There is a formula that can make children, parents, employers, and the economy better off.

The formula isn’t magic, and all other wealthy nations already use it: a functional childcare system that is accessible and affordable for parents, pays workers a fair wage, and equips children to thrive.

We do not have anything close to such a childcare system in America. The tortuous process of finding care and paying for it, along with getting children there every day, is pushing parents to the breaking point. The Annie E. Casey Foundation has shared national- and state-level data to document the pervasive challenge for families across the country.

Without reliable child care, parents can’t go to work, and that’s detrimental to the financial stability of millions of families and the nation’s economy. Women are five to eight times more likely than men to suffer employment and workplace consequences of a lack of child care, which harm their potential to advance in their careers and support their families. According to one estimate, failures of the childcare system cost the U.S. economy $122 billion a year through lost earnings, productivity, and tax revenue.

The childcare system was dysfunctional before COVID-19, but the pandemic made things worse. Before early 2020, 60,000 working parents and caregivers said that a lack of child care forced them to miss work in the previous month, but this number rose during the pandemic, hitting a record 108,000 in October 2022.

Meanwhile, the already insufficient childcare workforce dropped by more than one-third as COVID-19 took hold. The number of childcare workers fell from more than one million in February 2020 to 677,000 in April of that year, and it took three years for it to recover to 996,000 by April 2023.

Despite the vital role they play in helping prepare our children to succeed, childcare workers are grossly underpaid. While the cost of care burdens families, childcare workers earn wages lower than 98 percent of all other professions. This essential workforce behind the workforce is predominantly women, many of them women of color, perpetuating wage inequality. These inequities ripple through their families and communities. And this low pay and lack of benefits mean that providers battle sluggish hiring and high turnover. In an industry with thin profit margins, new potential providers have almost no incentive to open a childcare center.

While reducing costs for families while simultaneously increasing wages for caregivers seems contradictory, it is not. What is missing on both the supply and demand sides of the childcare formula is a long-term commitment to address the situation and adequate funding to stabilize this critical infrastructure. The United States is distinct among advanced economies for its paltry support of early childhood care: $500 per child per year compared to a $14,000 average across countries in the Organization for Economic Cooperation and Development whose data were available.

Transitioning from a broken childcare system to a flourishing one is possible—but it will take new thinking and investment at the local, state, and national levels. The thinking should be informed by listening to parents and providers themselves to learn which improvements to the system would be most beneficial to them. The American Rescue Plan Act, which was passed in the middle of the pandemic, directed $40 billion in funds for families and the childcare sector, helping head off the permanent closure of 75,000 childcare centers and preserving three million childcare spots. An infusion of federal resources had a direct, measurable effect. But this temporary aid hasn’t been converted into permanent solutions. An executive order issued by President Joe Biden in April, aimed at expanding access, lowering costs and raising wages, could prove to be a helpful framework, but more is needed.

Governments at the national, state, and local levels can provide subsidies, tax credits, and other financial assistance to make child care affordable for families and increase caregiver pay—using remaining pandemic recovery dollars to help fund these measures. Congress should reauthorize and strengthen the Child Care and Development Block Grant Act and increase funding for public preK and Head Start programs. Additionally, agencies should make assistance easier to access.

There’s a role for philanthropy to play as well—in advocating for a system that works. The Casey Foundation used this year’s edition of our signature annual publication, the KIDS COUNT Data Book, with hopes that lifting up these data will help policy makers come to informed decisions and take action.

When quality child care is affordable and accessible, kids gain the positive early experiences they need to develop, parents can pursue family-supporting careers and businesses, and our economy can have the workers it needs to grow to its full potential. That’s the formula for families to thrive and for America to prosper.

Lisa Hamilton is president and CEO of the Annie E. Casey Foundation.