The United States’ child care industry is in crisis. Families across the country are unable to find high-quality early care and education (ECE) options for their young children, and the COVID-19 pandemic has wreaked havoc on already strained businesses. Congress failed to pass a historic investment in child care in the 2022 session, and the nation faces a divided House of Representatives and Senate in 2023.

Absent major federal increases to the Child Care and Development Fund (CCDF), authorized by the Child Care and Development Block Grant (CCDBG), states must work to address the crisis. Governors can lead the way by engaging in bold action to support young children and their families. This report identifies five steps governors can take to increase states’ supply of affordable, high-quality child care:

1. Calculating the true cost of care and setting child care subsidy rates accordingly so that these rates reflect the actual cost of child care for providers
2. Developing wage scales that create parity with K-12 compensation
3. Creating new financing strategies to address the pending fiscal cliff spurred by the expiration of federal COVID-19 relief funding
4. Establishing grants and contracts with early childhood providers so that providers are compensated based on enrollment, not attendance
5. Offering incentives to expand child care options in child care deserts

The scope of the child care crisis

The child care industry is facing a national shortage of ECE providers and...

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