Ask Us Anything: Childcare as a Key Community Development Priority
Event Q & A
ALICE Data – Asset Limited, Income Constrained, Employed
What is the difference between ALICE data and the federal poverty level for households?
ALICE represents the population earning more than the federal poverty level ($26,200 for a family of four in 2020) but not enough to cover a bare-bones household budget, including housing, childcare, food, transportation, healthcare, a smart phone plan, and taxes. Visit the ALICE webpage for information on your state. Since it was adopted in 1965, the federal poverty level has only been updated to reflect inflation, so its calculations are fundamentally flawed. (For instance, in the 1960s the cost of food was one-third of a family’s budget. Although food costs today are about one-seventh of a family’s budget, the one-third number is still used.) ALICE data is adjusted for inflation and reflects current costs of household necessities, cost-of-living differences across the United States, and it also includes factors for payment of state and local taxes.
What can government and public-private partnerships do at the local or state level to most effectively help ALICE families obtain affordable, quality childcare?
Providing safe, affordable childcare is certainly an opportunity for public-private partnerships (PPPs). Numerous examples of PPPs that have been created to help ALICE families get affordable, quality childcare are under way in communities across the country. One example is a pilot program under development by the United Way of Northern New Jersey. Called Grow NJ Kids, it will connect center-based childcare providers with registered family childcare providers and support agencies to build a network of support and shared resources for working families.
Beyond improving access and affordability to childcare for ALICE families, nongovernmental organizations can advocate for a shift in incentives to improve the economic mobility of workers. The government has been providing incentives to create jobs for decades. These inducements may come in the form of qualified tax incentives or worker training subsidies, for example. However, even after an 11-year economic expansion, the percentage of ALICE families in the United States has increased over the last decade. In short, getting people off the unemployment rolls is not enough to ensure they can make a good living.
If more emphasis is put on offering incentives to expand career pathways, what does that accomplish? Career pathways raise wages, leverage and build talent, and help recruit and retain talent. Since childcare is an important work support, incentives tied to it could elevate a worker’s career pathways.
What supports are in place in terms of tuition assistance and support services for ALICE workers who want to upgrade their skills or pursue a career pathway?
There are many resources available to ALICE families looking to upskill:
- • Many communities have scholarship programs that cover tuition costs for working adults.
- • Businesses may offer tuition assistance programs, though many of these provide tuition reimbursement and don’t cover upfront costs.
- • States often subsidize college courses and degree programs for certain populations, likely those that live within the ALICE threshold.
- • Workforce boards offer Individual Training Accounts (ITAs), which usually work as vouchers for occupational training.
A part of the Advancing Careers work at the Atlanta Fed explores how career pathways influence benefits cliffs. This initiative looks at state wage thresholds for social safety net programs, average career pathway wage ranges, and the length of education and degree programs to provide a comprehensive picture for workers looking to upskill and obtain (and retain) family sustaining wages.
Workers in hospitality, retail, or leisure jobs may find new career pathways during the pandemic by shifting to working in the healthcare system. You can read more about those opportunities in the Foundation for Orlando’s Future report or in the Center for Workforce and Economic Opportunity’s blog.
The Benefits Cliff
Most workers earning low wages lack health benefits. How can providing comprehensive health benefits help ALICE families navigate the benefits cliff?
As a first step, businesses can help by being aware of these cliffs and the real financial barriers their workers face to balance life needs. Comprehensive benefits could include healthcare costs, which is one of the seven essential household budget costs. Other options include paid leave time, allowing flexible work hours, or financial supports to offset the loss of benefits which may occur with increased wages.
Has the Fed developed the information for those cliffs for the states in our region? If not, how do we find that info for our own state?
The Federal Reserve has examined benefits cliffs in many metropolitan areas including Miami, Atlanta, and Birmingham in the Southeast as well as Chicago, Illinois; Reno, Nevada; Wilmington, Delaware; Seattle, Washington; and others. For more details and to explore the data, visit the Advancing Careers webpage and reach out to the team if your area is not listed.
Benefits System Structure and Employer Roles
What can employers do during the recovery to promote financial stability and independence?
Employers can do a lot of things, many of which do not involve pay raises, to promote financial stability for ALICE workers:
How can majority white organizations be more open to the Black community in their efforts to promote diverse and inclusive leadership?
- • Providing free tax preparation for employees can help to increase income tax return collection.
- • Prescription drug cards can help lower healthcare costs.
- • Companies can negotiate discounts on public transportation passes, which would help workers with a major household budget item.
- • Providing courses to enhance financial literacy or technology skills can help improve a family’s standing in the long term.
- • Helping cover costs for workers’ home internet service can assist families greatly. During the pandemic, that kind of assistance can include providing access to education for school-age children.
- • Offering flexible work hours to employees allows them to care for their children at times when childcare options might not be available.
- • Subsidize the cost of childcare for workers.
What happens to people who are "parked" if a $15 minimum wage is implemented?
An observation made during the webinar is that no one organization or policy change can resolve the issues tied to improving worker mobility. Community partnerships with banks, workforce development boards, nonprofits, and government all can play roles in expanding career pathways. A minimum wage boost is not going to solve every problem for ALICE families. In fact, an increase in the minimum wage without other policy changes may leave families worse off financially, depending on their makeup. It is important to work through community partnerships so that policy makers can understand the challenges of workers.
How could changing the way the childcare system is financed affect childhood and family outcomes?
- Availability – Childcare deserts affect some demographics groups more than others. This issue is being exacerbated by the pandemic and could impact as many as 4.5 million childcare slots.
- Affordability – In 28 states, it is more expensive to provide early childcare than to attend a state institution of higher education.
