When Raelyn Scholl returned to work after having a baby, it was with a peace of mind foreign to many parents in the United States: She knew her son had a spot in day care, and for only $400 a month.
That’s because Scholl’s employer, a family-owned Missouri pharmacy, runs a day care for its workers and subsidizes the cost of child care. It is “a huge blessing” for Scholl, 25, and her husband, who didn’t have to worry about searching for child care — the average monthly cost of which is more than $1,200 across U.S. metropolitan areas — during the pregnancy.
Now, more Missouri employers will be able to help their workers pay for child care thanks to a new state-funded program, approved by lawmakers in May and launched last month. Through the initiative, employers can sign up to offer child care benefits to workers. The cost is split among the state, parents and employers, who can claim a tax break.
In Missouri and elsewhere, a growing acknowledgment of the economic and labor concerns related to child care has fueled political momentum for state-backed initiatives to help parents and providers. Lawmakers in about two dozen states passed new child care programs this year, often backed by business leaders concerned with recruiting and retaining workers.
Scholl’s boss in southeastern Missouri, Abe Funk, is among the business owners who argue that child care is important for a healthy economy. Funk, who is one of the first employers taking part in the new state program, believes that others who sign up will see the same outcome he did when he began footing part of his workers’ child care bill: better employee retention, happier families and more workers in the labor force.
“A lack of child care impacts every aspect of the economy,” said Funk, who owns John’s Pharmacy in Cape Girardeau with his wife, Emily, and has five children. “Think of how many people want to work and can’t because they can’t afford child care. … If they can get child care, then they can get off the sidelines.”
Across the nation, rising child care costs and a shortage of spots are squeezing families and pushing parents, especially mothers, out of the workforce. Meanwhile, providers struggle with low wages and high operating costs. Congress allocates some money to child care annually, but advocates say a much greater investment is needed to solve the system’s problems, and federal cuts to Medicaid and other programs are poised to squeeze state budgets further.
Tens of thousands of children are on voucher waiting lists in states such as Florida and Texas, and other states have frozen such programs. Providers have also shut down: In more than half of states, fewer child care programs were running in 2024 compared with 2023, according to an analysis by the Century Foundation, a progressive think tank. In Indiana, 10,000 spots are projected to be lost to closures by August, according to one estimate.
That has presented a “mixed bag” for states when it comes to child care funding — some are in crisis while others are innovating, said Anne Hedgepeth, senior vice president of policy and research at Child Care Aware, a national nonprofit.
Though state-level initiatives are limited in scope and cannot fix the nation’s shortage of 4 million child care spots alone, advocates hope the programs will prompt future investment.
At least 11 states this year allocated millions to subsidy or voucher programs that give families money to pay for child care. Others approved funding aimed at helping child care operators, increasing the number of available spots, creating new funding streams for child care or establishing public-private partnerships such as Missouri’s cost-sharing program.
A $100 million project announced this month in New York will build and expand child care facilities, aiming to create thousands of new spots. Wisconsin will use $110 million for payments to help child care providers stay in business, while Oklahoma lawmakers created a subsidy program for child care employees. New Mexico became the first U.S. state to enact universal child care, using state oil and gas revenue as funding.
“We have seen more states invest their own dollars in child care over the last five years than ever before,” said Julie Kashen, a senior fellow at the Century Foundation. “We have seen it in red, blue and purple states. That’s a big deal.”
Momentum around the issue began to mount in the late 2010s, and the strain on the child care system during the pandemic brought further attention to the need for reform, said Sarah Rittling, executive director of the First Five Years Fund, a national nonprofit. Now, “as we’re having these conversations about cost and affordability” in American life, she said, “you can’t get away from the role child care plays in that.”
In Ohio, an understanding of child care as an economic issue and interest from business leaders and chambers of commerce have represented a big win, said Kara Wente, director of the Ohio Department of Children and Youth.
Researchers there found in a May report that the state economy loses $5.48 billion per year because insufficient child care coverage is keeping parents out of the labor force. In a 2024 statewide survey, 49 percent of parents said they had to cut back their work hours because of a lack of child care, and 61 percent of nonworking mothers with children 5 or younger said they would work if they had access to high-quality, affordable child care.
“That really resonates when employers are struggling to find enough individuals to fill their positions,” Wente said. “It really changed the conversation, and we’ve had a lot of employers and chambers come to the table.”
The legislature approved funding for a cost-sharing program, similar to Missouri’s, which is now in the process of starting up. State Republicans, touting the program launch, said supporting working families will help businesses retain employees.
That perspective was also at work in Montana, where lawmakers this spring succeeded in adding a child care component to an infrastructure bill. The state will use a budget surplus to seed a child care trust with $10 million, which will grow with interest. The governor this month named an advisory board that will determine how to use the funds.
State Sen. Laura Smith (D), who pushed for the legislation, said she saw the bill’s approval as a reflection of the growing understanding of the issue, particularly as Montana businesses suffer from an unstable workforce. As she talked to Senate colleagues about child care “as an infrastructure issue,” she said it was “one of the first times in the last seven years” that the idea resonated.
“I think the quiet work that caregivers do is becoming more visible,” she said. “It’s become more of a crisis and it’s touching more people — including legislators and their families.”
In Missouri, Funk said he didn’t understand the impact of child care on the economy until he saw it firsthand at the pharmacy. Only 3 percent of the state’s counties have enough child care for infants and toddlers, meaning almost the entire state is considered a “desert” — for every spot available, there are more than three infants or toddlers who could need one.
The cost-sharing initiative was created out of two years of meetings with communities and data analysis led by Kids Win Missouri, a nonprofit. Its success leaned heavily on collaboration between business leaders, chambers of commerce and child care advocates, plus support from the governor, Republican Mike Kehoe, said Robin Phillips, chief executive of Child Care Aware of Missouri, an early-childhood education nonprofit that is helping launch the program.
The program uses a sliding scale based on workers’ incomes, with the employer and state pots covering the remaining costs for each enrolled child. Employers have an additional incentive to participate since a tax credit that Congress expanded this year will reimburse a larger chunk of their costs.
Demand for the program, called Child Care Works, has already outpaced the capacity of about 287 seats allowed by the $2.5 million in funding allocated by the state, said Brian Schmidt, executive director of Kids Win Missouri. Within the next month, the first employers that have signed up are slated to start offering the benefit, Schmidt said. He and other proponents hope that the program will grow over time, particularly if it becomes popular with employers, and that it could be a model for other states.
“It’s really exciting,” Schmidt said. “It’s really cool to see something come to fruition.”
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