econofact.org Open in urlscan Pro
2606:4700:3030::ac43:bfae  Public Scan

Form analysis
4 forms found in the DOM

/

<form action="/">
  <input type="text" name="s" placeholder="Search">
  <input type="submit">
</form>

/

<form action="/">
  <input type="text" name="s" placeholder="Search">
  <input type="submit">
</form>

POST /

<form action="/" autocomplete="off" method="post" novalidate="novalidate">
  <input type="text" name="email" placeholder="Enter email">
  <input type="hidden" name="task" value="subscribe">
  <button type="submit"><i class="fa fa-envelope" aria-hidden="true"></i></button>
</form>

POST /

<form action="/" method="post" autocomplete="off" novalidate="novalidate">
  <input type="text" name="email" placeholder="Enter email">
  <input type="hidden" name="task" value="subscribe">
  <button type="submit">Submit</button>
</form>

Text Content

 * The Econofact Network
 * EF for Educators
 * In the News
 * About
 * Support Us

 * Facebook
 * Twitter
 * Instagram
 * LinkedIn


Expand Search
 * Inflation
 * Poverty
 * Immigration
 * Environment
 * Fiscal Policy

 * EF Explains
 * Econofact Chats
 * EF Roundtable

Menu
Menu

 * Inflation
 * Poverty
 * Immigration
 * Environment
 * Fiscal Policy

 * EF Explains
 * Econofact Chats
 * EF Roundtable

 * The Econofact Network
 * EF for Educators
 * In the News
 * About
 * Support Us

 * Facebook
 * Twitter
 * Instagram
 * LinkedIn

Labor Markets
Labor Markets

--------------------------------------------------------------------------------

Share


RISING STRAINS IN CHILDCARE AND EARLY EDUCATION

By Charles Collyns·March 7, 2024
EconoFact





THE ISSUE:

The systems for providing childcare for infants and toddlers and pre-K education
for young children are under strain in the United States. The cost of childcare
severely stretches household budgets, especially for poorer families.
Furthermore, in many areas commercial childcare options are very limited, or
even nonexistent. There are economic arguments in favor of government support of
child care since its benefits accrue to society at large and not just to the
families using these services. But government support of childcare in the United
States is low compared to many other OECD countries and the support that was
provided as part of the COVID pandemic response expired last year. Why is
childcare absent in many places, and so expensive where it is available? What
are the economic and social consequences of the insufficient provision of
childcare?  What types of policies would make childcare and pre-K education more
affordable, more accessible and more sustainable?

> The failure of the childcare and early education business model has serious
> economic and social consequences.


THE FACTS:

