Who’s Watching the Kids? The State of Child Care in America

Who’s watching your three-year-old twin boys or your eight-month-old daughter while you sit at your computer and read this article? Your spouse? Your mother-in-law? A nanny? A daycare teacher? And how do you know that the type of care your children are receiving is high-quality and dependable?

Although millions of working Americans depend on child care, daycare programs are often considered inadequate at best and potentially dangerous at worst. Consider the following:

• The U.S. has no overall system for providing early care and education.
• Child care fees paid by parents equal, on average, the cost of college tuition at a state university.
• Only about 1% of child care costs in the U.S. are contributed by employers.
• Only about 10% of eligible low-income parents get the subsidies they need.
• In some states, child care workers undergo less professional training than manicurists.

On Sept. 22, 75 participants from government, business, the child care field and academia met at Wharton for a conference entitled, “Caring for the Young Children of Working Parents: A Call for Private and Public Sector Leadership.” The goal was to assess what’s wrong with child care and to examine both public and private sector options for fixing it.

One of the first challenges the participants faced was framing the debate. Should we, for example, focus primarily on improving the quality of child care (promoting intellectual and emotional development and school readiness), or on making it more accessible to families at all economic levels? Who should be responsible (and foot the bill) for child care options – the government or individual employers? And how do we convince both sectors to make child care a priority?

The good news is that policymakers are increasingly recognizing the importance of good early care: In a 1998 report, then-Treasury Secretary Robert Rubin characterized the issue of child care as “critical not only to the lives of the working parents and children involved, but to business and the well-being of our economy as we enter a new century.” More recently, both U.S. Presidential candidates have offered new child care initiatives as part of their campaign platforms.

Speaking for the private sector, conference participants Stewart Friedman and Ellen Galinsky provided several “examples of best practices and ideas for future action.” Friedman, director of Ford’s Leadership Development Center and practice professor at Wharton, and Galinsky, president of the Families and Work Institute, recently surveyed 32 companies large and small on their efforts to assist employees with child care. The firms included Aetna, Verizon, Chase, Ernst & Young, GTE, Seagram, and Target. The survey suggested trends in two areas: first, “the growth of family-friendliness over the last decade from a single program or policy to the notion of a coherent strategic approach,” and second, an increasing interdependence of workplace innovations with communities and government.

“The networked economy has radically revamped the way we think about the structure of work and what it means to ‘go to work,’ said Friedman. The result in one sense is “a completely different dynamic in terms of how we think about the availability of parents themselves to provide care directly rather than having to use surrogates.”

Glaxo Wellcome is one example of a company that has addressed the child care issue in a comprehensive way. The company offers an extensive network of programs including on- and near-site child care and summer camp, flexible work arrangements, dependent care assistance program accounts, resource and referral for child care, tuition assistance, adoption reimbursement and parenting education. Also providing on-site child care is MIT, which aims to create “a home-like environment” in which “village clusters will link infant, toddler, and preschool groups.” Children will be able to keep in touch with their parents via computer. Notably, MIT hired world-renowned architect Frank Gehry to design the center – a giant step up from daycare’s typical basement location.

Another business that is working to ease the strain between work and family is in the child care industry itself: Bright Horizons Family Solutions, the only child care organization ever to be named to the Fortune 100 Best Companies list. The company offers a 50% discount for child care to teachers and directors, innovative back-up care, part- and flex-time options, telecommuting, and job sharing.

Bright Horizons CEO Roger Brown, who was present at the conference, described how one of his clients, a Silicon Valley executive, finally decided to provide on-site child care after five years of listening to employees lobby for it. Says Brown: “They spent $10 million on a child care facility. And we calculated the return on investment,” which, among other things, includes “$11 million in turnover savings a year; employees commuting 1.3 million miles less on northern California freeways; and employees getting to work half an hour earlier, not only because the commute is shorter, but because with a child in the car they get to use the carpool lane.”

On the subject of public-private partnerships, Friedman and Galinsky discussed programs such as the American Business Collaboration for Quality Dependent Care – a group of companies that has pledged millions of dollars to improve America’s child and elder care – and similar moves by companies such as IBM, AT&T, Lucent Technologies, Johnson & Johnson, and Corning. Some business leaders, though, are wary of public sector involvement. “The danger,” says Richard Weakland of Corning, “is that a national or state system will stifle the entrepreneurial qualities that are the strength of the current initiatives.”

