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Nearly half of young low-income children from working families have parents who work nonstandard schedules that fall outside the typical Monday through Friday daytime work hours. Studies of state and local child care markets consistently find a shortage of licensed care to meet these families’ needs. As a result, there is growing interest among state and federal policymakers in expanding the supply of nontraditional hour child care.
The 2024 Child Care and Development Fund (CCDF) Final Rule strongly encouraged states to consider policies such as differential subsidy reimbursement rates to address the limited supply of nontraditional hour care for low-income families receiving child care financial assistance (i.e., child care subsidies). This policy assumes that a higher payment rate will incentivize subsidized child care providers to offer care during early morning, evening, overnight or weekend hours. However, little empirical evidence exists on whether differential reimbursement rates actually encourage providers to offer nontraditional hour care and what rate levels would be an adequate incentive. Using a two-phase sequential exploratory mixed methods design, this dissertation examines the factors that influence whether licensed center- and home-based family child care providers offer nontraditional hour care and the role of differential reimbursement rates.
In Phase 1, interviews with 31 licensed child care providers participating in Massachusetts’ child care financial assistance program explore the range of factors that influence providers’ decisions on whether to offer nontraditional hour care, and whether differential reimbursement rates influence those decisions. Massachusetts does not offer differential reimbursement rates, providing a unique policy context in which to examine providers’ decision-making absent of any statewide policy intervention. The results confirm that both center-based and family child care providers are guided by both financial and non-financial factors, including child care subsidy policies and licensing regulations, the perceived demand for nontraditional hour care, and the responsibilities and commitments educators have to their own families. While some providers are strictly unwilling to offer nontraditional hour care, the findings suggest that differential reimbursement rates may motivate a select group of subsidized providers to offer some periods of nontraditional hour care. Several center-based providers were open to offering early morning care to meet the needs of working families but face operational and workforce constraints due to the shortage of educators in the field and staff preferences for daytime shifts. These programs are more willing to commit to early morning hours if there was a differential rate that could be used to increase wages and incentivize staff to work early or longer hours. Differential reimbursement rates may also motivate a small group of business-oriented family child care providers to offer early morning or weekend care. Compared to child care centers, these family child care providers may need a larger incentive to cover the full cost of hiring an assistant for the additional hours.
Building on the qualitative findings, Phase 2 leverages state variation in differential reimbursement rate policies to quantitatively test whether subsidized providers in states with differential rate policies have a higher probability of offering evening, overnight, and weekend care. A longitudinal state-level policy database of differential reimbursement rate policies was constructed using CCDF state plans and merged with nationally representative provider-level data from the 2012 and 2019 National Survey of Early Care and Education. Results show that only 13% of subsidized center-based providers offer any period of nontraditional hour care. While differential reimbursement rates are not significantly associated with offering evening or overnight care, they are marginally associated with a five percentage point increase in the probability of offering weekend care (p<0.10). Among subsidized family child care providers, there is a much higher percentage (49%) that offer nontraditional hour care. The linear probability models find no association between differential reimbursement rates and the probability of offering any period of nontraditional hour care, suggesting that many family child care providers may offer nontraditional hour care for reasons other than differential reimbursement rates.
These findings suggest that differential reimbursement rates may be a promising policy mechanism to build the supply of early morning and weekend care in the child care subsidy system but are unlikely to have an effect on the supply of evening or overnight care. However, the size of the differential rate is an important consideration, and differential rates that do not account for the additional costs needed to operate nontraditional hour care may be insufficient to motivate providers. Moreover, differential reimbursement rates address only one aspect of providers’ decisions. In order to effectively build the supply of nontraditional hour care, differential reimbursement rates may need to be accompanied by additional efforts that aim to stabilize the early care and education workforce and address the non-financial aspects of the decision-making process.