The Economics of Child Care
According to a recent study released by the NC Chamber of Commerce Foundation, gaps in child care are driving parents out of the workforce, reducing tax revenue for the state, and placing incredible financial strains on North Carolina households, particularly among economically vulnerable families.
The report estimates how often parents leave the workforce, are absent from school or work, or miss educational opportunities due to insufficient child care support. Survey results were used to model an estimate of the direct financial impact of insufficient child care coverage on North Carolina’s economy: A $5.65 billion annual loss for the economy.
“The health of North Carolina’s economy is directly tied to the strength of its workforce. This survey shows that our state is not realizing its potential when it comes to both families and economic competitiveness,” said Meredith Archie, President, NC Chamber Foundation. “Affordable, quality child care supports working parents on the job, allows businesses to recruit and retain talent, and helps North Carolina children develop skills for success in school and life.”
Why Child Care Matters
Quality early care and education is essential to support the healthy development of young children and allow families to participate in the labor force. However, the landscape of child care across North Carolina has changed. While programs remain open, they suffer from a staffing crisis. Staff shortages prevent facilities from operating at their desired capacity. Many child care centers have closed classrooms or reduced enrollment because of a smaller early childhood workforce.
Many areas of North Carolina are considered a “child care desert” –where there are fewer licensed child care slots than the number of children who need care. Typically, five families compete for every available child care slot. This impacts more than just the child and family needing care – it limits workforce productivity and the state’s economy.
A healthy economy relies on the ability for people to save and spend. The U.S. Department of Health and Human Services considers child care affordable when it costs families no more than 7% of their household income. The NC Early Education Coalition reports that low-incomes families without access to assistance spend more than one-third of their yearly income on child care. Finding affordable child care has long been a challenge for families and the current child care cliff has made things worse.
In 2021, Congress passed the American Rescue Plan Act which included a historic and unprecedented federal investment into child care to stabilize the industry – keep the doors open for children and families and support wages for the early childhood workforce. The “child care cliff” is now being used to describe the impact felt across the nation with the abrupt ending of the pandemic-era funding and child care centers and homes closing across the United States.
Family income directly impacts child care choice and opportunity. Some survey respondents indicated that the price of child care forces families to make alternative child care arrangements such as relying on care from family or friends because they cannot afford the cost of care in quality child care settings.
All children deserve a strong foundation in life. The U.S. Chamber of Commerce Foundation views child care as a two-generation workforce issue – essential to supporting the workforce of today while developing the workforce for tomorrow. Investing in early care and education has long term benefits for success in school and later in life. According to Professor James Heckman and colleagues from the University of Chicago, their research revealed that early investments yield a 13% return on investment.
Without access to high-quality child care, parents cannot pursue educational or professional goals and participate in the workforce. Instead, they must compromise their future and face financial loss impacting North Carolina’s potential to grow and thrive.
The Problem for Parents
While accessing child care is challenging in a child care desert, finding licensed child care is difficult for employees that work non-traditional hours. Employees in retail, food and hospitality, law enforcement, and health care, often find themselves with limited or no options for care.
However, these are not the only parents that report challenges related to child care. During the last 12 months, 25% of families surveyed experienced changes to their own employment situation due to child care challenges.
Changes included not accepting a promotion, needing to reduce work hours, or choosing to leave the workforce. Each of these examples substantially impact family income and create additional costs for their employer while also impacting state taxes and the economy.
This problem, however, is not new to child care, it worsened during the pandemic and became front page news, but advocates for early care and education have been talking about these problems for nearly 40 years. In 1987, the National Association for the Education of Young Children adopted a position statement on Quality, Compensation, and Affordability – tackling the urgency for children and families to receive services in high quality early childhood programs where the early childhood workforce was fairly compensated with a living wage, and families could afford the cost of care.
Child Care in Onslow County
In Onslow County, 11,204 children under six live in a household where the sole parent or both parents are working. The latest data from the North Carolina Division of Child Development and Early Education (April 2024) indicates that 2,499 children under age six are enrolled in licensed care in our county.
The number of children with working parents in our community under age six and the number of children enrolled in licensed child care centers under age six confirms the county’s status as a child care desert. There are simply not enough child care slots available.
According to data compiled by the North Carolina Child Care Resource and Referral Council, the desired capacity of licensed programs in Onslow County is 3,476 children. The statewide staffing shortage is contributing to the gap between desired capacity and actual enrollment of children in our community. Child care directors are struggling to find qualified personnel to fill early childhood workforce vacancies.
The Department of Defense (D0D), the nation’s largest provider of employer sponsored child care, views child care as a military readiness and retention issue. The DoD invests over 1 billion dollars annually to provide high quality services to service members and active-duty personnel.
In Onslow County, child and youth programs aboard local military installations serve approximately 1,800 children and nearly 900 employees in child development centers, family child care homes, and youth programs.
The average household income in Onslow County is $59,976, much lower than the North Carolina average of $94,353. Cost of child care is a large burden for families with the average annual cost of child care in NC at $9,255 for infants and $7,592 for 4-year-olds.
If affordable child care is the central determinant for parents to participate in the work force, we need to learn about what stands in the way for parents. One mother quoted in the report got our attention –
“The biggest challenge I have faced while trying to access affordable child care is finding a situation that works well for us. It has to be close to home, affordable, safe, trusted, open at the right hours, and also provide the level of care or education that my child needs relative to her age.”
Equitable access to child care is achieved when all families can find affordable options with reasonable effort that meet their needs and support their children’s development.
How We Help
Our Child Care Resource and Referral team frequently speaks with families that are desperate to find child care, calling back two or three times for more options/availability. Parents find themselves making tradeoffs between cost, quality, and location, and settle for solutions that do not match their preferences or needs.
We connect families with vital resources and programs to support the healthy development of children and strengthen families to thrive in our community. Programs such as Early Head Start, Three School, and NC Pre-Kindergarten serve children from infancy through four years old and help reduce or eliminate high child care costs for families.
Local families also benefit from referrals to the Child Care Subsidy Program through the Department of Social Services, which offsets the high cost of care to families that meet program eligibility.
What’s Next/How You Can Help
North Carolina continues to grow its population and ranking as a great state for business. For the future to be strong for everyone, there must be a change to the child care landscape. A collaborative approach is essential to solving the crisis of child care that works for everyone.
At One Place, we want to learn more about the challenges facing families looking for child care that meets their needs. We also want to understand the implications of the child care challenge for local businesses. When employees don’t have reliable child care it can take a toll on a business, and ultimately, our local economy.
We want to hear from you! If you’re a parent/caregiver who has experienced challenges related to child care availability, or a business that has been impacted by employee challenges with child care, please take five minutes to fill out our short survey. When we know more about the challenges in our own community we can work to solve the problem- Brief Survey: How Child Care Impact’s Onslow County’s Workforce Productivity
If you’re a parent/caregiver looking for child care, please contact the One Place Child Care Resource and Referral Team. Click here to learn more.