Early Childhood

Child Care Provides Nearly $100 Billion Economic Impact, New Report Finds

By Marva Hinton — February 11, 2019 2 min read
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Taking care of little people is big business.

A new report from the Committee for Economic Development, a nonpartisan, business-led public policy group, finds that the child-care industry in this country has an economic impact of $99 billion dollars. That figure includes $47 billion in revenue and $52 billion in spillover, or the wages paid to child-care workers and the purchase of goods and services.

The “Child Care in State Economies” report notes that the revenue generated by child care is comparable to several industries including spectator sports at $46 billion and medical and diagnostic labs at $49 billion.

“That is a real surprise to most people, and to us,” said Cindy Cisneros, the vice president of education programs at CED.

The report provides a comprehensive overview of the industry and finds that it’s grown substantially since the the organization issued its first such report in 2015. It found that nearly 60 percent of children under age 5 regularly attend some form of child care.

“Women with children under six years of age are increasingly using market-based child-care services,” said Cisneros. “The percentage of women in the marketplace with children under the age of six has actually increased about 10 percent between 2005 and 2017.”

Cisneros also cites improvements in the industry as a reason for its growth.

“The more that the product is of quality level, the more that it will be utilized, and there have been great strides in improving the quality of early learning and care across the country,” said Cisneros, who adds that increased economic development in an area also leads to a boom in the industry as more parents start working.

The High Cost of Care

The cost of high-quality child care remains a problem for many parents. The report indicates that the median annual cost of care for an infant in a child-care center is nearly $10,750. But families living in some states pay much more. For example, in Massachusetts the annual cost of infant care is $20,415, while in the District of Columbia it’s $23,666.

The report also lists the prices for less expensive in-home child care in each state, but points out that these options have decreased significantly since the 2015 report was released. The researchers cite several possible reasons for this shift, including more lucrative employment options for child-care owner/operators in a stronger economy.

The report mentions the importance of child-care subsidies when it comes to helping low-income parents enter and stay in the workforce. It notes that in 10 states public assistance programs account for more than 50 percent of child-care industry revenue. That jumps to 60 percent in Washington state and Delaware.

“The spending that comes from being employed—whether it’s through rent, food, paying bills—that is the line of thinking in terms of how it is able to support other economic output and activity,” said Cisneros.

Researchers used U.S. Census Bureau data and national child-care usage surveys to compile this report, which was produced by RegionTrack, Inc., an economic research firm. The work was funded by the Alliance for Early Success.

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A version of this news article first appeared in the Early Years blog.