Latest Child Care Subsidy Plan Would Help High Earners

Number of the Day: The most relevant or interesting figure in personal finance

$299,999

That’s how much a family of four could earn and still be eligible for the latest version of a government child care subsidy being proposed by Democratic lawmakers.

The $1.75 trillion spending framework that Democrats agreed to Thursday—significantly scaled back from the $3.5 trillion President Joe Biden proposed this spring—would ensure that families earning under 2.5 times the median income in their state would pay no more than 7% of their household income toward child care for children under 6. That’s the equivalent of $300,000 for “the vast majority” of families of four, the White House said.

Lower earners would receive more support on a sliding scale, paying less than 7% of their income. A couple with one toddler earning $100,000 could save more than $5,000 under the plan, the White House estimated.

Child care has been a huge challenge for parents and providers alike since the pandemic struck. Providers say they have a hard time finding staff, and that’s left parents facing long waiting lists for care. In turn, lack of child care is a major reason some parents stay out of the workforce.

While providers have called for more government support, the high income limit proposed for the subsidy surprised even Cindy Lehnhoff, director at the National Child Care Association, a trade group for child care providers.

“I think that might be a little generous,” Lehnhoff said. “Yes, we do need something, but I’m thinking we maybe went too far too fast.”

The spending plan is by no means a done deal—lawmakers have yet to flesh out details of the plan and put it to a vote. 

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