New Mexico made childcare free. It lifted 120,000 people above the poverty line

The state, which has long ranked worst in the US for child wellbeing, became the first and only in the country to offer free childcare to a majority of families

There was a moment, just before the pandemic, when Lisset Sanchez thought she might have to drop out of college because the cost of keeping her three children in daycare was just too much.

Even with support from the state, she and her husband were paying $800 a month – about half of what Sanchez and her husband paid for their mortgage in Las Cruces, New Mexico .

But during the pandemic, that cost went down to $0. And Sanchez was not only able to finish college, but enroll in nursing school. With a scholarship that covered her tuition and free childcare, Sanchez could afford to commute to school, buy groceries for her growing family – even after she had two more children – and pay down the family’s mortgage and car loan.

“We are a one-income household,” said Sanchez, whose husband works while she is in school. Having free childcare “did help tremendously”.

Around the same time, Ofelia Gonzalez and her sister began receiving assistance from the state to develop their at-home childcare center in south-western Albuquerque, called Mis Conejitos. The state started reimbursing their work at higher rates, which allowed them to buy toys and swings for the backyard, and raised wages for childcare workers across the state, which allowed Gonzalez to begin saving “so that I can have good credit and in time I can have my own home”, she said in Spanish.

The changes in Sanchez and Gonzalez’s lives are intertwined. Three years ago, New Mexico became the first state in the nation to offer free childcare to a majority of families. The United States has no federal, universal childcare – and ranks 40th on a Unicef ranking of 41 high-income countries’ childcare policies, while maintaining some of the highest childcare costs in the world. Expanding on pandemic-era assistance, New Mexico made childcare free for families earning up to 400% of the federal poverty level, or about $124,000 for a family of four. That meant about half of New Mexican children now qualified.

In one of the poorest states in the nation, where the median household income is half that and childcare costs for two children could take up 80% of a family’s income , the impact was powerful. The state, which had long ranked worst in the nation for child wellbeing, saw its poverty rate begin to fall.

As the state simultaneously raised wages for childcare workers, and became the first to base its subsidy reimbursement rates on the actual cost of providing such care, early childhood educators were also raised out of poverty. In 2020, 27.4% of childcare providers – often women of color – were living in poverty. By 2024, that number had fallen to 16% .

During the state’s recent legislative session, lawmakers approved a “historic” increase in funding for education, including early childhood education, that might improve those numbers even further.

“This is a big investment that we know is going to pay off,” said Elizabeth Groginsky, cabinet secretary of New Mexico’s nascent early childhood education and care department. She points to research from the Nobel-winning economist James Heckman that “every dollar spent on high-quality, birth-to-five programs for disadvantaged children can deliver a 13% per annum return on investment from better education and health outcomes for children, employment gains for parents, greater economic productivity and reduced spending on healthcare and crime.

“The governor has seen that this investment in our human capital is as important as all the investments we’re making in our infrastructure,” said Groginsky.

Despite the fact that widespread poverty has kept the state’s child wellbeing rates low, “New Mexico had, almost from statehood, a real culture around caring for children,” said Hailey Heinz, a senior research scientist and deputy director of the University of New Mexico’s Cradle to Ca