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Notes from the Field

The Importance of High-Quality Early Childhood Education for Children and the Economy

Early childhood education (ECE) has received increased attention since the pandemic given the impact of closures on children and families. Among other ways, access to high-quality ECE can affect the economy by supporting families' participation in the economy and paving the way for children to reach their full potential.

The views expressed in this report are those of the author(s) and are not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System.

Early childhood education (ECE) can affect the economy in a variety of ways; for example, by allowing more parents of young children to participate in the labor force. It also can help prepare young children for future success in school, potentially impacting their longer-term educational trajectories and, by extension, the future US workforce. ECE, which refers to a range of programming for children prior to reaching school age (five years old), has received increased attention since the pandemic given the impact of closures—some temporary, some permanent—on children and families. 

The state of childcare in the US is complex. The challenges for families can include affordability, accessibility, and quality. One specific issue that ECE programs face is maintaining a stable workforce. Recent research by the Cleveland Fed finds that “turnover among US childcare workers was about 65 percent higher than turnover in the median occupation in 2022, which creates challenges for the broader workforce.” In addition, the study finds that “currently, the number of childcare workers remains below prepandemic levels.”

To help shed light on the importance of ECE and the childcare landscape in the Cleveland Fed’s district (Ohio, parts of Pennsylvania, Kentucky, and West Virginia), we talked to Jamie Remp. She’s a Cleveland Fed Community Advisory Council member and executive director of King's Daughters Childcare Center in West Virginia, and she shares below some of her experiences with running a childcare center.

Why is ECE important to the community that you serve and, more broadly, in the US?

Jamie: Research shows that the economy reaps the rewards when communities have quality ECE. Children who attended high-quality ECE programs are less likely to require remedial education or special services later, saving taxpayer dollars. Access to reliable childcare allows parents, particularly mothers, to participate in the workforce, boosting the economy. Early childhood programs encourage community engagement and parent support networks and can lead to stronger, more resilient communities.

In West Virginia, where I am based, 41 percent of children under six years old do not have access to childcare. So it’s a struggle to maintain access as well as high-quality standards.

How did the pandemic affect you or the services your organization provides?

Jamie: Pre-pandemic, ECE programs faced challenges such as finding quality teachers who would work for lower wages, high operating costs to meet licensing requirements, and a never-ending list of families in need of childcare. When the pandemic hit, thousands of programs had to close their doors; some closures were temporary, but others were permanent. Families were left scrambling to find alternate childcare options and businesses were struggling with employees unable to work.

Since the pandemic, our program has experienced much longer gaps in filling positions. The average turnaround time to hire one qualified staff member is almost six months. Hiring new staff requires background checks and training before a teacher can be placed in a classroom. Delays in hiring lead to the inability to enroll students—and even classroom closures—until teachers can be hired and trained.

In my experience, childcare staff often do the job of multiple people to keep their programs running. For instance, as executive director of a childcare program, I oversee the finances, grant-writing and fundraising, project management, and maintenance of the center, and often I am filling in the gaps where we are short on staff. The teachers at our center not only create and follow lesson plans for the children, but they also clean their classrooms and toys; do laundry (blanket, sheets, and towels); feed the children breakfast, lunch, and snacks; monitor naptime; and write up a daily newsletter for each child to communicate with parents.

What is high-quality ECE and why do you think it has an impact on children and your local economy?

Jamie: High-quality ECE programs have qualified and experienced teachers, lower student-teacher ratios, a stimulating learning environment, and a lot of family engagement and communication. During the crucial years from birth to age five, these programs can heavily impact the economic, health, and social outcomes for both individuals and society.

The findings of a study carried out by Professor James J. Heckman indicate that every dollar invested in high-quality, birth-to-five early childhood programs can deliver a 13 percent return on investment. This figure represents the highest rate of economic return of any workforce development initiative. The study analyzed several life outcomes throughout participants’ childhood and adulthood, including income, IQ, schooling, health, crime, and mothers’ incomes after returning to work through access to childcare.

Other research points to enhanced cognitive development in kids such as better memory and improved problem-solving abilities, as well as stronger social and emotional skills such as conflict resolution and empathy. High-quality childcare programs can also improve school readiness and narrow achievement gaps to the benefit of children from disadvantaged backgrounds.

The bottom line

The benefits of high-quality ECE for children and families can be wide-ranging, from stronger problem-solving skills in kids to helping to build more resilient communities. Access to high-quality ECE can support families’ participation in the economy and can pave the way for children to reach their full potential, contributing to a stronger economy for everyone.