- Quality – A relatively small percentage of childcare centers are accredited. This issue is related to worker churn and compensation. Additionally, should a parent lose a job, children often fall out of enrollment. This kind of disruption does not bode well for a child’s education and development. Additionally, at this time, all families are understandably not returning to childcare and it is not clear what the timeline will be for their return. These financial disruptions put childcare in a precarious and difficult place given these providers are largely operating without the revenue needed to sustain quality.
Changing the way the childcare system is financed could keep businesses running (particularly during the pandemic) and lower the costs for parents, which in turn could lead to a continuity of enrollment and improve early learning outcomes during one of the most important development periods for children.
Sarah Miller: Well, thanks for joining, everyone. Good afternoon. Happy Wednesday. Sarah Miller here from the Center for Workforce and Economic Opportunity here at the Atlanta Fed. For those of you that have been joining us through this series for the past several months, welcome back. It's great to have you. For those that are new, I'll give you a little bit of background on both the Center for Workforce and Economic Opportunity, the community and economic development division here at the Atlanta Fed, and also this Ask Us Anything series.
So, the Atlanta Fed's Community and Economic Development Center really focuses on all of the issues that affect low- and moderate-income populations as it relates to their advancement within the economy. Joining me today is Britt Birken, my colleague on the community and economic development side. I'll introduce her more properly in just a moment, but we kind of work hand in hand between the community and economic development function and the Center for Workforce and Economic Opportunity, which is a national center focused on labor market issues and anything under the much larger kind of workforce development umbrella.
We've been doing this Ask Us Anything series since we went in to kind of the remote posture about in April. We've been having consistent sessions roughly about every three weeks to four weeks on a number of different topics that are all affecting the low- and moderate-income populations and a number of different issues as it relates to workforce.
We're here today to talk about a very top-of-mind topic, childcare, and its importance to community and economic development. We know that many of you on the call right now are, while we're on the call, managing childcare, managing remote learning for your children, so we know that this is a big issue, and it's certainly a big issue for our low- and moderate-income populations with all of the challenges that have been exacerbated by the COVID-19 crisis.
We have some great experts on the call with us today. We're joined by Ted Granger and Dale Brill. They've both spent years together working with Britt in Florida, so I think we're going to have a really interesting kind of case study conversation around looking at childcare as a key barrier to economic mobility, really using some lush data from the United Way to understand the populations that they try to serve, and look at the policy levers and how practically they wanted to realign some of their work so that they could create better opportunities in terms of accessible, affordable, and quality childcare for the people in the state of Florida.
Just for everyone's ... kind of a logistical detail here today. Please do send us a Q&A through in the chat. We've tried to build these conversations to be very discussion based, conversationally based, so we're not going to overwhelm you with a lot of heavy content. In fact, we're not even going to be sharing a PowerPoint presentation with you today. This is just going to be a discussion, and you are the most important people in that discussion. So, please use the Q&A box at the bottom of your screen. Send us all your questions in. We will get to as many as we possibly can today. But if we can't get to your question, rest assured we do have that detail. We're collecting it on the back end. Within about a week and change, you will get a copy of this recording along with a full overview of the digest of all the questions that you've submitted and the answers from our fantastic experts on the call today.
But without further ado, let me turn this over to Britt Birken, my colleague at the Atlanta Fed. Brit is a principal adviser here in the Community and Economic Development Group. She specializes in benefits cliffs and social services policies that aid families with children in poverty. Prior to joining the Fed, she was a faculty member. She served as the director of Florida's Office of Early Learning and chief executive of Florida's Children's Council. She is a current gubernatorial-appointed board member and chair of the Strategic Policy Council for the Career Source Florida, and also serves as a board trustee for the Florida Chamber Foundation. If that wasn't enough, she also holds a PhD in child development.
So, we absolutely have our core expert on the phone. She's worked for years and years with Ted and Dale, and I'm very excited to listen to their conversation. So, without further ado, Britt, I'm going to hand it over to you. Take it away.
Brittany Birken: Thank you so much, Sarah. You could have left one of the ‘and years’ off, but I have worked with Ted and Dale for years and years, and I'm really pleased to be with you all this afternoon to talk a little bit about the intersection of childcare, the workforce, and economic development. Before I turn it over to my colleagues to engage, I want to just provide a little bit of an overview and backdrop on what's going on right now.
As Sarah said, childcare has recently come into the spotlight. Over the last many years, there's generally been an increasing awareness on the two generational benefits of childcare. That is how it both enables parents to work and supports the development of young children. In particular, quality childcare has been demonstrated to increase the productivity of working parents and serves as an effective intervention for children, improving kindergarten readiness and future school success.
Typically during economic downturns, there is a greater recognition on the importance of childcare, given it plays an important role for enabling dislocated working parents to acquire new skills and credentials through education and workforce development services and to seek and accept new employment opportunities. But now at this time, it's in the news more regularly. It's part of many economic briefings, and it's gaining additional national attention. In part, this is because the pandemic has added significant stress and strain on the childcare industry.
Typically during economic downturns, childcare businesses don't experience this level of operational and financial challenge. Last year, a report, Analysis by the Committee for Economic Development, identified 675,000 childcare businesses in the United States. To give a little perspective, at the height of the stay-at-home orders, approximately 60 percent of these businesses were closed. Since that time, many childcare programs have reopened, but they're experiencing numerous challenges.
One, infection that can disrupt their open status and cause closures for a period of time. Two, many states have reduced the number of children that can be served in each classroom or area. And three, all families are understandably not returning to childcare at this time, and it's not clear what the timeline will be for their return. However, it will likely be staggered and include fits and starts. This is an industry largely funded by parent payments. And while it's expensive for parents, it's also incredibly expensive to operate.
