A special thank you to Mike Knapp, Director at Grin & Grow who guest wrote this blog. Grin & Grow is a 2018 IWF Grant Partner. Visit their site to learn more about this organization.
Child care is a necessity for working parents in Iowa seeking economic self sufficiency for their families. This is especially true for the working poor—in Iowa, low income families can receive help through the state’s Child Care Assistance Program if their income is below 145% of poverty level and they work a minimum of 28 hours per week. While this is a great benefit to eligible parents in allowing them to enter and stay in the workforce, the assistance ends once the parent’s income exceeds the income guidelines. Once the transition period has elapsed, parents must then bear the full cost of child care, regardless of the amount of wage increase they have experienced.
This is known as the “Cliff Effect,” and it can be terrifying to a parent trying to raise their family out of poverty. In effect, it penalizes the parent for their success, as the full cost of child care often outweighs any income gains made. In many cases, it causes the parent to turn down wage increases—or worse—causes them to drop out of the workforce to avoid any net loss to their family income.
Grin and Grow, a nonprofit child care agency in Waterloo sees this phenomena happening to low-income parents with children enrolled at its centers every year. In response, Grin and Grow tries to help low-income parents experiencing the “Cliff Effect” through a network of scholarship assistance programs put together through local fundraising events, grants from community foundations, the local United Way, and most recently, the Iowa Women’s Foundation. This network allows Grin and Grow to provide sliding fee scholarships to families with incomes under 200% of poverty, giving these families additional time in their transition from Child Care Assistance to being able to afford increased costs of child care.