A Balancing Act: Low-Income Mothers on the Childcare Benefits Cliff

This article was co-authored by Rachel Huyhn.

While the myth of the modern “supermom” endures, real working mothers have to navigate a siloed, broken childcare system in America. This is especially true for low-wage earners, of which nearly two-thirds are women and more than a quarter are women of color. Unsubsidized childcare is so unaffordable in the United States that parents, especially working mothers, are forced to make bleak tradeoffs: either opt out of the labor force and stay home with their children, or sacrifice other basic needs such as healthcare to afford childcare. 

The childcare market is failing families 

The Atlanta Federal Reserve estimates that only 44% of U.S. families with children under the age of 13 can afford the full price of childcare without having to sacrifice other basic needs such as housing, food, health care, and transportation. These are impossible tradeoffs.  

 American childcare lacks three essential qualities: availability, quality, and affordability; studies find that no state ranks well in all three.  

• On availability: The majority of Americans (51%) live in a childcare desert, where the number of children outnumber licensed care slots at least three-to-one. The supply of licensed providers has continually declined, with the number of home-based providers halving from 2005 to 2017.¹ It is not uncommon for waitlist times to range from 18 months to 2 years.²  
• On quality: While states require licensing for formal childcare providers, regulations and adherence vary. Numerous reports of inadequate supervision, abuse, and poor food safety illustrate what is at stake when providers are not properly trained or equipped.  
• On affordability: No state can say they offer the federal definition of affordable center-based childcare, which costs no more than 7% of annual household income.  

The industry is “on the brink of collapse,” with razor-thin provider margins despite the cost to parents increasing by approximately 2,000% from the 1970s to 2000s so that average childcare costs exceed $8,000 a year. This is due to many factors: mandated worker-to-child ratios and costly certification requirements; turnover and shortage of caregiver labor amidst poverty-level wages; and insufficient public assistance for childcare providers and families. These market conditions are also pushing providers out of the market, further exacerbating the crisis.³  

How does policy exacerbate precarity for the low-income American mother? 

The impossible tradeoff these mothers face is not a new phenomenon for income-based public assistance more broadly. It is known as the “benefits cliff,” where even a nominal increase in pay – in some cases, even as little as 25 cents an hour – can leave a family ineligible for crucial benefits. Even with more income, many families are still not financially stable enough to absorb the loss of benefits and would be severely worse off earning slightly more if it means losing assistance. As a result, millions of Americans live in fear of hitting the cliff –  “turning down raises, promotions, hours, leaving jobs, so as not to fall into financial catastrophe.”  

The tenuous financial ground that low-income American families live on is further exacerbated by the siloed social welfare programs across the country. Income thresholds vary not only by the size of the family, but the differing limitations at the federal, state, city, and county levels. Undoubtedly, the varying income thresholds increase the administrative burden for working class families and individuals to navigate where they stand and how close they are to “falling” off the benefits cliff.

While benefits cliffs are a challenge for all income-based public assistance programs, they are uniquely crippling for working parents that rely on subsidized childcare 

Many parents rely on crucial public assistance programs such as the Child Care and Development Fund (CCDF) to subsidize costs, especially those with children under five who are not in school and need around-the-clock care.  

As part of our primary research, we spoke with a childcare center administrator in Chicago and several self-identified low-income working mothers in paid interviews to understand how the childcare benefits cliff plays out in their lived reality (“Anonymous,” 2022). One glaring headline from those conversations is how common it is for mothers earning minimum wage to be turned away from childcare funded by CCDF because they are incrementally over the official poverty line. A childcare center administrator in Chicago said, “With the increase in minimum wage, some families in Chicago are becoming ineligible for these programs. Some families even turn away an increase because they would not qualify for childcare. They should have support navigating these systems.” 

Therein lies the catch-22 of the childcare benefits cliff: either a mother deliberately restricts her earnings to qualify for childcare support or she is forced to absorb the exorbitant cost alone. Not only that, but Illinois’ childcare assistance programs typically have a work requirement. If she does not earn enough for licensed childcare and needs to stay home with her child instead, she is suddenly ineligible for other crucial public aid with work requirements, such as TANF or SNAP.  

Policymakers are working with fragmented data to serve these families 

The situation is tenuous for policymakers as well, as it is very difficult to identify where beneficiaries are on the benefits cliff and how close they are to losing eligibility. Fragmented data increases challenges for caseworkers at government agencies, researchers, and policymakers as they try to piece together a cohesive view of a family’s income, labor participation, and childcare availability. There have been important policy attempts to address the lack of visibility on the benefits cliff, albeit most of the legislation hits at the periphery of the issue, such as policy eliminating asset limitations for eligibility. There is notable movement in Kentucky, where legislation in 2022 proposed designing a benefits cliff calculator for families to use while applying for welfare programs and also created a task force to study this issue within the state. 

Beyond the economic imperative of investing in care infrastructure for working mothers, an often overlooked but pivotal aspect of her well-being is time and space for joy  

While childcare may seem to only affect families, it is not acknowledged as the social and economic imperative that it truly is. The $136 billion U.S. childcare market is often the most expensive item for dual-income families in the country, above mortgages, transportation, or college tuition. It is a key driver of the $4 billion loss due to childcare-related employee absenteeism and productivity loss that applies to nearly 32% of the workforce, as equal labor participation from women would increase the U.S. GDP by a whopping 5%, or over $1 trillion. Despite this, the U.S. is a global outlier in how it persistently underinvests in this issue, with only 0.2% of GDP going to childcare. Consequently, mothers must shoulder the consequences of a broken childcare market with more than a decline in labor participation. “Without childcare, low income mothers are not able to start a new adventure in her life, have time to be social or even emotionally stable,” the childcare administrator said.   

When 2.4 million women left the workforce in 2020 amidst pandemic-related childcare closures, American society witnessed the precarious balancing act of the working mother. Nearly four years years later with the federal public health emergency ending May 2023, our country still has not learned the lessons from that time. The American system currently ignores and undervalues childcare, continuing the cyclical burden of childcare falling disproportionately on mothers.  

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1 National Center on Early Childhood Quality Assurance. Addressing the Decreasing Number of Family Child Care Providers in the United States. 2020, p. 42. 

2 Workman, Simon, and Steven Jessen-Howard. “Understanding the True Cost of Child Care for Infants and Toddlers.” Center for American Progress, Nov. 2018, p. 35.

³ Thompson, Derek. “Why Child Care Is So Ridiculously Expensive.” The Atlantic, 26 Nov. 2019, https://www.theatlantic.com/ideas/archive/2019/11/why-child-care-so-expensive/602599/; Workman, Simon, and Steven Jessen-Howard. “Understanding the True Cost of Child Care for Infants and Toddlers.” Center for American Progress, Nov. 2018, p. 35.