Childcare traditionally has low profit margins, so these financial disruptions put childcare in a precarious and difficult place, given they're largely operating without the revenue needed to sustain that business. A recent national survey indicated that two in five childcare programs are likely to close without financial intervention. The Center for American Progress estimates that, due to the coronavirus, the U.S. could lose up to 4.5 million childcare slots if childcare providers can't weather the current shutdown.
So what does all this mean for working parents, employers and economic recovery? Prior to the pandemic, nearly 67 percent of children younger than age six had all parents in the household working. And as of this June, 32% of the labor force was made up of parents with children younger than 14. This becomes a very timely statistic when we think about the current realities of K-12 education. In some states, K-12 is occurring exclusively through virtual and distance learning options. In others, families may have the choice of brick and mortar or distance learning.
Parents that have children receiving instruction through distance learning may need assistance with the supervision of young children in order to work, so the coordination between childcare and schools for serving school-aged children might be needed, but what this means and how it will work is still a bit murky in most areas. Without access to reliable childcare, the economic recovery for working parents with children will be considerably challenged.
The U.S. Chamber of Commerce recently surveyed parents' employers about childcare. Two thirds of parents reported having to change their childcare arrangement during this period, and 40 percent of employers say they're concerned about some employees not returning fully to work because of worries of childcare as well as health and safety.
Another layer of complexity is the issue of affordability, as Sarah mentioned. The high costs of childcare are a longstanding challenge for many low- and moderate-income families. This challenge can limit job training, education and career opportunities during economic recovery, if affordable childcare options aren't available. In this current environment without access to affordable childcare, parents may be challenged to remain in the workforce.
So how can we better understand the challenges and budget realities for low- and moderate- income families? And how can this information be useful for supporting an inclusive economic recovery? And where exactly does childcare fit into this equation? So it's my pleasure to introduce two experts that can weigh in from very unique and important perspectives. As Sarah said, the three of us all hail from Florida, but I think our discussion this afternoon certainly has broader application.
First, I'd like to introduce Ted Granger, who had a long and distinguished career practicing law. He worked for the Florida Legislature, the Chamber of Commerce, and recently retired from a long history of service as the president of the United Way of Florida. He held that position for 29 years and has graciously agreed to serve as our historian today on the evolution of ALICE [refers to populations that are Asset Limited, Income Constrained, Employed].
So, Ted, understanding the budget realities for working families is especially important now as we're thinking about economic recovery. Knowing Florida was an early adopter of ALICE, can you share a bit about the history of ALICE, what it is, why it's important, how it's contributed to understanding of household budget realities for families above the poverty threshold and, specific to the topic today, learnings relative to childcare?
Ted Granger: Hi, everyone. It's great to be here with you today to talk about the topics that mean so much for the success of our economy and our society. I have about five hours, so settle back, and we'll be geared to go. Actually, I'll be done here in about 10 minutes or so. But thanks for that gracious introduction, Brittany. And thanks to you and one of our partners in crime today, Dale Brill, for playing such important roles in helping United Ways and communities across Florida assist our ALICE workers and our families. I'd also like to thank the United Way of Northern New Jersey, which gave birth to ALICE and continues to lead the United for ALICE initiative.
As Brittany mentioned, I was president of the United Way of Florida for almost three decades. And about 15 or 20 years ago, I was at a reception where a bunch of business ... high level business people. And a CEO came up to me, and we started talking. He said, "Ted, I believe in the United Way, but I've been giving to the United Way for decades, and it seems to me like nothing ever changes." And I'm convinced that there are two issues that need to be addressed to really change things, and they'll be a part of this conversation in today's Ask Us Anything webinar, and they are quality childcare and ALICE.
So, who is ALICE? I know while some of you are aware of ALICE, some may never have heard of ALICE, so I'd like to spend a couple of minutes kind of level-setting here, so we're all on the same page. ALICE is an acronym for American workers and their families who are Asset Limited, Income Constrained, Employed.
Asset Limited, Income Constrained, Employed. For many, the most important word is employed. There are millions of ALICE workers and their families across our country. And before COVID-19, and even in the midst of the virus, when we do go out, we're surrounded by ALICE. They're our cashiers at the grocery stories, the workers at Lowe's and Home Depot, the childcare workers, the hotel and restaurant workers, the retail workers in our stores, laborers, clerical staff, mechanics, legal aides. They're the workers who harvest and build the produce and the goods that our businesses generate and package and transport them around the U.S. and around the world. And the list of ALICE jobs just goes on and on and on.
ALICE works hard and is above the federal poverty line, but, due to high costs and low pay, lives paycheck to paycheck. ALICE cannot always afford bills, their bills. They have little or nothing in savings. They're often forced to make Sophie's choices as to whether they will pay their utility bill or put food on the table for their kids, pay for a prescription or fix their car. And one unexpected expense—a car repair, a medical bill to name just a few—can push these financially-strapped families over the edge into poverty, into homelessness, and into financial chaos. And of course when that happens, it hurts families, employers, and our economy. In the end, the ALICE population is really our nation's most valuable and most vulnerable economic driver. They're the backbone of our economy.
And so how do we determine who ALICE is? We know ALICE is employed and lives above the federal poverty line, but we also know that they don't earn enough to afford the actual bare minimum cost of basic necessities. How do we quantify bare minimum cost and basic necessities? Well, we know that it takes ... There are seven basic necessities that it takes to live in our society today. We have to have housing, childcare, food, transportation, healthcare, technology, and a little bit of a buffer for taxes and miscellaneous expenses.
The bare minimum cost for these seven basic necessities constitute the ALICE survival budget. If you don't earn enough to afford the survival budget, to pay for those seven basic necessities, you're below the ALICE threshold, which is real important. I'm going to be talking about that a lot in the next few minutes. Determining how to figure out the cost for the survival budget is done very, very conservatively. I don't have time to go into it in detail right now. We can go into it in more detail later. But just to give you a couple of examples: For transportation, it's the cost of operating a 10-year-old car. For technology, it's Consumer Reports’ lowest cost smartphone plan. Again, I'm not going to go into all of the others now. We can do that a bit later.
