State is losing more than $5 billion per year due to lack of child care access, study finds
Insufficient child care is costing North Carolina about $5.65 billion each year, a new study from the U.S. Chamber of Commerce Foundation estimates.
The report, released in partnership with the N.C. Chamber Foundation and NC Child, looked at the ways a lack of child care access hurts the state’s economy. Employers lose $4.29 billion a year because of job disruptions and turnover related to child care, and the state loses another $1.36 billion in tax revenue, the report found.
“When we couple the immediate needs of employers with the long-term workforce projections in the state, we simply cannot afford to leave people on the sidelines — and that is where access to affordable, quality child care is so critical,” Meredith Archie, president of the NC Chamber Foundation, said at a news conference Wednesday.
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Twenty-five percent of parents recently experienced a job disruption due to child care issues, based on a representative survey of 517 parents with children under 6 years old. Thirty-five percent of those parents reported leaving the workforce.
Fifteen percent of surveyed parents said they expected to leave their jobs in the following year, with 37% of those parents citing insufficient child care as the reason.
“It’s a top issue for our workforce,” said Gary Salamido, president and CEO of the NC Chamber, at the event Wednesday. “It’s a top issue for people. At the end of the day, we can get everything else right and be competitive, and we are, and we’re winning. Now it’s about workforce. Now it’s about people.”
North Carolina has been ranked the top state for business for two years in a row by CNBC. Yet the labor market is “historically tight,” Archie said.
“We have more job openings than people available to take those jobs, and as we look ahead, we know we have an aging population here in the state, and so labor constraints are only going to get tighter,” she said.
Danielle Stilwell, HR development and recruitment manager at Columbia Forest Products, said she did not find the numbers surprising based on her experience with her company’s employees, in terms of both participation and productivity.
“We have found when our employees’ needs are not met, they are not truly engaged in the workforce,” Stilwell said.
The report is part of a series from the U.S. Chamber of Commerce Foundation called “Untapped Potential,” which studies the economic impacts of insufficient child care at the state level.
“The child care challenge that we have right now is akin to quicksand,” said Aaron Merchen, senior director of policy and programs in early childhood education for the U.S. Chamber Foundation. “If you notice you’re in quicksand right away, you can take a low-level intervention and get out of that situation. The longer you wait, the more serious the situation becomes, the harder it gets to get out of that quicksand.”
“So how can we use this report to look at the situation that we’re in, and how can we use this report for employers, policymakers, providers, and working parents to work together to find a solution that works for North Carolina?” Merchen said.
More on child care crisis
The report’s release comes less than three weeks before the expiration of federal funds propping up the state’s child care industry. Early childhood advocates are pushing for the state to step in to extend that funding during this legislative session.
Without intervention, research predicts the state will lose an estimated 20% of its child care programs within a year, and about a third of its programs at some point after the funds end. Most programs have reported expecting to raise prices for parents to sustain their businesses and retain their teachers.
Cost was the top factor parents in the survey considered when choosing child care arrangements, and the report found high-income parents were more likely to be able to choose based on other factors such as quality and reputation.
“For an infant in center-based care in North Carolina, the cost is nearly as high as the average cost of a mortgage, and when you look at families with two or more children, it often far exceeds that cost,” said Erica Palmer Smith, executive director of NC Child. “And so what we see is an incredible need to address this issue as a state so that parents are able to work and provide for their families.”
The report does not include policy recommendations, but Salamido said the state chamber and its foundation have plans to “reimagine child care” in its delivery, in how parents access it, and in how it’s paid for. He brought up both public and private entities playing a role in taking on the cost of child care.
“It’s a long-term priority for us,” Salamido said. “This is not something that’s going to change overnight. This is not a click, and all of a sudden we solve the problem. It’s multidimensional.”
Workforce participation for parents is only one side of the child care coin, Palmer Smith said. It’s also about children’s learning and long-term well-being.
“Children who have access to early learning opportunities in those first five years of life, we know that they are more likely to read at grade level in school,” she said. “We know that they are more likely to develop strong coping skills, to be able to be resilient to all of the things that life is going to grow at them. We know that they’re more likely to graduate from high school, and even as we look into adulthood, we know that they’re more likely to be employed, to earn a higher wage, and even to be healthier.”