Anna Murphy
October 1, 2020

Why Child Care Is Essential for Reopening the Economy

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Why Child Care Is Essential for Reopening the Economy

Child care is a core function of our national economy. On the one hand, it is a major contributor to GDP and employment, but it is also a lifeline to working parents balancing raising a family with having a career. In a recent survey, we assessed the state of childcare in 2020 and how the pandemic has redrawn the childcare landscape, putting facilities at risk of permanent closure and limiting the availability of child care slots in an already limited market.

In this article, we plan to dive into why child care is critical to the reopening of our economy and the facilitation of our economic recovery.

An Overview of the Child Care Industry

In 2019, the Committee for Economic Development (CED) released a report, which found that there are 674,332 child care programs (centers and home-based sole proprietors) throughout the United States. Their revenue amounts to $47.2 billion, and they collectively employ 1.5 million workers. 

Beyond direct jobs, the industry supports an additional 507,089 jobs within communities leading to an overall employment impact of 2 million workers.

The spillover impact of these programs generates an additional $52.1 billion in local economies, which is a $99 billion economic impact and contribution to GDP annually. 

According to the same report, about 53.9 percent of children from birth to 5 in the US are in some type of non-parental care for at least 10 hours per week. 

Child Care Availability Pre-Pandemic

For families, lack of access to child care often keeps parents out of the workforce in order to adequately provide care to children. Pre-pandemic, about two million parents faced job disruptions due to child care accessibility. Nationally, this loss of earnings, revenue, and productivity cost the economy $57 billion annually.

Notably, the child care crisis most often impacts women, who are 40 percent more likely to report they’ve experienced negative impacts from child care on their careers. For example, women comprise 45 percent of working parents with young children, but they represent 55 percent of parents who depend on child care to go to work or school. 

Now with widespread distance learning and limited child care availability, this stresses an already fragile employment environment, leaving families, and often women, to grapple with the precarious job balancing work and child care, or financial survival and child development.

As one parent explained, “We are burned out because we are being rolled over by the wheels of an economy that has bafflingly declared working parents inessential.”

The Impacts of COVID-19 on Child Care

As the COVID-19 pandemic struck the country, school and child care program closures kept children home. Now, as facilities remain closed and their attendance shrinks, child care, which was already a limited commodity, becomes even more finite. 

Unsurprisingly, nearly 80 percent of parents stated that the coronavirus impacted their child care plans.

Research by the Center for American Progress predicted in April that the COVID-19 pandemic would put 4.5 million child care slots at risk of disappearing. Across the country, this amounts to nearly half of all available licensed child care slots.

More than half of parents expect to lose anywhere from ten to 50 percent of their income. This is largely due to the challenges of facilitating distance learning and caring for children permanently home due to closure. These challenges are prompting many parents to leave the workforce altogether.

In a survey conducted by the company Cleo, 27 percent of parents said they planned to leave the workforce to care for their children during the pandemic. Similarly, the US Census Bureau found that a third of working mothers are staying out of work to care for their children. However, the same survey finds that only 1 in 10 men are staying out of work.

Workers Caught in a Fast-Shrinking Market

Another side of this story is the child care workers who are facing job losses and reduced hours. These workers are 93 percent women and 40 percent women of color. With a median annual income of $22000, these jobs would fall close to the lowest pay scale in many parts of the country. 

Now, as schools brace to reopen doors, owners and directors of child care facilities must grapple with the financial challenges facing them in an industry that already ran on razor-thin margins. According to our survey, over a quarter of child care facilities are closed due to the pandemic. And the average child care facility has had to lay off half of its staff to survive.

As employment opportunities are reduced, this puts extra pressure on marginalized groups or workers, which further fuels the financial challenges gripping many under the COVID-19 economy.

It’s clear that child care closures fuel an already precarious economic environment, straining families financially as they stay home to care for their children, limiting a nearly 100 billion dollar GDP stimulus, and putting employment at risk for two million workers. In the wake of a global pandemic, there are no good options facing child care facilities and the communities and governments that support them. 

Pre-pandemic the child care industry steadily grew, allowing families to increase their earning potential and buttressing a growing industry, can we afford to lose this progress and can we recover economically without it?

For more, read the full survey analysis here.