10 Surprising Facts About Child Care in the United States
What is the ‘care economy’ and why does it matter for babies?
Key Takeaways
- The care economy is frequently undervalued and underfunded, leading to significant gaps in services and support for those who need it most.
- Affordable and accessible child care is not just a benefit for individual families; it has far-reaching economic implications.
- Paid sick, family and medical leave are essential components of a robust care economy.
- The expanded Child Tax Credit helped reduce child poverty and support the overall economic well-being of families.
At its core, the care economy is about recognizing and valuing the work that goes into caring for others—work that is essential for the functioning of society and the broader economy.
What is the care economy?
The care economy is a critical yet often overlooked sector that offers the broad spectrum of paid and unpaid work necessary to support the well-being of individuals, particularly the most vulnerable populations, such as children, the elderly, and people with disabilities.
This includes everything from child care and elder care to paid family and medical leave, as well as social services that assist individuals and families in maintaining a decent quality of life. Despite its importance, the care economy is frequently undervalued and underfunded, leading to significant gaps in services and support for those who need it most.
Affordable Infant and Toddler Care: The Economic Impact
One of the most significant components of the care economy is child care. Affordable and accessible child care is not just a benefit for individual families; it has far-reaching economic implications.
Supporting Workforce Participation: When parents, particularly mothers, have access to affordable child care, they are more likely to remain in the workforce. According to the U.S. Department of Labor, the lack of affordable child care is a key factor in why approximately 2.5 million women left the workforce during the COVID-19 pandemic. Additionally, studies show that reducing child care costs by just 10% could increase the employment rate of mothers by as much as 5%.
Boosting Economic Productivity: With reliable child care, parents can focus more on their jobs, leading to increased productivity. A report from ReadyNation estimates that the U.S. economy loses approximately $57 billion annually due to child care challenges, including lost earnings, productivity, and revenue.
Long-term Benefits for Children: Quality early childhood education has been shown to have lasting positive effects on children’s development. The estimated return on investment in early childhood education is $7 to $13 for every dollar spent, due to the long-term benefits for both individuals and society.
Paid Leave: A Necessary Investment
Paid sick, family and medical leave are essential components of a robust care economy. These policies allow workers to take time off to care for themselves or their loved ones without the fear of losing income or employment.
Healthier Workforce: Paid sick leave helps prevent the spread of illness, leading to a healthier workforce and reducing overall health care costs. The National Partnership for Women & Families estimates that the U.S. loses $1.3 billion annually in productivity due to workers who come to work sick because they do not have access to paid sick leave.
Employee Retention and Satisfaction: Workers who have access to paid family leave are more likely to stay with their employers, reducing turnover costs. The Institute for Women’s Policy Research found that offering paid leave can reduce employee turnover by up to 20%, saving employers significant costs associated with hiring and training new employees.
Economic Stability for Families: Paid leave provides families with financial stability during critical times, such as the birth of a child or a serious illness. According to a study by the National Bureau of Economic Research, access to paid leave in California increased mothers’ labor force participation by 6-9% in the year following childbirth.
Paid leave policy is gaining momentum.
The Expanded Child Tax Credit: A Game Changer for Families
The expanded Child Tax Credit (CTC) is another vital component of the care economy. By providing families with additional financial resources, the CTC helps reduce child poverty and support the overall economic well-being of families.
Reducing Child Poverty: The expanded CTC has been shown to significantly reduce child poverty. The Center on Poverty and Social Policy at Columbia University estimated that the expanded CTC lifted 3.7 million children out of poverty in 2021, reducing the child poverty rate by nearly 30%.
Stimulating Local Economies: Families receiving the CTC are likely to spend the money on essential goods and services, such as food, housing, and education. The Economic Security Project found that every dollar invested in the expanded CTC generated $1.24 in local economic activity, benefiting small businesses and communities.
Supporting Workforce Participation: By alleviating some of the financial burdens on families, the CTC allows parents to remain in the workforce, contributing to the economy and reducing the need for other forms of public assistance. The expanded CTC is estimated to have increased consumer spending by $27 billion in the second half of 2021, according to the Joint Economic Committee of the U.S. Congress.
Make every vote a vote for babies.
