The Economic Impacts of Insufficient Child Care & The Cost of Working in Early Childhood Education
Two new studies have been released recently that substantiate the critical need for systems change in child care, including an updated economic impact report, commissioned by the PA Early Learning Investment Commission (ELIC) and Ready Nation. These Pennsylvania-specific reports offer data and talking points which underscore the importance of increased wages, access, affordability, and quality. The key points below support the business and economic case for increased investments in quality child care and early learning.
The Economic Impacts of Insufficient Child Care Cost Pennsylvania $6.65 Billion Annually
For Pennsylvania, inadequate child care options impose economic consequences for families, businesses, and taxpayers. The majority of parents with young children are in the workforce and need childcare but the current system is not meeting the needs of families or their employers.
The Pennsylvania Early Learning Investment Commission partnered with Ready Nation to update Pennsylvania’s 2019 child care economic impact report and found that the negative impacts of insufficient child care have increased over time, from $3.47B to $6.65B in annual losses.
These findings suggest a combination of COVID-19 and insufficient policy action have now significantly worsened the child care crisis. Families with young children emphasize that they need child care that is affordable, high quality, and accessible.
Across Pennsylvania, working families report struggling with affordability, quality, and access:
- Affordability is a challenge for 61%
- Quality is a challenge for 51%
- Access is a challenge for 70%
- Working parents lose $16,490 in lost earnings and reduced participation in the workforce.
- Businesses lose $3,200 per worker in reduced revenue and turnover costs.
- Taxpayers lose $4,230 per working parent in federal and state/local tax.
Aggregated across all working parents in Pennsylvania, there are annual losses of:
- $4.10B in parental income
- $1.52B in business output
- $1.03B in tax revenue
The High Cost of Working in Early Childhood Education
Early childhood educator compensation is a core issue affecting the sustainability of early learning programs across the state and the country. Low wages and insufficient benefits are contributing to an unprecedented early childhood staffing crisis. The results of which are devastating to children, families, businesses, and Pennsylvania’s economy.
With support from the William Penn Foundation, Children First and the Reinvestment Fund partnered with the Office of Child Development and Early Learning (OCDEL) and the Department of Labor & Industry on a statewide ECE wage study, The High Cost of Working in Early Childhood Education. For the first time, wage data from the Department of Labor and Industry for 30,000 child care providers was matched with demographic information from OCDEL. In addition, 3,429 early childhood educators responded to a survey asking how their wages impacted their lives.
“The findings are deeply concerning, indicating that Pennsylvania’s early childhood teachers earn only $12.43 an hour and that nearly 50% of respondents either intend to leave their job or are unsure if they will stay.”
- The average early childhood teacher earned an estimated $25,844. This translates to approximately $12.43 per hour.
- There was no county where wages met the cost of living. Wages are not high enough to cover basic necessities like housing, transportation, food, and child care.
- Their finances affect their mental wellbeing, with 97% of respondents saying they feel stressed out about their finances and 29% saying they worry about their finances on a daily basis.
- Almost 50% of respondents say they do not plan to be around or are unsure of whether they will still be working in the sector in 5 years.
- The number one reason they would stay is higher wages.
- Racial inequities exist in the workforce. Black and Hispanic educators earn approximately 2% less and 5% less than their white counterparts.
- Turnover will most likely affect program quality. Of respondents who indicated they are likely or very likely to leave the field within 5 years, 39% had bachelor’s degrees and 18% had master’s degrees.