Understanding the Economic Impact of Childcare

📢 A record number of workers were impacted by #childcare problems in 2024. Using BLS datasets, including previously unpublished data by gender and age, our Parental Work Disruption Index shows the impact of inadequate childcare options on workers in the US. 🔹 Index On The Rise: The Parental Work Disruption Index increased to 121.6 in December 2024 from 115.7 in December 2023. This means there were 22% more workers impacted by inadequate childcare options at the end of 2024 compared to the pre-pandemic baseline. (This is slightly off the all-time high of 124.3 in September.) 🔹 New Record High Impacted: An average of 1.34 million workers each month either worked part-time or missed work entirely due to childcare problems in 2024. That is up from the previous record of 1.28 million in 2023 (see chart below). Lower birth rates mean that proportionally the number of workers impacted is even higher. 🔹 Women Still Affected Most: 89% of these workers were women. The share of women aged 55-64 grew to 3% in 2024 from 2.6% in 2023. This shows how grandmothers are increasingly being affected as they fill in gaps in care. 🔹 Men’s Share Up: 11.1% of workers impacted in 2024 were men; that is up from 10.3% in 2023 but still down from the peak of 12.6% in 2022. 🔹 Lost Work Hours: Up to 1.5 billion potential work hours were lost due to workers’ childcare problems in 2024; that is up from the estimate of 1.4 billion in 2023. The lack of access to quality and affordable childcare hurts workers and their children, is a hidden but very real cost for employers and dampens the potential growth of the entire US economy. Research shows that making strategic investments in childcare and paid leave benefits are evidence-based ways to increase employee satisfaction, engagement and loyalty, and decrease absenteeism and presenteeism. These, in turn, result in higher productivity and retention as well as lower turnover and hiring costs. Employers can (a) engage directly with employees to understand the extent of the current cost from childcare problems; (b) identify which benefits work best for different workers; (c) assure that employees are aware of benefits; (d) destigmatize and encourage use of benefits; and (e) evaluate the effects of benefits on employee satisfaction, turnover and productivity. This is a key issue for workers, employers and governments in 2025, and it is likely to increase in intensity in the years ahead. #ChildcareCrisis #WorkingParents #CareEconomy #EconomicGrowth #Productivity

The return on investment (ROI) for childcare, particularly high-quality early childhood education, is significant. Studies have shown that investing in these programs yields a return of $7 to $10 for every dollar spent. This not only leads to economic benefits but also long-term outcomes, workforce participation, social advantages, and health benefits. - Economic Benefits: Investing in high-quality early childhood education programs results in reduced costs in special education, grade repetition, and remediation. It also lowers social services, healthcare, and criminal justice expenditures while increasing tax revenues from higher earnings. - Long-term Outcomes: Children who benefit from quality early childhood education achieve higher educational attainment, earn more throughout their lives, and are less likely to engage in criminal activity, reducing societal costs associated with crime. - Workforce Participation: Reliable childcare access enables more parents to join the workforce, boosting household income, economic stability, overall productivity, and economic growth. - Social Benefits: Quality early childhood education fosters better social and emotional development, leading to improved behavior and social skills. This translates to better classroom environments and lower rates of behavioral issues, reducing the need for disciplinary actions. - Health Benefits: Early education programs focusing on health and nutrition promote better physical and mental health outcomes for children, ultimately reducing long-term healthcare costs. The ROI for childcare extends beyond financial gains to encompass social, educational, and health advantages, contributing to a more prosperous and resilient society.

America's lack of national #childcare policy is particularly puzzling given the staggering costs to the nation associated with the lack of a considered policy — and the compelling educational and economic benefits of child care and early education.  According to a study released in February by the Council for a Strong America, the lack of adequate child care currently costs American families $78 billion each year, businesses another $23 billion, while government tax revenues are reduced by $21 billion — for a total annual cost of $122 billion, double the national loss estimated in 2018. By stark contrast, research by economist James Heckman, Nobel laureate and director of the Center for the Economics of Human Development at the University of Chicago, has shown that high-quality birth-to-5 child care programs deliver a 13 percent per child annual return on investment through better outcomes in education, health, social behaviors and employment, reduced taxpayer costs, and preparing the country’s workforce for a competitive future. American families, women, and children — and taxpayers — deserve a national commitment to quality and affordable child care. https://lnkd.in/ef_zUAbE

According to recent reports, the Federal Administration could release a Fiscal Year 2026 budget proposal that would zero out the national #HeadStart program and provide no offsetting funding increase to the Federal block grant to States for child care. These recommendations, if made and followed by Congress, would have damaging consequences for #Massachusetts children, families, communities, businesses, and the local economy. Two arguments have been offered to justify a proposed elimination of Head Start, both of which are incorrect. First, it has been suggested that Head Start programs are too unsafe to continue. This is not supported by the facts. Massachusetts has the strongest child care health and safety standards in the nation. Head Start standards are even stronger. Given the high vulnerability of the population, the work of child care is incredibly complex and high-risk. Standards MUST be high to protect and nurture children. Caring for and supporting the healthy development of children requires exceptionally strong judgement, practice, and monitoring. The consequences of errors or bad actions can be deeply harmful and even fatal. As a result, dozens of monitoring investigations across the entire child care system are occurring at any given time in Massachusetts and, while patterns can emerge, cherry-picking any case is just that: cherry-picking. Head Starts, on average, delivers strong health and safety results. The second case being is that child care shouldn't be a Federal concern and would best be left to the States. One problem with that argument is that the current proposal reportedly doesn't shift the program to the States, administratively or monetarily. It's simply an elimination. What would result? In Massachusetts, about 11,000 children would lose access to their child care, and all of the proven developmental benefits and future opportunities that accompany #earlychildhoodeducation. Simultaneously, their parents would lose access to child care services that make it easier or possible to participate in the #laborforce. Consequently, businesses will lose access to workers and the overall economy will take a hit. Additionally, the basic laws of supply and demand would inflict harm on ALL families in the Massachusetts child care system. Child care costs already are prohibitive for too many families. Assuming that Head Start families even could afford full private pay, imagine the inflationary impacts of 11,000 children flooding the child care market? And imagine the costs of trying to create 11,000 new seats (buildings, classrooms) to accommodate the transition? Very few families and no State could afford this scenario. For more information, check out this First Five Years Fund toolkit for Head Start. National Head Start Association, Massachusetts Head Start Association https://lnkd.in/eiKe7qfj

