Billion Dollar Problem: Working Parents Leave Workforce, Postpone School Due to Childcare Challenges

February 28, 2020

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The Billion Dollar Problem
© David Walker Photography

Takeaways

On average, states lose an average of $1 billion annually because of childcare breakdowns.
The childcare crisis is a solvable problem, and it takes a village. Business must be part of that solution.

There is substantial research on the benefits of early childhood education for both children and their parents. Children gain a strong educational foundation and their parents can pursue careers or enhance their education or vocational skills. Despite the evidence in support of childcare, many working parents with young children cannot find or afford high-quality childcare. At the same time employers across the country are struggling to find and retain skilled workers. We see this as an opportunity for the business community to be part of the solution so that working parents have the care they need to have peace of mind at work, young children can be set up for the best start in life, and businesses can have a strong workforce.

To find solutions, several states–Louisiana, Maryland, Georgia, Washington, and Indiana–have previously looked at the economic impact of childcare breakdowns on employers and the economy. They sought state-specific data to ensure that all stakeholders understood the importance of early childhood education and how the state was already being impacted.

These states found that they each lose over $1 billion annually in economic activity due to breakdowns in childcare. 

Louisiana was first. Prior to creating the economic impact report, a state-commissioned report said major funding to the tune of $86 million was needed to bring the state's early education programs in line with public need. In 2017, the Louisiana Policy Institute created an economic impact report, Losing Ground, to understand the cost the state was paying for not solving this issue. The report found that the state was already losing $1.1 billion annually because of childcare breakdowns. This data, along with the work of advocates, business support, and several other factors led the state to increase its investments in early education to the tune of $18 million.

It was the first time in over a decade that significant state funds had been directed to early education. 

The funding provided by the state of Louisiana was a huge step forward, but it didn't get them all the way to their goal. The childcare crisis is a solvable problem, but that solution won't come from a single stream of funding. It takes a village and that village must include the business community.

To build on the work done in other states, we partnered with the business communities in Idaho, Iowa, Mississippi, and Pennsylvania and their early education partners to understand just how much breakdowns in childcare cost each state. In this study we looked at the causes of childcare challenges as well as motivations behind why parents select various childcare providers. Knowing many employers want to facilitate more access to childcare but do not know where to begin, we sought to learn what types of childcare benefits working parents desire most from employers.

The results indicate there is tremendous untapped economic potential in each state if childcare challenges are solved.

The Untapped Potential reports were unveiled at our Early Ed Summit today in Washington, D.C. where the study’s experts, workforce leaders, and early education advocates discussed the economic impact of childcare breakdowns, the unique challenges faced by each state, and the role of business in solving the childcare crisis affecting states across the country. 

Iowa, a state where women outnumber men in the workforce, is among the top five states in the nation in households with young children where both parents or the only parent are in the workforce (74 percent compared with 63 percent nationally). Our study found that 87 percent of those working parents in Iowa voluntarily left their jobs when their child(ren) was one year or younger because of the challenges finding care for infants. In Mississippi, that number jumps to 90 percent. 

We also learned that in almost all states surveyed, more than half of parents reported missing work due to breakdowns in childcare. The cost of absenteeism and turnover for employers in those states ranges anywhere from $414 million to almost $3 billion a year. 

Our study also revealed that working parents are striving for economic and social mobility, but often falling short due to an inability to finish school or a training program. In Pennsylvania and Mississippi, four out of every ten parents had to postpone school or training because they couldn't get access to the childcare they needed. This impacts families, employers, and communities.

To learn more, read the press releases from Idaho, Iowa, Mississippi, and Pennsylvania.

More Key Findings

  • On average, U.S. states lose $1 billion annually due to breakdowns in childcare. 
  • Among the working parents surveyed in each state, at least 69% rely on family for childcare; In Idaho, that number surges to 90% of parents. 
  • Pennsylvania loses an estimated $3.47 billion annually for the state’s economy as a result of childcare issues. In other states, Iowa is losing an estimated $935 million; Mississippi’s economy sees an estimated loss of $673 million; and Idaho misses out on an estimated $479 million. 
  • Estimated lost tax revenue in the four states due to childcare issues ranges from $65 million (Idaho) to nearly $600 million (Pa.). 
  • Absences and employee turnover as a result of childcare issues cost employers in each state significantly; the employer costs are estimated at $414 million annually (Idaho), $553 million (Miss.), $781 million (Iowa), and $2.88 billion (Pa.). 
  • Across the four states, roughly half or more of parents reported missing work due to childcare issues in the past three months. 

The Faces Behind the Numbers

In all of the data and research that we found, we wanted to make sure that we didn't miss the people behind the numbers. From our unique perspective, the numbers are key for us to spur others to action, but so are the people. These are the hardworking people that we advocate for everyday and the people we are proud to represent in our work. To understand the full picture, we wanted to highlight the small business owners, the working parents, and the children who are in our communities and who are directly impacted by the childcare challenges in every community.

The Untapped Potential reports are based on a study conducted in in two phases by the U.S. Chamber of Commerce Foundation, Cicero Group, and organizations in each of the four states: the Idaho Association of Commerce and Industry and the Idaho Association for the Education of Young Children; the Iowa Association of Commerce and Industry and the Iowa Association for the Education of Young Children; the Mississippi Economic Council (MEC) and the Children’s Foundation of Mississippi; and the Pennsylvania Chamber of Business and Industry and the Pennsylvania Early Learning Investment Commission. 

The first phase consisted of statewide surveys of households with children age five and under investigating the intersection of workforce participation, education, and childcare issues. In the second phase, the economic impact of childcare issues was estimated based on the results of the survey and secondary data sources, such as the U.S. Census Bureau and The American Community Survey. 

The persistent childcare challenges outlined in these reports will not be fixed overnight, and they won’t be fixed by just one sector. Our hope is that these reports will help create a better understanding of the challenges we face, help stakeholders identify partners, and inspire action.