Disruptions in child care access show its importance to the economy

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By Marnie Werner, Vice President, Research & Operations

A lack of reliable child care was the single biggest problem for employees in America before the pandemic. Now, as parents head back to work, they will be looking for child care, whether it’s with their old provider or a new one, and that will drive up demand on an already stressed system.

An October 2020 article from the Federal Reserve Bank of Minneapolis lays out the economic impacts of not having enough child care. In their review of two surveys conducted just before the pandemic by the Bureau of Business and Economic Research at the University of Montana and the Montana Department of Labor & Industry respectively, author Rob Grunewald found that “some child care-related work problems can directly affect household income in the near term, such as missing work (62 percent), changing from full-time to part-time work (15 percent) or quitting a job (12 percent).”

What was perhaps more troubling was that 26% of workers responding reported “declining to pursue further education or training” while 22% reported turning down a job offer, two moves that can affect a parent’s career trajectory, the article stated.

All in all, the studies reported the average Montana household with children under 6 losing $5,700 a year “due to missing work, switching from full-time work to part-time work, or turning down a job offer because of inadequate child care.”

Even two-parent households where one parent stays home with the children “lose an annual average of $2,960 due to child care problems.” Altogether, parents of young children in Montana “lose more than $145 million in wages because of inadequate child care,” while the federal and state governments lose $32 million a year in income tax receipts and businesses lose out on almost $55 million in revenue due to lost parental wages, lower worker productivity, higher turnover rates and a shrinking pool of qualified workers, all due to inadequate child care, the article stated.

Low-income and American Indian households were affected even more, the studies found: Parents in low-income households were more likely to decline pursuing further education or training (38 percent versus 21 percent of high-income parents); turn down job offers (36 percent versus 12 percent); change from full-time to part-time work (24 percent versus 10 percent) or quit their jobs (26 percent versus 5 percent).

For American Indian households, the findings were even more alarming:

“American Indian respondents were more likely than White respondents to:

  • decline to pursue further education or training in connection with their employment (47 percent versus 24 percent [of White households]);
  • turn down job offers at a higher rate (37 percent versus 22 percent); or
  • quit their jobs (27 percent versus 10 percent).”

These studies from Montana were completed before the pandemic. During the pandemic, Grunewald and his Minneapolis Fed colleagues also found the impact of child care interruptions were falling disproportionately on women.

Using data from the Bureau of Labor Statistics Current Population Survey, the authors showed that at the beginning of the pandemic (April 2020), nationwide “mothers and fathers of young children were, respectively, 1.7 and 1.4 percentage points more likely to report that home and/or family care responsibilities kept them out of the labor force than in November 2019.” By November of 2020, however, “mothers of young children were 2.2 percentage points more likely than in November 2019 to report that care responsibilities kept them out of the labor force, while fathers had recovered to about the same situation as in November 2019….”

These two articles paint a fairly clear picture that while inadequate child care is still a very personal family issue, the shortage does indeed have economic effects that reach out into the community and beyond. With Greater Minnesota’s continuing need for workers to keep an expanding economy moving and the growing interest in living in rural areas, ways to support and grow our rural child care network are more important now than ever.