Legislature(2021 - 2022)BARNES 124
04/28/2021 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HJR19 | |
| HB149 | |
| HB146 | |
| Occupational Safety and Health Review Board | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HJR 19 | TELECONFERENCED | |
| += | HB 149 | TELECONFERENCED | |
| += | HB 146 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
HB 149-CHILD CARE PROVIDER COLLECTIVE BARGAINING
4:28:27 PM
CO-CHAIR SPOHNHOLZ announced that the next order of business
would be HOUSE BILL NO. 149, "An Act relating to allowing
certain child day care providers to organize for the purpose of
collective bargaining."
4:28:38 PM
CO-CHAIR FIELDS, as prime sponsor, stated that HB 149 would
solve the issue of persistently low wages and benefits in the
child care sector, which results in an inadequate supply of
child care workers, which in turn inhibits Alaska's ability to
economically recover from the COVID-19 pandemic. He discussed
the different models of structural change, along with their pros
and cons. The first model, he said, focuses on countries that
have high taxes and directly subsidize child care, which Alaska
wouldn't be able to afford with its current revenue. The second
option, he said, would be to create a structure for the industry
to negotiate with the state for wages and benefits as outlined
in HB 149. He noted that this model is based on the model in
place in 11 other states. It is non-coercive for workers, he
said, and the industry would be able to collaborate with the
state to adjust the cost structure according to changing
circumstances. The third model, he said, is legislative
establishment of a living wage for the child care industry, but
it would be difficult to adjust the model in response to
changing circumstances. The fourth option, he said, would be to
establish a prevailing wage covering all providers that receive
public funding. He pointed out that the construction industry
has higher-than-average wages due to public intervention to
ensure the industry's place as a middle-class profession. He
said the model would be based on established policy; however,
unlike construction, child care does not experience robust
public investment, so there may not be the market penetration
necessary to sufficiently raise wages. It's also more coercive
in terms of private sector impact, as opposed to the bargaining
structure proposed under HB 149. Of all these options, he
concluded, HB 149 outlines the option which is both the least
expensive and the least coercive.
CO-CHAIR FIELDS said key goals of HB 149 are to raise wages and
benefits to allow workers a living wage, which would make it
easier for employers to find and keep employees. This would
increase the supply of quality child care, he said, which is
important so that working professionals can help the economy
recover. Another key goal, he said, is to not increase the
already high prices of child care; the economics of the model
must also work so employers can stay in business, and a
structure must be provided for the industry to work with the
state for adaptability in response to changing circumstances.
He stated that the longstanding structural problems within the
industry, the pandemic's effect on women's participation in the
workforce, and workforce nonparticipation due to the lack of
available child care all make HB 149 necessary.
4:33:26 PM
NOLAN KLOUDA, Executive Director, Center for Economic
Development, University of Alaska, presented a PowerPoint titled
"Economics of Child Care in Alaska." He presented the overview
on slide 2, which read as follows [original punctuation
provided]:
? Economic value of child care
? Pandemic impacts
? Wages for child care workers
? Affordability of child care
MR. KLOUDA presented slide 3, "Economic impact of investing in
early childhood learning," which displayed the Heckman Curve
showing that educational investments made between birth and age
five have much higher payoffs in terms of generating positive
lifetime benefits for individuals. He clarified that early
education programs could include child care or Head Start. He
noted that investments in K-12 education and job training later
in life are important, but they produce lower benefits per
dollar invested. He then presented slide 4, "Economic impacts
of early childhood education," which displayed a graphic that
said, "High quality birth-to-five programs for disadvantaged
children can deliver a 13% Return on Investment," and which read
as follows [original punctuation provided]:
? Increased parental income
? Greater educational attainment
? Increased earnings and employment
? Fewer arrests
? Reduced likelihood of drug use
? Greater overall health
MR. KLOUDA presented slide 5, "Pandemic effects on child care in
AK," which read as follows [original punctuation provided]:
? Child care capacity in AK reduced to
? 49% in June 2020
? 75% in January 2021
? 37% of centers considered permanently closing
? 63% needed additional funding to stay open
MR. KLOUDA noted that the committee has previously demonstrated
the understanding that child care capacity has been reduced due
to the pandemic and said almost 40 percent of daycare centers
considered closing permanently, with 60 percent needing
additional funding in order to stay open.