 * The high costs and limited availability of childcare and pre-K education
   present a substantial challenge for parents of young children in the United
   States. More than half of working parents face significant challenges to
   finding childcare that is affordable and high quality, according to a 2022
   survey by Ready Nation. Child Care Aware estimates that the average annual
   cost of childcare for one child under six was $10,600 in 2021— more than a
   third of a single parent’s average income. Such costs have risen 220 percent
   since 1990, well in excess of the 140 percent rise in the general price
   level. And the cost relative to income is highest for low-income families,
   many of whom are minorities. The cost of care for two young children absorbed
   26 percent of the average income of a white working mother, 42 percent of
   income for Hispanic mothers and 56 percent for Black mothers in 2017,
   according to a report cited in the 2023 Kids Count Data Book (see page 7). 
 * There are also areas where childcare is simply not available. A 2017 study
   that covered 22 states by the Center for American Progress found that more
   than half of the states’ residents lived in neighborhoods or communities
   either lacking any childcare options or with so few childcare providers that
   there were more than three children for every licensed childcare slot. These
   “childcare deserts” are disproportionately located in low-income urban and
   rural communities. Working families often have to resort to relying on
   friends and family. Difficulties in finding available childcare are also
   particularly acute for those engaged in irregular shift work or who work at
   night. In addition, an estimated 54 percent of young children do not have
   access to early childhood education, according to the Annie E. Casey
   Foundation’s 2023 Kids Count Data Book.
 * The high costs and limited availability of childcare and early education
   reflect the dependence of these services on a relatively large number of
   workers per child. Labor costs account for 50 to 60 percent of licensed
   childcare providers’ costs according to the Center for American Progress. To
   qualify for government support, childcare centers need at least one qualified
   care provider for every three children (and must also meet minimum health and
   safety standards, although such standards are often not fully met). The
   nature of this work offers little scope for increases in labor productivity,
   which results in low profits for providers, typically less than one percent
   of revenues. Low productivity also results in low pay for workers; the median
   pay for credentialed childcare workers was $13.71 per hour in 2022, about
   half of the average pay for production and non-supervisory workers and 23
   percent less than other workers with similar skills and training. One in
   seven childcare workers live below the poverty line (see here). Low pay and
   high stress result in high turnover. Childcare providers find it increasingly
   hard to compete for workers with other sectors that pay higher wages. 
 * The failure of the childcare and early education business model has serious
   economic and social consequences beyond those directly affecting
   families. High quality childcare and early education can improve children’s
   cognitive and social-emotional development, reducing costs to society over
   the longer term. A growing body of research has linked quality care to
   reductions in costs that are associated with poor education, including
   low-paid and unstable employment; dependence on social welfare services; and
   increased crime and drug use, among others (see here). Difficulties accessing
   childcare also discourage some parents, mothers in particular, from entering
   the labor force. Others who do work outside the home face the challenge of
   simultaneously managing work demands and the needs of their children, leading
   to absenteeism and on-work stress. Strains from these childcare challenges
   cost American families, businesses, and governments $122 billion per year
   through lost earnings, lower productivity, and foregone revenues, according
   to ReadyNation. 
 * The benefits to the economy and society from more affordable and more
   available childcare build the case for government support for this industry
   and for parents who need childcare. Government intervention in a market is
   usually justified in the presence of “market failures.” A recent U.S.
   Department of the Treasury report points out several of these failures as
   relates to childcare. Typically, parents need childcare at an early stage of
   their careers, when their incomes are lower than they will be subsequently.
   Parents cannot borrow against their future earnings, and this “liquidity
   constraint” is a classic market failure. Another market failure is the
   difference between the private and social benefits of childcare such as a
   better-educated workforce and a stronger and deeper labor market. A long-term
   follow up of the Perry Preschool Project, an influential program that
   demonstrated the benefits of quality early education, found that each dollar
   invested in the preschool programs paid off more than nine times in terms of
   benefits to society. Government support also promotes greater equity since
   lower-income and minority communities disproportionately face high costs of
   childcare relative to income as well as childcare deserts. 
 * While there has been bipartisan support in the United States for government
   programs at Federal, State and local levels to help families with young
   children, these efforts tend to be less ambitious and less well funded than
   in other rich countries and need to be renewed each year. All told, the U.S.
   is estimated by the OECD to spend 0.35 percent of GDP supporting childcare
   and early education, compared to an OECD average of just over 0.8 percent and
   over 1 percent in France and some Nordic countries, based on 2019 data.
   Differences between countries in the support for childcare and other parental
   benefits can partially explain differences in women’s labor force
   participation across countries and why the United States has been falling
   behind other OECD peers (see chart).  The U.S. Federal Government does
   provide a child and dependent care tax credit, as well as a separate child
   tax credit (unrelated to childcare payments), but the full amount is not
   available for low-income families. The Childcare and Development Fund (CCDF)
   is a block grant program that provides federal funding to state and local
   governments and through programs to support early education such as Head
   Start - but less than 20 percent of families eligible for assistance from the
   CCDF actually receive support, in part because of lack of funding: these 
   programs are subject to annual budget appropriations and are not ongoing
   entitlements, as is the case with Medicare. 
 * The increase in public spending on childcare and early education in the US
   during the COVID-19 pandemic illustrates the potential benefits of government
   support. In response to the impact of the public health crisis on the
   childcare industry, $24 billion in relief funds were distributed to states
   through the American Rescue Plan Act (ARPA) and, according to a report by The
   Department of Health and Human Services, the funds served 220,000 childcare
   providers, saved the jobs of more than 1 million early educators, and enabled
   continued care for as many as 9.6 million children. However, these additional
   supports came to an end in September 2023.


WHAT THIS MEANS:

The expense of childcare in the United States, and the lack of sufficient supply
relative to demand, will hold back economic growth and have serious long term
social as well as economic consequences. Many groups — civil society and
corporate as well as governmental —have advocated for policy actions to address
the issue. Realistically, a solution requires a multifaceted approach combining
agile use of public funds with private sector initiatives. Various proposals
have been made by legislators from both major political parties to provide
deeper and more long-lasting support for childcare. But agreement on legislation
has not been reached. This reflects different views on the appropriate role of
Federal vs state and local governments, the role of religious establishments,
and the tradeoff between parental childcare and out-of-home childcare. It also
reflects concerns about fiscal costs at a time of large budget deficits and high
public debt.

TOPICS:

Education Policy / Labor Force Participation / Labor Markets
Read next


POVERTY AMONG HISPANIC CHILDREN IN THE U.S.

Poverty Among Hispanic Children in the U.S.
by Lisa A. Gennetian and Yiyu Chen
Written by The EconoFact Network. To contact with any questions or comments,
please email contact@econofact.org.

Stay in the know
Sign up to get the latest memos, alerts on new podcasts, and analyses from top
economists straight to your inbox.


RELATED CONTENT


 * CHARTER SCHOOLS: THE MICHIGAN EXPERIENCE AND THE LIMITS ON THE FEDERAL ROLE
   
   by Nora Gordon


 * THE CASE FOR INVESTING IN PUBLIC COLLEGES
   
   by David Deming


 * EDUCATION FUNDING: TAX CREDITS COST THE FEDERAL GOVERNMENT MONEY
   
   by Nora Gordon

More from Econofact


SCHOOL VOUCHERS: PROMISE AND PITFALLS

by Sarah Reber


INCOME DIFFERENCES IN EDUCATION: THE GAP WITHIN THE GAP

by Susan Dynarski and Katherine Michelmore


THE DIPLOMA GAP: GROWING COSTS OF AN UNFINISHED COLLEGE EDUCATION

by David Deming
Contact

For questions, comments, submissions or media inquiries, please email EconoFact:
contact@econofact.org


REPRODUCING ECONOFACT CONTENT

Social
Facebook Twitter Instagram LinkedIn
Topics
Stay in the know:
Sign up to get the latest memos, alerts on new podcasts, and analyses from top
economists straight to your inbox.
Submit

--------------------------------------------------------------------------------

© 2024 ECONOFACT
 * Privacy Statement & Terms of Use

The views expressed on this website are not the views of Tufts University.