“An overwhelming 85% of primary caregivers said problems with child care hurt their efforts or time commitment at work. These challenges had predictable impacts…As a result, families lose $78 billion per year in forgone earnings and job search expenses. Meanwhile, productivity problems cause employers to lose $23 billion annually due to child care challenges faced by their workforce. Taxpayers, in turn, lose $21 billion each year in lower federal and state/local tax revenue. Beyond its #impact on the workforce and #economy today, the infant-toddler child care crisis damages the future workforce by depriving #children of nurturing, stimulating environments that support healthy brain development while their parents #work. *Access: More than 1/2 of U.S. residents (51%) live in a child care ‘desert,’ where there are more than 3 children under age 5 for every licensed child care slot. Availability is especially limited for families who have infants and toddlers, have low incomes, work non-traditional hours, or live in rural areas. For example, 60% of rural residents live in a child care desert. *Affordability: The average cost of center-based child care for infants is more than in-state, public college tuition in 34 states and the District of Columbia. *Quality: Among the shortcomings in quality are high rates of provider turnover, due in large part to inadequate compensation. As a result, young children face a lack of stable, consistent caregiving.” Excerpts & image below from Report by Sandra Bishop, Ph.D. Council for a Strong America ReadyNation linked in full here: https://lnkd.in/eHq8gB-Y “In a national poll this summer, 74% of voters said they wanted to see increased federal #funding for #childcare, including 61% of Republicans, 74% of independents and 86% of Democrats…The 19th posed questions to every member of Congress: What is your stance on federal child care #policy? What kind of child care policy would you support? Over nearly 4 months, The 19th contacted and repeatedly followed up with every single congressional office. Only 142 of 535 members, a little over a quarter, answered: 135 Democrats, 5 Republicans and 2 independents… ‘Child care is a winning investment — you will 100% get a return on this investment.’ Kathryn Anne Edwards. #Data is clear that the investment in child care would support both the current and future workforce. It’s an economic issue.” All Excerpts and quotes written by Chabeli Carrazana in this article: https://lnkd.in/efF4dr4w #investing #government #assetmanagement #finance #sustainability #entreprenuership #innovation #strategy #business #leadership #money #cultureofmoney

When our childcare infrastructure collapsed during the pandemic, many women simply left the workforce in what was dubbed the "she-cession." Since then, the rapid recovery has succeeded in drawing women back in record numbers. That's amazing news! But this improvement shouldn't overshadow the potential productivity of the female labor force. There are still too many moms who are on the sidelines because our nation's child care system is broken. A new poll by First Five Years Fund finds that 59% of part-time or non-working parents say they would return to full-time work if they had access to quality childcare at a reasonable cost. This figure encompasses moms *and* dads, but too often, women end up being the stopgap when the schedule goes awry. Funding for childcare and early education pays economic dividends in so many ways. Not only is it a key driver of our children's success later in life, but it can also help women reach their true potential now. https://lnkd.in/gsyfM6gs

Up to 1.4 billion work hours are lost every year as working Americans have to miss work or shift to part-time schedules because of child care problems. The research is part of KPMG US's new Parental Work Disruption Index, is tracking not only the collective hours lost, but for the first time a gender breakdown of how who is reducing their work hours because of child care problems. Women continue to be disproportionately impacted, but an increasing number of men are too. “We know child care costs prevent labor participation and that the child care problem really hits both sides of the [gender] equation,” says Matthew Nestler, PhD, senior economist at KPMG U.S. and author of the index, which the firm plans to update monthly. “But to what degree are child care problems affecting working Americans?” My latest for Forbes: https://lnkd.in/dHRVi3mM

Last month, the Ohio Chamber unveiled our "Untapped Potential: Ohio" economic report — a study conducted in partnership with the U.S. Chamber of Commerce Foundation and Groundwork Ohio — that assesses the direct financial impact of insufficient childcare coverage on our state’s economy. Childcare isn't just a family issue; it's an economic one, too. The study found that our state loses an estimated $5.48 BILLION in economic activity each year due to inadequate childcare coverage. Ohio is growing every day, and we need to strengthen our childcare infrastructure to keep up. Read the full study below: https://lnkd.in/gWFV3c9F

The high cost of childcare is putting a strain on parents’ finances and creating gender inequities in the workplace. Recent data highlighted by Bloomberg shows the drop in women’s employment each summer when school – a source of free, guaranteed childcare – is out of session. Many working mothers are sacrificing high-paying, quality jobs for flexible ones in order to take care of their children. That’s part of the reason why women are overrepresented in teaching, food service, retail, and other low-paying occupations. This trend underscores the critical intersection between childcare accessibility and workforce participation. Employers can help by offering quality jobs that provide flexible work arrangements, family-sustaining wages, and policies like paid leave to support working parents. This will not only improve the lives of individual families, they will also make our economy more inclusive and resilient. #Childcare #WorkforceEquity #QualityJobs https://lnkd.in/gJyiMMh9