Childcare crisis costs US firms money

The Covid-19 pandemic exposed each the cracks and the resilience of the American economy, putting child care front and center as daycare centers closed, classes moved to distant learning, and fogeys tried to juggle child care with their jobs.

While employment within the childcare sector has returned to baseline levels following the pandemic, latest data from the Bureau of Labor StatisticsA shortage of employees and available places for youngsters in some areas is putting pressure on the sector.

Costs are also rising for families. Bank of America February report showed that costs for families increased by 15 to almost 30 percent within the fourth quarter of 2023 in comparison with the identical period last 12 months by way of average child care payments per household. The largest increase was seen amongst households with median incomes between $100,000 and $250,000 per 12 months.

Proponents of policy motion argue that child care, including that of infants and toddlers, is an economic problem that affects all Americans, not only those with young children.

Last fall, billions of dollars in stabilization funds from the American Rescue Plan Act intended for the kid care sector expired, which may lead to additional costs for families or the closure of facilities.

ReadyNation, an advocacy group of greater than 2,000 business leaders, lobbies on the state and federal levels to support policies and programs that strengthen the workforce and economy, including child care.

The group released a report in 2023 that found that the crisis in infant and toddler care costs the U.S. an estimated $122 billion in lost earnings, productivity and revenue annually, up from $57 billion in 2018, before the pandemic exposed and exacerbated gaps within the system for working families and the companies that depend on them.

ReadyNation’s study found a mixture of “Covid-19 and inadequate political measures has now significantly worsened the crisis.”

“All taxpayers are affected by this. We need to be clear that taxpayers are losing $1,470 per working parent each year because of less income tax paid and lower sales tax due to the lack of purchasing power of the unemployed,” said Nancy Fishman, national director of ReadyNation.

Part of the nationwide solution is supporting what the group calls “the workforce behind the workforce”: early childhood care providers.

“Supporting early childhood education workers could include things like ensuring that child care providers have access to benefits. We all know how important benefits are, whether it's health insurance benefits or the ability to find quality child care for their own children,” Fishman told CNBC. “Programs that support additional training and education for child care providers are also important.”

In California alone, ReadyNation predicts the economic damage from lost revenue, productivity and sales shall be an estimated $17 billion. The organization estimates that that is greater than some other state within the country.

While the variety of child care jobs within the state has rebounded to 2020 levels since this spring, in accordance with an evaluation by the Center for the Study of Child Care Employment, other states have seen larger employment gains following the pandemic.

Some child care providers in California joined together in 2019 to form Child Care Providers United, which now represents greater than 40,000 licensed and unlicensed friend-and-family child care providers who work in the house. The providers are a part of California's state subsidy program, and the union is a partnership of SEIU Locals 99 and 521 and UDW/AFSCME Local 3930.

The group received its first contract in 2021, giving it access to the country's first retirement advantages.

The union says child care employees are currently reimbursed a percentage of the prices of providing care within the state. The average hourly wage for child care employees is between $7 and $10, and lots of care employees don’t have any take-home pay, it says.

Providers are currently lobbying through the federal budget process to recuperate the complete cost of providing care with a purpose to add dignity to their work, keep providers open, and attract recent providers to the job market.

Deborah Corley-Marzett runs a subsidized care nursing home in Bakersfield, California. She told CNBC she would really like to rent more staff to support herself and the kids, but it surely's difficult to seek out the correct people and offer competitive wages on this environment. Low-wage employees within the state's fast-food sector, for instance, just hit a historic minimum wage of $20 an hour, putting pressure on other sectors to maintain up.

“I have a staffing problem. I literally can't afford to hire someone to work with me in the mornings right now. I can't afford that,” Corley-Marzett said. “I don't have enough kids right now. But I physically can't take on any more kids.”

Lawmakers argue that while progress has been made, much stays to be done. Democrat Nancy Skinner, who represents parts of the Bay Area and is chair of the California Women's Caucus, said the group continues to put emphasis on early childhood care and education. The group advocated for increasing state spending on early childhood care and education by $2 billion over the past two years, for a complete of $6.5 billion.

The caucus' current focus is on maintaining stable reimbursement rates for child care facilities because the state struggles with a budget deficit.

“We have low unemployment, but many sectors of the economy are looking for workers,” Skinner told CNBC. “If your family is in a situation where you can't go to work because you don't have adequate child care or you can't afford child care, then you can't fill that job that's unfilled and waiting for you.”