How Childcare Challenges Are Curbing Economic Opportunity

Summary

Many people rely on childcare to work. However, experts have found that in some states and neighborhoods it is now harder to find reliable and affordable childcare than it was five years ago.

It affects the US economy if people want to work but can't. Businesses need workers who can provide services and produce goods. Though conditions have cooled, the labor market remains tight historically speaking, meaning there are more open positions available than unemployed workers willing and able to fill them. When people want to work but can't, they typically spend less money in their local economies and pay less in taxes, among other consequences that impact our economy.

The Federal Reserve, which is mandated to set monetary policy to promote maximum employment, studies how issues such as access to childcare affect the economy.

The childcare industry’s challenges have existed for some time but worsened with the COVID-19 pandemic. Childcare workers earn low wages, but centers generally can’t pay them more and pass on the costs to caregivers, as the cost of childcare for caregivers is already higher than many can afford. If centers cannot attract and retain workers, they can’t operate: Childcare is an industry that relies on people.

Given the challenges, some employers are offering benefits such as financial contributions toward employees’ childcare costs and on-site daycare centers. Some states and cities are also developing programs and tactics to address childcare challenges. For example, Kentucky started a program to help with childcare costs. The state and employers pay a part of the cost, and employees pay the remaining amount. Some cities have changed their zoning codes to make it easier to open and operate childcare centers.

In this latest multimedia story by the Federal Reserve Bank of Cleveland, sources share ideas for innovation and possible options to address childcare issues. Parents share the childcare challenges they’ve faced and how they’ve navigated them. A daycare center shares a look inside its operations and its finances.

Featured in this story on childcare are the voices of

• Childcare workers
• Parents/caregivers who work and have to consider how to afford childcare
• City and state policymakers
• Researchers from the Cleveland Fed and elsewhere who’ve studied childcare
• Workforce development practitioners

Read an excerpt from the story:

Mandy Beever went without a job for a year, not because she didn’t complete her job training or acquire the software certification she pursued, but because she couldn’t find reliable childcare.

Beever thought things were looking up when she landed a spot for her youngest son, Bentley, at a nearby childcare center, enabling her to start a job as a paralegal in 2022. Her childcare woes were far from over, however. The center, she says, didn’t work for her family, so she transferred Bentley to an in-home daycare. The operator there, though, would text Beever on one too many mornings saying she couldn’t watch him those days. Beever’s mom could sometimes pinch-hit and watch Bentley, but on days Beever couldn’t find care, she had no choice but to ask to work from home or take leave. “I don’t have care otherwise,” she says. “I’m a single parent. Daycare is my only option. Not having childcare put me in a bad spot. Daycare is the first steppingstone to having a job. It’s not that people are not trying to do better for themselves and their families. It’s that they can’t without childcare.”