Vermont Made Child Care Affordable. Could It Lead by Example?

Vermont had a problem. Child care was too expensive. “We would be paying $3,500 a month, more than twice our mortgage.” Some parents were giving up their careers to stay home — “After daycare, you come home with maybe $60 extra a week. It’s just not even worth it at that point.” making it harder for local businesses to hire workers. Some businesses wanted the state to pay for childcare, but they faced a big obstacle. “The word tax. It’s a very volatile word.” Ultimately, Vermont did manage to make child care more affordable. So we’re here to find out how they’re doing it. This year’s midterm elections could turn on the issue of affordability. “Affordability.” “Affordability.” “Affordability.” “The affordability crisis.” Forty-four percent of voters said having a family was unaffordable in a recent Times-Siena poll. Alison Byrnes and her husband, for example, wanted a third kid. “It felt just like our family wasn’t complete.” But daycare for two kids here costs $3,500 a month, and Alison’s mom was already dipping into her retirement fund to help pay for that. “There’s no way we could make that work.” For years, Vermont’s working-age population has been shrinking, making businesses like Smugglers’ Notch Resort compete to find the workers they need. In 2022, the resort was short more than a dozen housekeepers. The managing director was fed up with the staffing shortage and decided to try something new. He offered free child care for employees. “We announced the new program on a Friday and by Tuesday, we were full. All the jobs had been taken, so we knew we were really on to something.” The child care benefit attracted employees like Becca Bishop, who wanted to rejoin the workforce after a few years as a stay-at-home mom. “I chose to start working here purely because of the child care that we have.” Now before work, she drops off her 3-year-old, Archer, at the on-site daycare and her 5-year-old son, Hunter, at ski camp, which is also free. Then she works full time managing the resort’s arcade. Once Bill solved his staffing problem, he started talking to other Vermont C.E.O.s about the benefits of child care and lobbying for a new tax that would fund it statewide. “When I was first back in Vermont working for the governor, I was talking to all kinds of Vermonters, and what I found was everything that they cared about actually linked back to child care. Aly Richards spent a decade expanding child care in Vermont. She said business leaders like Bill were a crucial part of the push. “Once we had them in here saying, ‘Look, if I paid in to fix child care in a systemic, sustainable way through, let’s say, a payroll tax,’ what happened was it gave permission to lawmakers to move forward on this issue. Often, businesses come into this building and say, ‘Please, do not raise taxes.’ In this case, it really was flipped on its head. They became the most powerful voices in advocating for public investment.” “What we should really do is try it and find out what happens.” The child care bill, Act 76, passed in 2023. It established a new 0.44 percent payroll tax on employers and generates about $125 million a year to fund child care subsidies. Families pay on a sliding scale. So a family of four with a modest income pays no tuition for child care. Higher-income families pay a co-pay that’s supposed to stay below roughly 10 percent of their income. The law has only fully been in place for a year, but already the new funding has led to more than 1,200 new child care slots for kids across Vermont. For years, child care centers were closing because they couldn’t cover their bills. Now, new ones are opening, like this one in the farming town of Addison. Michelle Bishop had dreamed of starting a place like this, but couldn’t afford to open until she could count on the state to pay more than $400 per child each week. “We have 16 children enrolled — 80 percent of them are receiving subsidy.” The additional funding also meant she could actually afford to pay her workers a livable wage. Statewide, Vermont still needs many more child care centers before it can fully meet demand. For now, though, the difference the new law has made for these Vermont residents is clear. Alison and her husband were finally able to have the third child they wanted because they knew their childcare costs would be about $30,000 a year less than it would have been without the new law. “We can’t imagine our family without that third kiddo. It’s literally life-changing. Like — she would not be here.” For Rebecca, free child care means she can afford to save for a new house that fits her family better. “We do plan on staying in Vermont, yes.” Michelle plans to expand into another room for toddlers this spring. “We hope to open in March or April. We’re almost finished.” And as for Bill, he says the New tax is nothing compared to what Vermont gets for it. “We didn’t put in a new tax and find that we couldn’t pay our bills. We’re still here.” “In Vermont, we really came together and it’s working.”