Towards a Child Care Inclusive Poverty Measure

• In Event: Poverty, Policy, and Economic Supports in Early Childhood

Abstract

Child care is a major expense faced by families with children in the United States, especially in early childhood. Yet the current approach for measuring poverty treats child care needs and resources inadequately. Since 2011, the United States Census Bureau has been releasing the Supplemental Poverty Measure (SPM; (Short 2011)), which is a marked improvement over the official poverty measure (OPM) in several respects. But its treatment of child care is notably limited. The SPM conceptualizes needs based on a basket of goods that include food, clothing, shelter, and utilities, plus a multiplier for other necessities. On the resource side, the SPM improves upon the OPM by considering both cash and in-kind benefits, including tax credits. However, child care expenses are included only when considering families’ resources, by subtracting out-of-pocket child care expenses from income as a non-discretionary expense. Moreover, these expenses are treated simply as a work expense – they are included only if both parents are working (or a single parent is working) and are pooled with other work expenses and capped at the value of the lowest-earning parents’ earnings.

A recent NAS report (Ziliak, Mackie, and Citro, 2023) recommended further research so that an improved SPM could more fully incorporate the need for child care in the poverty threshold and incorporate the value of child care subsidies and publicly provided care such as Head Start and pre-kindergarten (and the value of unpaid child care) as resources that can be used to meet that need. Our paper lays the intellectual and empirical groundwork for improving the measurement of child care needs and resources in the SPM.  We document the creation and estimation of a “child care inclusive poverty measure” that follows the recommendations outlined in the NAS’ recent report on proposed improvements to the measurement of poverty in the United States. Specifically, our paper addresses two conceptual and empirical gaps in knowledge: (1) defining and measuring child care need; and (2) defining and measuring child care resources.

Our paper adds the need for child care into the poverty thresholds using data on child care prices derived from the Bureau of Labor Statistics’ National Database of Childcare Prices (NDCP), a database that harmonizes child care prices for family-based and center-based care derived from state child care market surveys. We develop routines for filling in missing data and establishing child care prices for all counties in the U.S., and then bringing these to the metro area level consistent with other geographic data in the SPM. Our paper values child care resources – including both government subsidies and unpaid care – by imputing child care subsidies and care use from the Survey of Income and Program Participation (SIPP), and then following NAS recommendations for valuing these subsidies and care. In so doing, our paper highlights the data needs and challenges in creating a child care inclusive measure, and provides initial estimates of the impact of child care subsidies on the poverty rates of young children.

Authors

• Christopher Wimer, Columbia University
  Presenting Author

• Danielle Wilson, American University
  Non-Presenting Co-Author

• Jiwan Lee, Brown University
  Non-Presenting Co-Author

• Sarah E Bohn, Public Policy Institute of California
  Non-Presenting Co-Author

• Robert Paul Hartley, Columbia University
  Non-Presenting Co-Author

• Jane Waldfogel, Columbia University
  Non-Presenting Co-Author