I remember crunching numbers all the time when my child was one-year-old and in a Head Start program: How much of a raise would keep my kiddo on state Medicaid, or how much of a raise would be sufficient to be able to afford private child care?
I am part of the 33% of former benefit recipients in Colorado who ended up not taking the new job, who turned down a raise, who wasn’t able to progress in my career for fear of losing my benefits. I worked with other families in similar positions. Our incomes were low enough that we were eligible for things like food stamps, income-based housing, the state child care subsidy — along with CHP+ and/or Medicaid. But all too often, our choices were between taking a raise — or keeping affordable health insurance. Or housing. Or child care. Years ago, I realized if I made just $4,000 dollars more annually, I would lose my child-care subsidy and have to pay private child care. But in order to pay for that private child care, I needed to make $19,000 more a year.
I found myself smack dab in the middle of the cliff effect. The cliff effect happens as a family like mine climbs the self-sufficiency ladder while using state benefits to offset low incomes. More often than not, a job offer with a raise lifts incomes just high enough to lose state benefits such as food stamps or Medicaid or subsidized housing, but not high enough to pay for private child care, market rent and private health insurance. Many parents choose to stay home to offset the cost of child care, but single-parent families like mine don’t have that option.
Let’s break it down. In 2019, in order to qualify for a child-care subsidy as a single parent with one three-year-old child, you had to make less than $3,170 a month or $38,040 annually. However, the income that brings that same family to self-sufficiency is approximately $53,256. That would have covered average basic living costs — child care, housing, food and health care in Colorado. This means that in order to become self-sufficient, that same single parent in Colorado would need to be offered an almost $15,216 raise.
When I received the child-care subsidy, my son was in a quality-care facility that offered wrap-around services, including a mental health consultant and an early intervention specialist. The cost of private child care was such a far reach for me that in order to keep qualifying for that program I refused job offers and was left with staying a low-wage working mom for a longer period of time. In addition, research shows that early childhood education and quality care can help set up a child for success in the development of their relationships into young adulthood. Multiple transitions and constant change in child-care providers can actually reverse the benefits of early quality care.
Colorado expanded the income to qualify for the child-care subsidy to the federal maximum, but we also need solutions that support working families and the early childhood education sector. We need to address the cliff effect and the disparities low-income families face. We need social paid family leave and a universal health care model. We need federal funding that saves child care now, and finally, a cost-of-living adjustment that redefines poverty at a federal level.
The cost of child care in Colorado is also contributing to the gender wage gap — particularly for households led by single mothers. It is no wonder 87% of child-care subsidy recipients are single parents. COVID-19 has only worsened the need for child care and overall family economic security.
In 2018, 62% of working single moms in Colorado lacked adequate income to meet basic needs. We avoid taking extra hours at work. We turn down raises. We decline job offers. My story isn’t unique. We have to ask ourselves: What does real economic security mean in Colorado for working parents and how can each unique family finally reach the top?
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Research shows families can reach self-sufficiency at 200% of the federal poverty level. A child care subsidy can help families achieve self-sufficiency while building their household income.