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Child Care is not Child’s PlayThe Economic Impact of the Child Care

and After-School Industry in Washington

Jill Nishi, DirectorOffice of Economic DevelopmentCity of Seattle

Report prepared by the Northwest Finance Circle

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Overview

Economic impact of the child care industry Benefits of child care Market inefficiencies Recommendations

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Defining child care

Early childhood education: education & care of children birth to 5

– Licensed child care centers & homes– Preschool programs, Head Start, ECEAP

School-age care: licensed & unlicensed programs for children ages 5-12

– Before & after school– Summer & school breaks

Licensed care: meets state standards for health & safety Unlicensed care: programs not requiring a license

– Part-time preschools– Family, friend & neighbor care– Arts & sports programs, tutoring, day camps, drop-in clubs

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Washington’s child care industry

Generates $836 million in revenue Creates more than 30,600 jobs Contributes to the infrastructure necessary to

support a strong economy Provides long-term benefits

– Prepares children to succeed in school– Sets foundation for a skilled productive work force

of the future

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Child care: generating revenue and creating jobs

The child care industry contributes directly to our state and local

economies. Over 9,000 licensed facilities create jobs and earn gross

annual revenues of $836 million

Licensed child care

businesses

Employees Annual Wages

Washington 9,012 30,600 $566 M

King County 2,041 8,537 $175 M

Seattle 620 2,491 $ 50 M

Note: 2002 data

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Child care: Washington industry employment comparison

Manufacturing—aircraft and parts

76,874

Child Care 56,900Licensed: 30,600

Unlicensed: 26,300

Agriculture—crops

51,387

Apparel Retail 24,204

Hotel 23,791

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Child care: generating revenue and creating jobs

The child care industry contributes to the economy through its spending in other sectors.

Multiplier effect of child care labor income in

Washington (2000)

– Licensed child care employees earn $566 M in wages– These employees’ spending generates $1.64 B in other

kinds of sales– Resulting in $65 M in taxes (sales and B&O)

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Child care: generating revenue and creating jobs

2003

State of Washington

invested $50M in child care

Yielding a federal

government match of $350M

State child care investments brought $7 to Washington for

every $1 invested

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Consumer demand for child care

56% of employed parents use child care Working parents use an average of 26 hours

a week for children birth to five; 16 hours a week for school-agers

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Economic impact of working parents’ wages

Parent Impact:

$13 B in wages

Average annual household earnings in

Washington:

$51,974

Families with at least one

working parent:

250,000

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Child care: increasing worker productivity

By making employment possible for parents By helping working parents to be more

productive By supporting businesses to attract and

retain parents in low-and moderate-wage jobs.

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Child care: increasing worker productivity

Stable child care reduces employee absenteeism and improves productivity Child care problems cause working

parents to miss days at work, arrive late, leave early or use work time to deal with these problems.

Equivalent of 6 work days per year lost due to child care problems

Cost to employers: $112.5 M/year

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Child care: supporting business

Child care subsidies help employers– Child care subsidies help low-wage parents afford

to work. 8% of our state’s working parents receive child care subsidies.

– The City of Seattle helps over 600 families afford child care so they can work.

– Over 1/3 of City of Seattle subsidies support employees working in retail and medical service sectors.

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High quality child care: a high return on investment

Studies show: High linkage between quality early learning and

school readiness and school success Every $1 invested in high quality early education

yields $7 in savings to the public Children in high quality early learning programs are

more likely to:– Graduate from high school– Attend college– Own their own home

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Child care: a failed market good

The child care industry can’t offer a high quality “product” at a price most families can afford.

Public investment has not bridged the gap between what families can afford and what a high-quality child care product costs.

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Child care: a failed market good

Because public investment is low, the cost to families is high

The average family of 4 spends more than 20% of their budget on child care. – In King County, child care consumes over 25% of

the average family budget

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Child care: a failed market good

Early education can’t be delivered effectively without adequate resources—employers, working families and children are not getting their needs met

The child care industry needs external supports from the public and private sectors

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Summary

The child care sector is an important source of jobs and revenue generation

High demand for child care exists throughout the state Child care improves worker productivity in the short term In the long term, high quality child care is an investment

in our future workforce High quality child care requires a higher level of private

and public investment

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A call to action: Workforce development and business assistance

Recommendation #1– Ensure child care sector workforce training needs

are met– Provide small business assistance in conjunction

with child care resource and referral programs to help child care businesses be competitive, meet regulatory standards and be responsive to consumers

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A call to action: Sustainable financing

Recommendation #2– Raise state subsidy reimbursement rates to the 75th

percentile of the market rates.– Offer cash incentives, such as tiered reimbursements and

bonuses– Include funding for early learning and after school services

in the State of Washington’s basic education formula– Extend current B&O tax exemptions to include those

licensed child care providers serving children up to age 12– Offer tax incentives for private developers to incorporate

space for child care in new housing or business developments; or to offer free or below-market-value rent to child care programs

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A call to action: Equity and access

Recommendation #3– Expand eligibility for state child care subsidies to

300% of the federal poverty level– Foster public/private partnerships to match

government subsidy dollars with private sector contributions

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A call to action: Consumer education

Expand consumer education and accountability measures.– Quality rating systems (such as Educare)– Expand consumer information and referral– Institute accountability measures, such as

developmental assessments of children to ensure children are thriving

– Periodic consumer satisfaction surveys

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Conclusion

The child care industry is part of the fabric of our economic infrastructure. If we are to reap the benefits this industry can produce, we need to:– Expand public and private investment– Work in partnership with state, regional and local

economic development organizations to strengthen the industry and maximize its contribution to our state's economy.