The Importance of Childcare in Reopening the Economy

By , and ·July 29, 2020
Northeastern University

The Issue:

Working parents comprise roughly one-third of the U.S. workforce. Having a safe place for their children to be during work hours is a requirement for these parents to be able to work. This past spring COVID-19 severely disrupted the nature and availability of childcare options as schools and daycares were shuttered. Even now, many daycares and summer camps have not reopened due to the challenges of complying with state-imposed restrictions and many schools are planning hybrid or fully online education programs for the fall. In addition, parents are left wondering if informal or unpaid caregiving arrangements with relatives, such as grandparents, are safe—particularly in states with high or resurging COVID-19 caseloads. Evidence is beginning to show the extent to which these disruptions to childcare have already affected the hours and employment of parents. Addressing the childcare needs of working parents is a key element of reopening the economy, yet little federal aid has been directed towards solving this problem to date. Failure to do so has implications for the childcare industry, the longer-term career trajectories of many parents, and the wellbeing and education of their children.

Absent adequate investment, childcare disruptions can hamper the economic recovery in the short-term and economic growth in the long-run.

The Facts:

  • Child supervision and care is an important concern for a significant share of the U.S. workforce. About one third of the workforce, or an estimated 50 million workers, has a child under 14 in their household according to a study that used data from the American Community Survey. Of these workers, 30% have all of their children under the age of 6 — requiring the most supervision. Prior to the pandemic, almost 60% (11.8 million) of children under age 5 participated in regular, weekly care arrangements with a non-parental provider —either paid or unpaid, according to 2016 data analyzed by the Conference Board (see here). Childcare facilities followed by care provided by relatives (i.e., grandparents, aunts/uncles, siblings), were the most prevalent sources of childcare used on a regular basis by parents of preschoolers. The use of non-parental childcare for children under age 5 varies considerably by state ranging from a low of 32.5% in Nevada to a high of 75.7% in the District of Columbia. School becomes the most important care arrangement for children ages 5-14. Still, about 10 % of all school-aged children (4.0 million) participated in one or more forms of organized childcare on a regular basis such as that provided by childcare centers and home-based facilities in 2016.
  • How have the pandemic's disruptions to childcare impacted working parents? We conducted a national panel survey of 2,557 working parents with PureSpectrum between Mother’s Day (May 10) and Father’s Day (June 21) this year and found that 13.3% of working parents report that they have lost a job or reduced their hours due to a lack of childcare. On average, parents are losing a full day of work (8 hours) each week to address their children’s needs during the pandemic. Combining reported hours lost for the individual as well as their spouse/partner, the survey revealed an even greater loss of 14.6 hours per week, potentially representing a significant hit to the household’s total income. The longer that the pandemic continues to affect the availability of childcare and school openings, the less sustainable stopgap measures will become for working parents. According to a recent Massachusetts survey of parents of young children, 61% of parents said that they were “struggling to work from home without childcare.” Half of the parents surveyed said that they “will not be able to return to work without a consistent childcare solution for my child.” Nationally, among working parents who reported needing care nearly two-thirds (63%) of parents had difficulty finding childcare, including 33% who found it very difficult—nearly double what parents reported just six months ago.
  • The burden of childcare has typically fallen disproportionately on women when their family cannot find or afford childcare, and this has been exacerbated by the pandemic. Even before the pandemic, women often made job decisions based on childcare constraints rather than to benefit their financial situation or career goals. In a 2018 survey conducted by the Center for American Progress, mothers were 40% more likely than fathers to report that childcare had negatively impacted their careers. Our recent survey of working parents finds that among respondents who lost a job, over a quarter of women attribute it to lack of childcare compared with one eighth of men (see chart). In all, of those saying that they lost a job due to a lack of childcare during the pandemic, 60% were women. The gender difference for reduced work hours due to the lack of childcare was much smaller. This evidence suggests that a continued lack of in-person schooling will affect all working parents, but may have especially damaging effects on the careers and earnings of women. 
