Childcare providers across the United States are bracing for widespread closures as federal and state support programs that sustained the industry during the pandemic come to an end.
In Wisconsin, longtime childcare provider Corrine Hendrickson announced she will close her family daycare, Corrine’s Little Explorers, before the new school year begins. After 18 years in the business, Hendrickson said the model has become unsustainable without subsidies. “I don’t want to choose between raising rates on parents or taking a pay cut,” she said. “I think enough of us are going to close that they’re going to have to do something.”
Her decision reflects a national crisis. For years, the childcare sector has struggled with rising costs, staff shortages, and limited resources. The pandemic temporarily eased pressures with $24 billion in stabilization funds from the American Rescue Plan, which helped 220,000 centers cover wages, rent, and utilities. An additional $15 billion expanded access for families. But those funds expired between September 2023 and late 2024, and most states are now running out of stopgap measures.
The impact has been immediate. In North Carolina, 43 childcare centers closed after federal aid ran out in June 2024, and by early 2025 the total had risen to 158 closures, according to state officials. Even with temporary pay increases—raising wages from $11 to $14 per hour—many workers left for higher-paying jobs in other sectors. Nearly half of childcare providers in the state cannot offer health insurance, and 43% of workers rely on public assistance programs.
Demand, however, remains strong. In North Carolina, there is just one infant and toddler spot available for every five families applying for care. Parents unable to find childcare are increasingly leaving the workforce, with mothers most affected. According to the Federal Reserve Bank of Kansas City, the number of workers who reduced hours or left jobs due to childcare needs rose 43% between mid-2023 and late 2024.
The cost of care also continues to climb. In 38 states and Washington, D.C., childcare now exceeds the price of college tuition, according to the Economic Policy Institute. Tuition has risen 29% since 2020, outpacing overall inflation.
Providers say they face an impossible choice: raise tuition and risk losing families, or keep prices low and face closure. Some, like Seedlings to Sunflowers in Maine, have turned to community fundraising to survive, but leaders admit such solutions are not sustainable.
Efforts in Congress to create permanent funding have stalled. A federal childcare proposal was stripped from the Inflation Reduction Act in 2022, and a new bill introduced this year faces slim prospects. Experts warn that without renewed investment, closures will continue, deepening a patchwork system where access depends largely on state policies and family income.