4:38:09 PM
MR. KLOUDA pointed out the link between the availability of
child care and the ability of parents, particularly mothers, to
participate in the workforce. He presented slide 7, "Child care
and workforce participation," which read as follows [original
punctuation provided]:
? In May/June 2020, 41% of unemployed parents looking
for work said they were unable or uncertain about
returning to pre-pandemic arrangements for child care
(Urban Institute, 2020).
? "For parents with young children, the loss of
full-time childcare was associated with an increased
risk of unemployment for mothers but not fathers."
(Petts, Carlson, Pepin, 2020)
MR. KLOUDA presented slide 8, "Workers' Ability to Return to
Prepandemic Child Care Arrangements, by Employment Status,"
which displayed a graph showing the ability to return to
previous child care arrangements as a function of unemployment
status. The graph shows that those who were unemployed or laid
off, but actively seeking employment, had the biggest problems
with child care access; the workforce categories of "unemployed
but not seeking employment," "furloughed," "hours reduced," and
"working part time," had progressively decreasing degrees of
difficulty in child care access, with the category of "working
full time" experiencing the least difficulty. Mr. Klouda
pointed out that difficulty accessing child care impairs an
unemployed person's ability to accept work.
MR. KLOUDA presented slide 8, "Workforce shortfalls are among
employers' greatest concerns," which displayed a graph from the
annual Business Confidence Index Report by the Anchorage
Economic Development Corporation. The report from 2021 showed
that most of the top issues concerning businesses in Anchorage
related to the availability, affordability, and readiness of the
workforce. He then presented slide 9, "Survey of AK child care
workers," which read as follows [original punctuation provided]:
? Over 50% said pay inadequate to meet living expenses
? Passion for job, but 65% planned to leave
? 36% not compensated for professional development
? Over 70% do not receive health insurance from
employer
? 97% are women
4:42:40 PM
MR. KLOUDA presented slide 10, "Hourly pay compared," which
displayed a graphic showing that the median pay of a child care
worker in Alaska is $13.21 per hour, which is at least $10 less
than the median pay for all occupations. For points of
comparison he included two other occupations for which, like
child care, the prerequisites are a high school diploma and on-
the-job training; median pay for a corrections officer is $30.08
per hour, and $42.84 per hour for a special education teacher.
He noted that these occupations relate to the Heckman Curve, as
individuals receiving less early education are more likely to
have encounters with criminal justice and to need remedial
education, both of which cost more and are less effective than
early education. He shared that he learned that animal
caretakers are, on average, paid more than child care workers.
MR. KLOUDA presented slide 11, "National data about child care
workers," which read as follows [original punctuation provided]:
? Disproportionately women of color
? 1 in 7 live in poverty, twice the rate of other
occupations
? Almost half are in households using public
assistance programs (vs 25% of the general population)
? Cannot afford their own child care: infant care
costs equal 40-60% of the median child care worker's
earnings in most states (7% is the DHHS standard)
MR. KLOUDA said, "In a particularly cruel twist of fate, most
... could not afford child care on their own, because the
typical child care would cost about 40 to 60 percent of what
they make in wages." He pointed out that the standard published
by the U.S. Department of Health and Human Services is that
approximately 7 percent of income should be budgeted for child
care. He then presented slide 12, "How can costs be high but
wages so low?" Slide 12 read as follows [original punctuation
provided]:
? Highly labor intensive: 1 teacher for 4 infants
? Wages and benefits are almost 70% of costs
? At $12,000 per year per child, center collects
$48,000 in fees per teacher
? Subtract administration, rent, utilities, insurance,
materials, etc
? Leaves about $30,000 to pay staff (including admin
and support staff other than teachers!)
MR. KLOUDA pointed out that economies of scale don't function in
the child care industry because handling more children means
hiring more child care workers. He then presented slide 13,
which displayed a graph showing a breakdown of personnel costs,
noting that they're higher for those caring for infants and are
approximately 70 percent of a daycare's total cost. He
proceeded to slide 14, which read as follows [original
punctuation provided]:
"...adequately compensating a highly qualified
workforce is a mathematical impossibility when public
funding is limited and parents cannot afford to pay
higher tuition rates."