But how many people in the U.S. can't afford these basic necessities without having to make those Sophie's choices? These are the figures that really knocked my socks off when we started talking about ALICE in Florida. And it's the data that has made ALICE a focal point for discussions in the 21 United for ALICE states where United Ways and their partners, their communities, and policy makers are working to help ALICE. Nationally, over 40 percent of US households earn below the ALICE threshold. That's almost half of America. They're living paycheck to paycheck, and they're struggling to pay their bills. And during the decade from 2007 and 2018, the cost of those seven essential living expenses increased at an average rate of 3.4 percent. And the official inflation rate during that time was 1.8 percent. So, in effect, over the last decade, ALICE families have lost about 5.2 percent of their purchasing power.
In January, The New York Times reported that wage growth at the bottom is doing well. It's been around 4.1 percent over the last two years, and over the last 10 years has averaged about 3.9 percent. In other words, while we've been hearing great things about wage growth for ALICE of 3.9 to 4.1, ALICE has lost 5.2 percent of their purchasing power of the last 10 years, and which results in a reduction of real spending power of over 1 percent.
These ALICE households exist in every age group. They're spread across all of our counties, and they represent a cross section of our nation's population. In Florida, 46 percent of households live below the ALICE threshold. Thirty-three percent are ALICE, 13 percent below the FPL. And the ALICE population has been growing. During that decade from 2007 to 2018, the total number of households in the state increased by 10 percent while the number of ALICE households grew from 22 percent to 30 percent, so it's a growing population that we know we need to address.
In terms of ALICE and childcare nationally, we know that center-based care for infants can cost a single-parent family an average of about 36 percent of household income. For ALICE families, if a family has two children under the age of five, the cost of childcare is more than the cost of housing in every state in the United States, and of course housing costs are usually the highest cost for a family. On August 15, The Wall Street Journal had an article titled “Working Parents Are Hitting Their Coronavirus Breaking Point and Paying for It.” They noted, "For individual families, higher childcare expenses can range from troublesome to financially debilitating. Rising costs divert money from other purchases," those Sophie's choices.
In the same article, Misty Heggeness, who's an economist with the Federal Reserve Bank in Minneapolis, is quoted as saying about childcare, "Here's the deal. If you care about U.S. economic growth, this should be one of the first areas of concern for you." For many businesses, they've already listened to Misty, and childcare has become a major concern.
Why are more and more businesses supporting quality childcare? In my opinion, the organization in Florida that leads Florida's business community really says it best. I want to give a special shout out to Florida Chamber of Commerce CEO and president, Mark Wilson. Under his leadership, the chamber has recognized that, unless we address generational poverty and create pathways to prosperity for all, our economy and society will never be what they can be, and in fact they will suffer.
The Chamber's also recognized the business imperative to support high quality childcare. They've noted that 85 percent of brain growth occurs by the time a child is five. I know some of you haven't heard that before, but it also knocked my socks off. Eighty-five percent of brain growth occurs by the time a child is five years old. Well, participants in early childhood learning programs are 80 percent more likely to attend college. And high quality early childhood education programs increase employability by 23 percent. And if you're having problems recruiting qualified employees ... In furtherance of these conclusions, the Florida chamber has created, again the first of their kind in the country by a state chamber, the Florida Prosperity Initiative, focused on ALICE and others who are struggling to pay their bills, and the Business Alliance for Early Learning. Those two initiatives are off and running and are part of the Florida chamber's blueprint 2030 in terms of what the state needs to do in order to move forward and be an economic power, continue to be an economic power by 2030.
After this webinar, you're going to receive some info from us. Among others, it will include about how can you ... information about how you can learn more about ALICE at UnitedForALICE.org, including ALICE reports and information for the 21 states that are part of the United for ALICE network. You'll also be able to see how many residents in every county in the country live below the ALICE threshold, which might be interesting for you. There's also information about the Florida Chamber of Commerce and its efforts. I highly recommend that you watch the video of chamber CEO Mark Wilson talking about the business imperative to actively engage in working with ALICE in terms of workforce development, childcare and early learning.
Thanks again, Brittany, to you and the Fed for helping us to raise awareness about ALICE and these really important issues. And I'd like to thank all of you who have joined the webinar. Thank you for joining and to learn more.
Birken: Hey, Ted. I really appreciate you sharing the history and application of ALICE and giving some concrete examples of how it's being used in Florida.
Before we delve any further into that, I'd like to introduce Dr. Dale Brill. Dale serves as the senior vice president of research in the Foundation for Orlando's Future with the Orlando Economic Partnership. The partnership serves as Central Florida's catalyst driving regional economic prosperity. Before joining the partnership, Dale worked in various public and private sector capacities, including General Motors, the Florida Governor's Office of Tourism, Trade and Economic Development, and is the [inaudible] of a Florida-based consulting firm focused on policy research.
Dale, as you tell us a little bit about your work with Orlando Economic Partnership, can you also reflect on how the ALICE data has changed your work approach to economic development? And for years in knowing and working and partnering with you, you've recognized the importance of childcare as a critical construct of community development. Can you share a bit about that as it relates and intersects with your work?
Dale Brill: Sure, Britt. And greetings everyone from the City Beautiful at the heart of the Sunshine State. The journey has been interesting for me. And I appreciate Ted giving the groundwork, and props to the work that the Florida Chamber's doing. One job you left off in my career attention deficit disorder list, Brittany, was I served as the president of the Florida Chamber Foundation. And left there at about the right time that the OEP, the Orlando Economic Partnership, was formed by a merger of its Orlando Regional Chamber, a regional community development organization known as MyRegion.org, or the Central Florida Partnership, and as well as we have a couple of foundations that were involved there, and then the traditional economic development corporation, or the Economic Development Council, EDC.