Elaine Zimmerman, executive director of the Connecticut Commission on Children, described her experience with a successful public-private partnership to establish a preschool program in her state. She urged her colleagues in the child care field to respect the business community, treating it not simply as a source of “dollars” but as a source of “leadership partnerships.” “The child care field has been doing God’s work with no power,” said Zimmerman, and can benefit tremendously from businesses’ clout, leadership, ability to project numbers, and media savvy, all assets that childcare advocates sorely lack.

During one conference session, Swarthmore economics professor Ellen Magenheim addressed the role of the public sector in child care. She identified three major areas of concern – affordability, accessibility, and quality, but noted that tradeoffs are inevitable. “We’re talking about the child care market as a market,” she said. “We have to recognize that policies that affect the supply side and the demand side cause interactions. You can’t simply say, ‘We will make sure enough money is available so that people can buy child care,’ or, ‘We will change regulations to ensure that quality standards are raised.’ For example, improving the quality of child care would increase its cost to consumers, so that low-income households might be shut out of some programs entirely.”

Working families, Magenheim noted, have substantial child care expenses – some estimates place it as high as 25% of a family’s budget – occurring at a time (right after the birth of a child) when “family income is low relative to what it will ultimately be, and when there is little help in terms of financing.” While federal and state funding for child care subsidies, publicly-funded preK programs, Head Start expansions, and child tax credits has risen substantially over the last decade – spurred by concerns both about child development and women’s participation in the labor force – major problems remain, said Magenheim. For one thing, only about 50% of income-eligible families actually get the subsidies offered by the Childcare Development Fund, possibly because they’re not aware they’re entitled to it. Better public education is clearly needed.

Some of the options for change Magenheim listed include increased subsidies and tax credits; a loan fund to help families with child care expenses; and the alternative – and very controversial – option of public provision of childcare and early childhood education. On the quality side, she suggested establishing parental education programs to encourage the choice of quality care; offering wage subsidies or credentials to improve the child care labor force; and strengthening regulatory standards. She also asserted that public attitudes about child care could use a paradigm shift: “Some kind of system that educates parents and policymakers alike about the importance of decent child care and the value of paying for that care is a necessary first step.”

Another major issue, most attendees felt, was the need to convince the public that birth-to-three education was not just “babysitting,” requiring little or no training, but that the quality of care during these years has a profound, lasting effect on children’s intellectual and emotional development. Thomas Langfitt, a senior fellow in Wharton’s management department, forcefully addressed this point. He posed the question: “What is the cost of doing nothing?” Of the four million infants born in the U. S. each year, one-quarter to one-third will have been significantly impaired by the time they reach kindergarten, he said. “Approximately 90% of that impairment will have been to their developing brains and minds. And there is a linear relationship between the number of risks to which these children are exposed and their school-age outcomes.” Langfitt described four well-established risk factors: genetic disorders/prenatal drug and alcohol exposure; inadequate nurturing in the home; environmental factors such as poverty and crime; and poor or mediocre outside child care, which together produce “a cascade of risks from which only the most resilient children ever recover … But high-quality child care can have a profound countervailing effect,” he emphasized.

From free mandatory early education and extended paid parental leave to workplace “communities” and public-private partnerships, a wide range of ideas and options was aired at the conference – for some, perhaps, too wide as they struggled toward consensus. Nevertheless, a set of shared goals for improving child care emerged:

• Use public relations, the media, and high-profile advocates to raise awareness of the problem (possibly combined with a slogan such as “Born to Learn”).

• Get everyone involved with child care to present a uniform, clear message.

• Educate parents, corporate leaders, and policymakers.

• Institute free, universal, voluntary preschool.

• Institute extended paid leave for new parents, funded by either the public or private sector, perhaps drawn from unemployment insurance.

• Make child care a government budgetary priority or obtain public funding through such sources as the lottery.

• Don’t dismantle, but build on, existing child care options.

Even in the face of some agreement on solutions, Elaine Zimmerman complained about what she perceived as an air of paralysis: “We don’t have to reach Nirvana before we decide how to move an agenda,” she noted. And after describing the frustration of getting conflicting messages about child care from agencies, businesses, advocates, and parents, Rep. Georganna Sinkfield of Georgia perhaps summed up the sentiments of many in the room: “It is no small matter, as a policymaker,” she said, “to come to grips with what we need to do, and what it is that we should do.” The important thing is “to do something.”

Organizers of the child care conference were the Delaware Valley Child Care Council, the Wharton Center for Human Resources, the Wharton Work/Life Integration Project and Child Care Matters. Corporate sponsors included Ford Motor Co., Merck, Inc., Bright Horizons Family Solutions and Ceridian.

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