MR. KLOUDA noted that there is more federal involvement in child
care under the current administration, as well as tax credits
and funds available through block grants to the state.
4:48:30 PM
REPRESENTATIVE MCCARTY asked for statistical information on
child care businesses, licensed in-home operations, unlicensed
in-home operations, and stay-at-home parents.
MR. KLOUDA responded that he doesn't have such information on
hand.
REPRESENTATIVE MCCARTY asked what the worker to child ratio is
for toddlers.
MR. KLOUDA responded that he doesn't know the exact ratio for
the licensing requirements in Alaska, but said the ratio becomes
more lenient as kids get older and require less care.
CO-CHAIR SPOHNHOLZ interjected that child care prices tend to
decrease as the ratios get higher.
REPRESENTATIVE MCCARTY asked about the ratio of infants to older
children.
MR. KLOUDA replied that he doesn't know the breakdown of the
ages of kids in the daycare system, but that most child care
research is focused on the ages of birth to age five.
4:51:05 PM
CO-CHAIR FIELDS said that it's harder to find a spot for infants
because the economics are more challenging for a child care
provider. He said it's easier to find care once a child reaches
15 months.
CO-CHAIR SPOHNHOLZ added that the cost is due to the licensing
requirements mandating a certain ratio for workers to children.
CO-CHAIR FIELDS opined that there will never be a provider that
accepts only infants because that facility would not survive.
He explained that a facility that accepts infants and toddlers
makes enough money taking care of the toddlers to subsidize
infant care.
CO-CHAIR SPOHNHOLZ asked Representative McCarty to clarify his
earlier question about child care businesses, noting that even
an in-home provider is a child care business.
4:53:04 PM
REPRESENTATIVE MCCARTY said that he was trying to differentiate
between a child care operation in an "office," in-home child
care operation, and unlicensed providers. He shared an anecdote
of a child care facility that recently stated to him its belief
that it was turning away business because they can't hire
employees because people are making more money on unemployment.
CO-CHAIR SPOHNHOLZ reminded the committee that it is illegal to
decline appropriate employment when an individual is collecting
unemployment. She pointed out that the additional wage
replacement for unemployment expires in September, meaning the
state will revert to the traditional wage replacement value of
49 percent for a minimum-wage worker, which is what many child
care workers are. She then pointed out that Mr. Klouda's
research found that 50 percent of child care workers are on
public assistance.
4:55:14 PM
REPRESENTATIVE KAUFMAN noted a 2012 study from Rutgers
University and asked Mr. Klouda if he has studied the child care
industry in "more free-market states."
MR. KLOUDA responded that he doesn't study many other states.
Low wage states, he said, would be expected to have cheaper
child care due to an overall lower average wage. He
hypothesized about licensing requirements allowing more children
per worker and explained that the main variables are the cost of
labor and the number of children per workers.
REPRESENTATIVE KAUFMAN commented that he suspects there could be
other factors and talked about population growth in Texas and
Florida.
4:58:15 PM
CO-CHAIR FIELDS noted that the biggest cost driver is the ratio
of teacher to child, which is fairly consistent across most
states.
4:58:52 PM
REPRESENTATIVE MCCARTY asked whether there would be an economic
difference if the ratio changed by one child.
CO-CHAIR FIELDS responded yes, which is why providers are more
likely to stay in business taking care of toddlers. He said
that it wouldn't be desirable to increase the number of children
per worker when discussing infant care due to safety issues.
4:59:53 PM
CO-CHAIR SPOHNHOLZ pointed out that it is very difficult to care
for more than four infants at a time.
5:00:43 PM
CO-CHAIR SPOHNHOLZ opened public testimony on HB 149. After
ascertaining that no one wished to testify, she closed public
testimony.
5:01:09 PM
REPRESENTATIVE SCHRAGE moved to report HB 149 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 149 was reported out of the
House Labor and Commerce Standing Committee