Report: Childcare Problems ‘Ripple Throughout Economy’

04.01.2022
Economy
The impact of the childcare industry’s problems will ripple throughout the entire economy, according to a new report. Released by Wells Fargo, the Who Cares? How the Childcare Industry’s Problems Are Every Employer’s Problem report highlights the importance of childcare to a full economic recovery.
Labor force participation rates are significantly lower for women with young children.
“The pandemic laid bare the importance of childcare to the U.S. workforce as millions of school-age children shifted to remote learning, but it also amplified the cracks in an already thin and fragile care system for young children,” the report’s authors note. “Not surprising, the shortfalls of the current system continue to land disproportionately on women. A rethink of policy has never been more warranted.”

Childcare Costs

The report called the cost of childcare “crippling for parents, lousy for caregivers.” The cost of daycare for one child is typically about $11,000—14% of the median income of a household with a child under the age of six.
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And yet the average pay for a childcare worker is $25,060, one of the lowest paying occupations in the country. This low pay makes childcare an unattractive workplace to return to; employment at daycare services remains 12.4% below pre-pandemic levels, compared to only 1.9% of the total labor market.

Labor Force Participation

The impact of the childcare shortage is felt “through lower labor force participation, greater hiring difficulties for employers, slower potential growth, smaller tax bases, and ultimately smaller families,” the report noted. That shortage leaves about 460,000 families needing to find alternative sources of childcare, such as one parent—typically a mother—leaving the workforce to care for their child.
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The report states that if the labor force participation rate of mothers with young children matched that of women with school-age children, about one million more workers would be in the labor force. These childcare shortages contribute to an already significant labor shortage crisis in Connecticut, CBIA’s Wyatt Bosworth said. “With workforce recruitment and retention representing employers’ greatest challenge, it has never been more important to invest in childcare and make it easier for employers to retain employees with childcare needs,” he said.

Connecticut Legislation

In Connecticut, the state legislature is considering SB 2, which addresses the accessibility and costs of childcare, an issue exacerbated by the pandemic. According to state estimates from 2019, 9.5% of Connecticut parents quit a job, did not take a job, or greatly changed their job because of childcare problems—19th highest in the nation.
“Improving the state’s childcare offerings and affordability is critical for our economic recovery.” CBIA’s Wyatt Bosworth
“Improving the state’s childcare offerings and affordability is critical for our economic recovery,” Bosworth said. “CBIA stands ready to work with lawmakers to stabilize childcare, invest in making Connecticut the nation’s most family-friendly state, and give working parents more flexibility to return to work. “Our economic well-being depends on it.”
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