As the OEP formed, the current CEO, Tim Giuliani, had worked with me at the Florida Chamber and gave me a ring and said, "How'd you like to put a lot of that theoretical conversation that happens at that macro state level and see what we can do to make a dent in the Central Florida region, which encompasses a footprint of seven counties?" Again, I leapt at that. And it was perfect timing, at least for me, as I had evolved in my thinking and really what broad-based prosperity, what prosperity was all about. And I'll mention often broad-based prosperity. That is the mantra or the mission, the highest order objective that the Orlando Economic Partnership has set.
So, again, you can see in Florida a lot of merger and coming together on a couple of realizations. The chief one for me was made clear by the ALICE, first ALICE report. And when I was invited, when I was still at the foundation for the Florida Chamber, to be part of that research committee. And I remembered it was such an intriguing idea, and it really challenged this notion that GDP and growth, growth, growth and the other kind of worn out record is jobs, jobs, jobs. There's economic growth, economic growth and jobs, jobs, jobs. Coming off of the Great Recession when we were at 12 percent employment, that makes all the sense in the world. But I started to scratch my head when we started to fall below 8 percent that we never shifted to the conversation of what kind of jobs. And the reason what kind of jobs is so important is that, yes, it's important to be employed. You can't—no denying that basic fact. But if you're employed, and you are unable—well, you find yourself as an ALICE household, that becomes very problematic. And the other thing the ALICE data really made clear for me now, over time, when the pandemic hit, the United States had experienced 11 straight years of economic growth as far as GDP is measured, right? So that's the longest economic expansion in American history.
Now, I won't recount the data points that Ted cranked out from memory, but the contradiction or the incongruence there is striking. 11 years of economic growth, unheralded in American history, yet the proportion of households that are unable to get by increased. And that for me was this very practical evidence of the decoupling of growth, growth, growth from its altar or its pedestal and to looking at things that are far more complex and are operating underneath that growth is everything mantra. Again, I'm not saying—You can't leave this and say, "Well, Dale Brill from OEP got in here and said that growth doesn't matter." That's not what I'm saying, although there are some economists that are on that ship.
I would say growth is absolutely necessary. Growth is entirely insufficient. And if you look at what happened with ALICE, that was the wake-up call for me. And so important is it to our work at the Orlando Economic Partnership that when we released our Orlando Prosperity Scorecard last November, we made the ALICE figures for our seven-county footprint one of the two overarching metrics or indicators that we are putting forward as the best indicators of, "Well, how is the economy really doing?" You might ask them, "OK. If ALICE is one, what's the other?" And the other is wellbeing, and that pulling from data and metrics that come from Gallop national surveys that are quite meaningful. That intersection was a great opportunity that the OEP created for me to put things into practice, right? All the economic development is local, and it was, again, perfect timing.
And I'd be remiss if I didn't tell you the other thing that really happened is that late in my career, late in my life, I had children. And in fact today is my daughter's fourth birthday. And so when I looked at the slap in the face of when childcare was so important is when I had to deal with it, right? And I'm embarrassed to tell you that until then, it was off my radar screen. And so when you're wrestling, you're looking at this and saying ... and decisions that the Brill family has to make, and then because of my day job of looking at economic policy and economic data, I started thinking, "Well, what are other people wrestling with?"
And then the third leg of that stool that was transitional for me, or transformational actually ... I'm going to embarrass her, and she's going to think I'm doing this on purpose. But I ran into Karen Willis, who is our ELC [CEO of Early Learning Coalition of Orange County], just the rock who is bold and outspoken and in your face like, "You've got to do something about this." And I don't want to put forward that Orlando has figured it all out yet. In fact, Karen would be the first one to tell you that we're way behind from the benchmark of where she expects us to be. But because of her leadership and because of the breadth of the OEP's lens looking at broad-based prosperity and the things that we're talking about today, I think that we're on the verge of making the case that, as you indicated in the preamble, Britt, that childcare is fundamental to any kind of economic recovery. It is fundamental to economic resilience, and it is one of the tenets of broad-based prosperity for Orlando.
Birken: Thank you, Dale. I will comment. If it … didn't resonate with you before having children how important childcare was, you did a great job sort of faking that. As somebody who has worked closely with you for a number of years, get that it's all the more relevant and appreciate your candor with that. And one of the questions would be, and either of you can answer, but I feel it's on the heels of your comments, is, recognizing how important this is for community development and economic development, recognizing there are business leaders on this webinar with us, what can businesses do to support and address childcare, particularly now with there being uncertainty of access to quality childcare and there being some changes?" Can you talk a little bit about what businesses can do in [inaudible]?
Brill: Go ahead, Ted. Take it. I'll back you up.
Granger: There's an awful lot that businesses can do. One thing that we tell our business partners is ALICE does ... and the research shows that ALICE doesn't make enough to pay their bills, but this isn't an effort to require increases in minimum wage across the country and across the state, et cetera. To a certain extent, increases in minimum wage could actually hurt ALICE employees. I know many of you maybe on this webinar have had employees turn down career opportunities and improving their employment in your offices because if they earn that extra 10, that extra 100, that extra $200, they hit the benefits cliff that Brittany mentioned a little bit earlier, and they'll fall off, and they'll lose the benefits that they have. They'll actually be making less money, bringing home less money than they would otherwise.
So, there are a lot of things. I mean, many, many, many things. Free tax preparation. In Florida, ALICE workers leave $1.1 billion of earned income tax credits on the table in Washington every single year, and that's true, not to the billion but more or less, in every state. So, providing free tax preparation through VITA or finding a VITA site, volunteer income tax assistance, in your communities can really help these folks get back what they need.