  • Like almost every system in our economy, the pandemic has exacerbated pre-existing inequalities across families seeking affordable, high-quality daycare for their children. Daycare was expensive for many families prior to the pandemic but is likely to be even more so as the number of slots decreases and the cost per child increases due to space constraints, cleaning, and inability to share toys/supplies. This will likely exacerbate the hard choices that low-income families with young children have to make between spending a significant portion of their income on childcare, finding a cheaper, but potentially lower-quality care option, or leaving the workforce altogether to become a full-time caregiver. Black and Hispanic families were more likely to live in childcare deserts with few childcare options before the coronavirus pandemic struck. Indeed, our survey of working parents found that the loss of hours due to lack of childcare thus far in the pandemic is greater for women of color, women without a college degree, and women living in low-income households — groups which lost 9 or more hours per week and who were more likely to be working in essential industries that require in-person work. Moreover, households that were low-income, less educated, and nonwhite were less likely to have any type of back-up childcare. Yet, when back-up childcare was available to these vulnerable populations, they lost fewer hours of work per week during the pandemic. For example, women without a college degree lost 7 hours instead of 9 hours per week.
  • The pandemic's impact on childcare options and education is likely to be having detrimental effects on children themselves in ways that can exacerbate inequities in the long-term. Many children rely on early childhood educators for stable, nurturing care. The early learning opportunities provided by pre-schools can help reduce achievement gaps between children from low-income families and their more affluent peers that emerge well before kindergarten and largely persist throughout K–12. According to a Massachusetts survey of 2,300 parents of young children between April 20 and May 29, 2020, 84% of parents said that they were “worried that my child is missing out on important developmental opportunities (socialization and learning)” while daycares have been closed. For school-age children differences in access and availability of learning resources also become more pronounced when schooling is conducted remotely (see here).
  • Absent adequate investment, there is a concern that many temporary childcare closures will become permanent ones, hampering the economic recovery in the short-term and economic growth in the long-run. Before the pandemic, the childcare industry was already operating under very thin margins; COVID-19 has made these margins even thinner and has driven costs and tuition fees upward. Strict child-staff ratios and space requirements imposed by states, such as Massachusetts, have reduced the capacity of childcare centers (as well as their revenues). These restrictions mean either steep increases in tuition for families or going out of business. Like other industries in the service sector, the childcare industry has suffered large job losses due to the pandemic, some of which are likely to be permanent. Between March and April, 351,500 child-care workers lost their jobs with just under one-third of those jobs having been recovered in May and June. According to a July survey of childcare programs by the National Association for the Education of Young Children (NAEYC) enrollment in these programs had dropped by two-thirds. The same survey found that 40% of such programs said they would have to close if they did not receive government support. 
  • Federal recovery efforts to date have done very little to shore up the childcare industry or to support working parents. Barriers to the application process for the Paycheck Protection Program (PPP) and the program itself have hampered its effectiveness in addressing the needs of the childcare industry. Only 53% of childcare centers and 25% of family childcare applied for a PPP loan and of those, only half were approved for a loan—roughly equivalent to one-quarter of the childcare market. Although a federal relief package in March provided an additional $3.5 billion for the Childcare Development Block Grant (CCDBG) for emergency support, the funding is not enough to keep childcare programs afloat for long and did not go to all types of providers. Congress also enacted a temporary national paid leave program, but few parents seem to know about it or have accessed it. Under the Families First Coronavirus Response Act (FFCRA), workers can receive up to 10 weeks of paid and medical family leave in 2020 through their employer at two-thirds of their salary to care for a child who is home due to school or day care closures. However, the benefit only applies to parents working at employers with less than 500 people and small businesses with fewer than 50 employees or employers of health care providers and emergency responders may choose not to provide paid leave. Not surprisingly, our survey of working parents finds that only 4% of working parents have used paid leave during the pandemic.

What this Means:

Childcare is a critical piece of our economic infrastructure that enables parents to “get to work” just like roads and bridges do for commuters. The obstacles that childcare imposes on workers during the COVID-19 crisis are widespread and not limited to just a few key industries or certain geographic areas. Many families were able to find short-term solutions during the initial round of daycare and school closures by reducing hours, taking paid or unpaid leave to care for children, or alternating schedules with another adult in the household. Even if parents are able to juggle working from home, they are not likely to be as productive. However, these stopgap measures were based on the assumption that the fall would bring a return to school and organized childcare and are simply unsustainable for the long-term. The longer that the childcare crisis continues, it is likely that more parents, primarily women, will need to drop out of the labor force to care for children. A full economic recovery simply cannot happen without adequate childcare.

  • Editor's note: The authors wish to acknowledge financial support for this research provided by Northeastern University and outstanding research assistance provided by John Fallon.

  • Topics:

    Coronavirus / Labor Force Participation
    Written by The EconoFact Network. To contact with any questions or comments, please email [email protected].
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