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Why Child Care Packs Quite the Economic Punch

By Linda K. Smith, Deputy Assistant Secretary for Early Childhood Development

For years we’ve known that child care helps lift up parents to work and boosts children’s development. But, a new report shows that child care also boosts local economies. 

The Committee for Economic Development (CED) published a new report in August, “Child Care in State Economies.” This report examines the following:

  • Child care industry’s economic impact within states
  • Parent participation in the labor force
  • Paid child care usage rates
  • Employment within the child care industry, related spillover within communities (i.e., the purchase of goods and services and jobs supported outside the child care industry)
  • Role of public funding

The report is significant because through economic modeling, it shows that the impact of the child care industry goes far beyond supporting the needs of parents to work. 

Infographic that promotes Quality Child Care that helps "parents earn" and "students learn"With revenue of $41.5 billion, the child care industry supports an additional $41.6 billion in spillover supporting additional industries within communities. 

More than 1.5 million sole proprietors (those operating child care programs out of their home) and wage and salary employees working within centers support 624,500 jobs in other industries.

While individuals in the child care field typically earn low wages, the industry supports about $18 billion in additional earnings outside of the child care field throughout the United States.

These are important findings. Not only does child care help parents work and offer a setting for children to promote their healthy development, the child care industry also plays an important role in supporting local economies.  The report also found that for every federal dollar increase invested in child care, there is a return of $3.80 in local economies.

More than 11 million children are in paid care throughout the country while their parents work, obtain higher levels of education or participate in job training. The average cost of care varies from state to state.

In 30 states in 2013, the price of center-based infant care exceeded the cost of college. States with lower economic growth and lower average income have more families using informal (unpaid) care.

Research shows that quality child care makes a difference in the school readiness of children, particularly for low income children. When children start school ready to learn, they are:

  • Less likely to be retained in grad
  • Less likely to be placed in special education
  • More likely to graduate high school either college or career ready

The neuroscience shows that:

  • A child’s earliest experiences affect brain development
  • Brain development is cumulative
  • Architecture of the brain can impede later language, cognitive, social, and emotional capacity

That’s why quality child care matters – the foundation for learning happens long before age 4 or 5 when children typically start preschool or kindergarten. 

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