A lot of easy ones, prescription drug cards to help them reduce their costs for prescriptions. FamilyWize is a great one that United Way partners with, but most pharmacies have prescription drug discount cards that you can get, or you can tell your employees that they can get. And there's a number of different discount cards. Help them get a bunch of them so they can figure out which one works best on each different prescription because they vary. Bus passes, simple things like bus passes that often are available at a discount when purchased through employees.
Building credit is huge for ALICE, the ALICE population. So nonprofit credit counseling agencies can help this population hugely in terms of understanding how they can arrange their finances and build a budget that actually works for them. Stay away from payday loaners that usually churn their clients and actually have them pay so much that they get further and further and further behind, and just ruins their credit and ruins their finances. Financial literacy education. Technology. There's a national group called ... EveryOn.org. It's a national group that helps families, especially children, access affordable broadband and hardware, and the list goes on. There's many things that employers can do to help their employees. Most of it is information to help them climb the ladder.
Brill: Brittany, let me riff off of Ted's comments and explore a little bit more about cliff effects because I think that that would be the... I talked about a three-legged stool, and nobody can destroy a metaphor like I can, so let me change that to a four-legged in the evolution of my career, and that was the work that you and I have been doing. It sounds so weird to be talking about it, but let me talk about the work that you're doing, Brittany, because you're the architect of this. It's a project called FATES. That's an acronym, of course. That stands for Families Ascent to Economic Stability or sustainability. But FATES is funded generously by the Kellogg Foundation and Kresge Foundation and Morgridge Foundation, and others have come in as well in partnership.
The whole concept, it's pretty simple, is to look at that cliff of so that when somebody can get a 25 cent raise and lose $10,000 or more of benefits, they're not irrational when they make a very logical decision of, "Well, then I don't want the raise." In fact, that behavior is known as parking. Even worse than parking, there's some actually detrimental things that the workforce or that particular worker can do to his or her own career as they start to sandbag, right? They don't want the promotion. And that creates just a bizarre motivation when you walk into your... if you're an employer, walk into your place of business. One is just the awareness of that.
And so if we can with FATES get past this cliff effect, which is really no more complicated than a phase-out, so it doesn't fall off like a cliff, but also combine that with work supports that include partnership with our Career Source Florida folks and the workforce development arm, and try to tie the training and education path that people have access to to career pathways.
And that's a fundamental change, right? The WIOA [Workforce Innovation and Opportunity] Act of 2014 was such a big deal at least in my reading because when the federal government tells you—and this is Dale Brill's paraphrase—"Stop just checking the box that you got somebody off of the unemployment role and call it a day." It's more important than just get them off the role. It's to get them started and put them on a career pathway that ideally gets them above the ALICE threshold, right? So you see this whole thing getting together. If you're satisfied, "Well, we got them a job," but that job is dead end, and we haven't done anything really to alleviate the problem.
But FATES has been integral, and we are looking to bring that here into Orange County and Central Florida, and we've got the backing of, again, our foundation partners, and we're trying to get the attention of our folks in the public sector, but the private sector is ready. We're going to partner that. When I say career pathways, if you look at the healthcare industry, that is very much looking for talent and certainly has career pathways. So, you start to see this blending of some pretty straightforward design is, let's create a phase-out, so let's eliminate the cliff effect. Sorry, not eliminate. Let's mitigate it. Let's partner that with getting people access to the childcare that they need so that they can do the career training and educational work and put them on a path that gets them above the ALICE threshold. So all these things are part of the same conversation.
What can businesses do? Be aware of that. So if somebody is late, you might say, "Well, that's one of my problem employees." Sometimes you've got to get beyond that and say, "Let's talk about the dynamic of what's happening." And there are some very forward-looking companies that are talking to their employees, seeing that childcare is such a critical component, that they're even doing their own backup systems, or they're extending Family Leave Act with their own version of that, flexible hours. If I remember the data point, less than 8 percent of families that need flexible hour childcare are able to find any offerings that allow them to be in shift work. So there's a whole ball of yarn that's knotted around this, and to me the biggest thing that a business or employer can do is be aware of this dynamic, work with your Career Source or your Workforce Development folks, work with your Early Learning Coalition, and if you've got something like a children's services council, and get involved in that discussion. Because if this issue, this challenge, this crisis is not addressed, it will cripple the economy. And I'm not just going for the hyperbole to make the point. We are that close to being in a situation where even economic growth will be difficult.
Granger: Brittany, I know you and Dale know the story very well. It's on the video that I mentioned to everyone about Mark Wilson. You know what I'm going to say now about the fiscal cliff issue, and it's really important in terms of what you just said, Dale. In terms of getting involved, I would add the word advocacy and talking to your policy makers, talking to your members of Congress. Mark Wilson, the CEO of the Chamber, in one of those videos at a Prosperity Summit that they had here, he asked the question, "If you were a single parent with two children under the age of five, would you rather earn $18,000 or $50,000? And of course everybody's saying, "What the heck is going on here?" And he said, "Well, if you look at childcare benefits and healthcare benefits and food benefits, the way they're structured at the federal level in particular is it's better for that single parent to earn $18,000 because they lose all of those benefits if they get that $50,000.”
So, advocacy and changing the system that's a true disincentive to employees taking promotions and climbing the economic ladder of success would be huge. And I know many of your businesses, for those on the phone, are engaged in advocacy. So I really encourage you to help our policy makers gain a little bit of understanding on the importance of really looking at that benefits cliff.
