New Research Shows States Lose Billions in Annual Economic Opportunity Due to Childcare Gaps

The U.S. Chamber of Commerce Foundation studies found that state economies lost between $100 million and $10 billion this year because of childcare issues

Washington, D.C. — Today, the U.S. Chamber of Commerce Foundation released five new reports in its "Untapped Potential" series, examining the impact of childcare challenges on the state economies of Alaska, Arkansas, Arizona, Missouri, and Texas. The studies reveal that addressing childcare breakdowns would unlock significant economic potential for states, employers, and working parents.

The research finds that due to breakdowns in the childcare system, these states miss an estimated average of $2.7 billion annually for their economies. This number includes an average annual total of $528 million in lost tax revenue, and a combined average annual loss to employers of $2 billion from absences and employee turnover.

"While the impact is different in each of these states, these studies show the urgency needed in finding solutions to childcare issues across the country," said Cheryl Oldham, senior vice president of the U.S. Chamber of Commerce Foundation Center for Education and Workforce. "The challenges in the childcare system are complex, but solvable—and addressing them comprehensively, in ways that consider the needs of parents, businesses, and providers, will be central for the nation's long-term economic success."

The limited supply of childcare currently does not match high demand, an existing problem made worse by the COVID-19 pandemic. Throughout the pandemic, working parents have struggled to balance the demands of childcare, faced with options that are located too far to manage, are too expensive, or do not fit their needs. Meanwhile, childcare providers have fought to stay operational, and employers have dealt with uncertainty about how and when employees could return to work. All of these factors have contributed to hundreds of millions in lost revenue for state economies and an increasing number of employees being forced to leave the workforce.

Key findings from the 2021 reports include:

  • Childcare gaps result in massive economic losses for states. Annually, across the states examined, childcare issues result in estimated losses ranging from hundreds of millions to almost $10 billion. 
  • Childcare issues are significantly affecting parents' job decisions. In these states, between 28 and 40 percent of respondents reported that they or someone in their household has left a job, not taken a job, or changed jobs because of problems with childcare in the last 12 months.
  • The greatest need is for infant and toddler care. In these states, between 55 and 76 percent of parents who voluntarily leave their jobs do so when their child is two years old or younger.

The findings indicate that successfully addressing the childcare crisis extends beyond just the affordability of care. Families report that investments in childcare should foster innovative solutions that give parents more flexibility to manage their schedule and choose childcare based on their unique needs and preferences, help providers remain open, and ensure qualified childcare workers — for all ages of young children, especially infants and toddlers — are available in their communities. Successful solutions can only be reached by jointly addressing gaps across affordability, access, flexibility, and quality. 

The reports also draw from examples of public-private partnerships that have successfully helped parents in each state find childcare that meets their specific needs. One such example is “The Best Place for Kids!” in Fort Worth, Texas. The Best Place for Kids! connects leaders from philanthropy, education, health care, business, nonprofit, and municipal governments to create a supportive local ecosystem that enables students and families to thrive. To address childcare breakdowns both nationally and locally, policymakers have an opportunity to collaborate with the private sector to identify flexible solutions that address existing affordability, access, and quality gaps without restricting parents' options.

The 2021 "Untapped Potential" series builds on reports released in 2020, examining childcare challenges in Iowa, Idaho, Mississippi, and Pennsylvania. To access the full reports and other resources, visit this link