Birken: Thank you both. As you all speak, I think about how we came to the original concept for the project that Dale described, recognizing that on the workforce development side of the system, working with families and parents who would enter a credentialing program, receive the credential, get placed in a job just above the ability to receive a childcare subsidy, but not yet able to afford childcare, and that would compromise their maintaining that position. Or, on the early learning side of the system, that parent would have that 10 cent an hour opportunity or raise, Dale I think you said 25 cents, and that knocks them out of eligibility and still at that ALICE threshold where, Ted, as you said, looking at an ALICE family, that could still be up to 40 percent of their income. And so as you all are saying all of this, and looking at one of the questions that came through, what can government and public private partnerships do at the local or state level to most effectively help ALICE families access quality childcare for their employees?
Granger: Well, we have a lot going on across the country in those 21 states that are members of United for ALICE. Just one example of many that I can cite is a new initiative that United Way of Northern New Jersey is in the process of putting together, a pilot project that will connect center-based childcare providers with registered family childcare providers to create a network of support. It really turns out to be, or will be, a shared services network where, to create a sustainable ecosystem where childcare centers, support agencies, ALICE families will be able to gain the benefits of the experience and the realities of all of the different players, particularly the childcare home providers, learning more and being able to access perhaps some of the backroom operations of those centers and learning from the quality experiences within those high-quality centers that will help them provide a more developmentally appropriate curriculum.
Brill: Britt, for my part, if you don't mind a little creative thinking or shooting-from-the-hip innovation with our audience, it's that... A point I hope I've made is that the jobs, jobs, jobs is kind of the old school regimen and, again, still important. I'm not saying jobs are not important. And we have ... There's a whole, depending on your state and your local governments, there's an entire... There's a complex set of incentives that have been designed roughly since 1930 when Mississippi began doing this in earnest to create jobs, so incentives to jobs. But if you accept my proposition that let's move from jobs to career pathways as the goal, so then what does it mean to create incentives that create career pathways?
Because if career pathways mean you're raising wages, it means you're leveraging and building talent within your region, so you're growing your own. It takes a little bit of the burden off of having to recruit your growth or recruit your higher wages but allows you to focus on what you already have. So now to me that leads to a question of, what can we change about our incentives, if they're designed for talent development and career pathways? And we see that childcare is a critical work support, enabling and making possible career pathways. We're left with a question. What incentives can be used to reward companies or to incentivize them for creating the career pathways? And I don't think they're that much different, right?
If you've got ... In Florida, we used to have a qualified tax incentive, a QTI. We have incumbent worker training. I mean, all the acronyms can flow off the tip of my tongue, and it's driven towards jobs. What would it mean to reorient those incentives that helped companies be aware that there are career pathways that you can put your employees on that are based on skills. And that changes the dynamic as well, when you start talking about skills-based hiring or skills-based analysis, which we're trying to pioneer with Orlando Economic Partnership. That changes the game altogether as well because it ... When you look at this pandemic situation in Orlando, for example, with the tourism employment being roughly 21 percent of our employment base, you say, "As they're being laid off, what do you transition them into?"
Again, our research is indicating that there are all sorts of skillsets that wouldn't be necessarily illustrated by the degree or credential, formal credential that they hold, but if you take apart kind of what they're good at, for example, customer service. The suite that we pulled from Burning Glass Technologies and from Esri. That roadmap is being built, and so I'd be glad to share. Maybe that will be my leave behind is our recent report that shows how we're connecting skills-based hiring to career pathway development, trying to patch in this work support with FATES and looking at childcare as a critical role enabling people to do that training and education to be on a career pathway, and then changing the incentives to drive that whole machine.
So, that was a mouthful. I hope that you followed or were able to see through the mud that I created, but that's what's changing. This pandemic is accelerating the need to do something and the clarity. Nothing creates mental clarity like pain, and the economy is hurting. People are hurting. Families are hurting, and businesses are hurting. And so, the old phrase, don't let a crisis go to waste, let's leverage that clarity and evolve our approach.
Birken: Thank you, Dale. You lifted up the example of FATES and in itself, it's a good example of private public partnerships at the community level for the federal childcare subsidy program. Once families hit 85 percent of state median income, they would lose eligibility. And the premise here was to use philanthropic and community resources so that as parents move through a career pathway, as their income increases, they're paying more towards the cost of childcare without falling off of that benefits cliff. And so there's an ability to have a graduated phase-out of supports that allow them to advance in their career, achieve economic security, and mitigate that benefits cliff using additional resources within the community and, in this case, philanthropy.
So I think that in itself is a model of private public partnership that can be explored to stop that practice of parking, where families are stopping the advancement of their career just under that eligibility threshold, as Dale said, with sort of a rational brain of, "I'm choosing between childcare for my children or my career advancement. Career advancement, longer term better for the family. Right now in the immediate, that's going to potentially put my family in crisis." So that would be one solid example.
We've received a question which I think relates, which is, "What would happen to people who are parked if a $15 minimum wage is implemented?"
Granger: Can you repeat that?
Birken: What would happen to people who were parked if a $15 minimum wage was implemented? And to get the ball rolling, I think part of what would require additional analysis, but part of what we were just describing as, "Where does a family lose eligibility to a benefit like a childcare subsidy?" It depends on the size and the make of the family, but potentially that could knock them out of receiving the financial assistance that allow them to maintain employment. I don't know. Dale or Ted, would you all have anything you'd want to elaborate on that point?
Granger: I think one of the things that is key in the ALICE model is we know that no organization can do it all. It's truly about public private partnerships and partnerships within communities. United Way is a partner with banks, with workforce development folks, with other nonprofits across the board. And it's these systemic issues that need to be addressed, if we're going to be... The career pathway is a systemic issue that takes a lot of players to solve, and that's why it's so important, what Dale was saying about those of you on the webinar talking with your colleagues or your peers about this and giving it some thought and working together to address. And with regard to the $15, I would just second what you said, Brittany. It really depends on the particular family's circumstances as to how much federal benefits or state benefits they would lose if they do take that raise or they get the minimum wage.
Birken: Absolutely. All right. We are approaching the end. I'd like to open up. Tim and Dale, any final comments that you'd like to add in or offer? Really appreciate your insights on both ALICE populations, the linkages to the workforce, the importance of childcare. So I'll just open it for you all to make a closing comment.
Granger: Well, I'll close with a story that, again, opened my eyes. And I think it shows the importance of childcare to the ALICE population and low income folks across the country. When you get to third grade, by the time you get to third grade, you've been learning to read. And when you're in third grade, passed third grade, you're reading to learn. What we see with low-income children and ALICE families is they enter the school system behind their peers, often substantially behind their peers. And when they start behind their peers, it's exceedingly hard for them to catch up. I've had first and second-grade teachers tell me that they can spot who's going to drop out in high school in first and second grade.
There's a story about the Texas Corrections secretary a number of years ago being asked how he projected how many prison beds he would need in the future. And his answer was third-grade reading scores, which is incredible to me, which means really in terms of the employability, in terms of prison, everything, we've got to hit those early years when 85 percent of the brain is being formed in order to address so much of these issues. And how we do that systemically to address the circumstances of families and get the economy going is going to be a challenge, but is obviously, I think, very doable for us.
Brill: Britt, I would close with kind of bringing us back. And we've gotten into the weeds. I'd take us out to big level or the macro perspective. This isn't just a small challenge. This is an enormous challenge largely because the majority of American parents who have small children are in the workforce. In fact, 78 percent of folks with small children are working, and they need the childcare to go to work. They need the childcare to be productive while they're at work and to add value to your bottom line. If you're in the private sector or even a not-for-profit, you still have a bottom line.
They need that childcare to build their careers, whether they're starting or whether they're trying to make that next level up, and you want them to progress. If you're in economic development, any realm of economic or workforce development, and we talk about higher wages, that's why career pathways matter so much.
And this whole system to me is failing at three points. It fails at access. And the concept of childcare deserts is ... There's now a website that you can, using GIS and heat maps, you can see where those deserts are. If you live in rural America, you are 99 percent chance, roughly speaking, you're in a childcare desert. And especially if you're in the middle class, you are in a child class desert. And coincidentally, by race and ethnicity, if you're in a Hispanic neighborhood, chances are greater, three times greater that you're in a childcare desert. So access is really, really difficult. A desert, by the way, is having I think it's more than three children per available slot. And so it's not that they're there.
As you mentioned in your preamble, these childcare centers are going out of business because of the pandemic. A lot of that has to do with being compensated on enrollment versus ... and so the dynamics of all that. Affordability is an issue. The ALICE households have an enormous burden when they pay for childcare. It is more expensive in 28 states to go to a state institution for higher education. So going to a Florida State University is cheaper than it is to pay for the childcare for an infant.
And the third one is quality. And that really has that cascading effect of when not necessarily ... The first thing is 11 percent, I think, of those childcare centers or the center-based are actually accredited. And a lot of that has to do with this churn and this turmoil we see in the industry. And it has difficulty because we pay workers who work in childcare centers so little, they churn. But it's also the discontinuity. And another objective of FATES is that when there's so many disruptions to access to childcare, and parents are having to start, re-start. They fall out; it's harder to get back in. OK. You're a three or a five-year-old bouncing around like a ping-pong ball on a table trying to... You're going to be educated and nurtured in that environment.
So it really is pulling a thread out of a sweater. This is a key issue. You can tell I'm only a little bit passionate about it, largely because you focused me on this, what? Six, seven years ago. And it's really been life changing. And I'm just excited and glad that the Federal Reserve Bank, of all surprises, really in the last couple years is to learn that this is a priority and objective of the Federal Reserve. I couldn't be more excited that you've got the leadership and the talent that you all have. And thank the audience for being interested and hanging in there with us this long.
Birken: I thank you both very much this afternoon for your time, your expertise, your offering your perspective on this. As you said, this is a considerable issue with a lot of intersection with economic development. The Federal Reserve system actually has formed a working group focused on childcare so that we can share regional challenges and approaches, collaborate on research and resources and tools that contribute to a deeper understanding of this really complex issue. We actually have a childcare brief. That's going to be published soon. That includes policy and funding considerations. So if that's of interest, be on the lookout for that.
And with that, Sarah, I will transition back over to you to close us out.
Miller: Great. Thank you so much. And I very much enjoyed the conversation. Ted and Dale, you are such treasure troves of great information and kind of a call to action. I love that this was a Florida example with very national ramifications and applicability. I know everybody on the call got a lot out of this. We have a number of questions that we weren't able to get to around reframing how childcare is even financed in general, so we'll be able to provide some answers for you on that as well.
But thank you, again, everybody on the call for joining us, for being a part of this conversation. The next discussion that we're going to have is on September 23, Wednesday, September 23, where we're moving from Florida now to the Midwest. We'll be highlighting a group called Midwest Urban Strategies. It's a workforce innovation lab that's representative of 13 different major Midwest cities and their workforce boards and the partnerships that they've been able to forge within their communities and a part of a regional collaborative. We'll be joined by Tracey Carey, the executive director, and two of her board members, Clyde McQueen, who is the executive director of the Full Employment Council in Kansas City, and also Linda Woloshansky, who is the executive director of the Center for Workforce Innovations in Gary, Indiana.
So please join us for Workforce Month. Again, bring your questions, bring your thoughts. We will follow back up with you with some post-session materials. But, again, thanks for spending your afternoon around this table. Go Orlando Magic. Thank you, Dale, Ted, and Britt for joining us here today. Have a good afternoon.
Brill: Thank you.