Untapped Potential: Economic Impact of Childcare Breakdowns on U.S. States
The U.S. Chamber of Commerce Foundation holds the position that childcare is a two-generation workforce issue because it is essential to supporting the workforce of today and vital to developing our workforce of tomorrow. There is not enough access to affordable, quality childcare which makes it difficult for parents trying to enter, re-enter, or stay in the workforce. In addition, the pandemic exacerbates existing issues in the childcare system and creates an impossible situation for parents, employers, and childcare providers. There are working parents who struggle to balance home childcare and work, children who miss valuable educational opportunities, childcare providers who are fighting to stay open and serve their communities, and employers wondering how and when their employees with children can return to work.
Successful solutions can only be reached by jointly addressing gaps across affordability, access, flexibility, and quality.
There have been numerous studies highlighting the developmental benefits of highquality childcare for young children as well as the professional benefits for their parents. Children gain a strong foundation and their parents can pursue careers or enhance their education or vocational skills. When there are breakdowns in the childcare system, it can cause children to miss valuable opportunities and parents may experience disruptions to their work or education. Despite the myriad benefits resulting from high quality childcare, many families are struggling to find viable options for their children. In 2019, the U.S. Chamber of Commerce Foundation conducted studies in four states—Idaho, Iowa, Mississippi, and Pennsylvania—to better understand the size of the childcare problem in those communities. The report estimated that each state lost hundreds of millions of dollars in economic activity due to breakdowns in childcare. The following year, the U.S. Chamber examined how parents, employers, and providers were responding during the pandemic to childcare choices, workplace situations, and the provision of care. In 2021, the U.S. Chamber of Commerce Foundation has conducted case studies in Alaska, Arizona, Arkansas, Missouri, and Texas.
The results indicate there is tremendous untapped economic potential in each state if childcare challenges are solved.
Alaska
Advancing Access and Affordability
The Chamber Foundation partnered with the Alaska Chamber on this report to better understand the unique needs of working parents in Alaska and examine the current childcare landscape. Since the height of the pandemic, Alaska’s unemployment rate has slowly started to return to pre-pandemic levels, falling by more than five percentage points since April of 2020. As more Alaska residents return to the labor force, it is important that there are adequate and affordable options for childcare. If parents are not able to return to work because of childcare, there are financial impacts to both parents and the economy.
Our report estimates that Alaska loses $165 million annually due to childcare breakdowns
Our report estimates how often parents are missing work or educational opportunities because of insufficient childcare. With that information in hand, we model the financial impact to the Alaska economy to understand the untapped economic potential due to childcare breakdowns. The results highlight the challenges facing families with young children and clearly show the need for flexible access to high-quality, affordable care. It is essential that any proposed solution be developed by and tailored to the unique needs and distinct challenges of each community, and directly address the issues of access, affordability, and quality.
Key findings in Alaska:
- An estimated $13 million is lost annually in tax revenue due to childcare issues
- Approximately 7 percent of parents voluntarily left a job due to childcare issues
- Forty percent of respondents reported that they or someone in their household has left a job, not taken a job, or greatly changed jobs because of problems with childcare in the last 12 months
- 58 percent of parents who voluntarily leave their jobs do so when their child(ren) is two years old or younger, indicating that childcare for infants and toddlers is the greatest need
Arizona
Access to High-Quality Childcare
The Chamber Foundation partnered with the Arizona Chamber on this report to better understand the unique needs of working parents in Arizona and examine the current childcare landscape. Arizona is one of the ten fastest growing states in the nation and is positioned to emerge from the pandemic with a strong and vibrant economy. However, as the population increases, finding and affording childcare will become an even larger issue for parents who are eager to enter the workforce. Without suitable childcare options, many Arizonans will be forced to exit the workforce, which has negative financial impact for their household and the state’s economy.
Our report estimates that Arizona loses $1.77 billion annually due to childcare breakdowns
Progress is being made in Arizona, and the Chamber Foundation is committed to supporting these positive steps forward. To do so, partnerships between early education advocates and the business community are vital to ensure that Arizona’s children, families, businesses, and economy are strong. The persistent childcare challenges will not be fixed overnight, and they won’t be remedied by a single sector. It is our hope that this report and the data it presents provide a better understanding of the challenges being faced and create opportunities for partners to discover the solutions.
Key findings in Arizona:
- An estimated $348 million is lost annually in tax revenue due to childcare issues
- Approximately 6 percent of parents voluntarily left a job due to childcare issues
- Thirty-four percent of respondents reported that they or someone in their household has left a job, not taken a job, or greatly changed jobs because of problems with childcare in the last 12 months
- Fifty-five percent of parents who voluntarily leave their jobs do so when their child(ren) is two years old or younger, indicating that childcare for infants and toddlers is the greatest need
Arkansas
Strong Childcare, Stronger Workforce
The U.S. Chamber of Commerce Foundation partnered with the Arkansas State Chamber of Commerce and Excel by Eight Foundations to understand how much breakdowns in childcare are currently costing Arkansas.
The Southeast is one of the fastest growing regions in the nation and Arkansas unemployment rate is well below the national average at slightly over 4%. Having a dynamic and competitive labor force increases the incentive to focus on supporting childcare efforts in the state. As the population increases, finding and affording childcare will become an even larger issue for parents who are eager to enter the workforce. Without suitable childcare options, many Arkansans will be forced to exit the workforce, which has negative financial impacts on their household and the limits the talent pool available to businesses in an already tight labor environment.
Arkansas employers lose an estimated $865 milliion annually due to absences and employee turnover
Our report estimates how often parents are missing work or educational opportunities because of insufficient childcare. With that information in hand, we model the financial impact to the Arkansas economy to understand the untapped economic potential due to childcare breakdowns. The results highlight the challenges facing families with young children and clearly show the need for flexible access to high-quality, affordable care. It is essential that any proposed solution be developed by and tailored to the unique needs and distinct challenges of each community, and directly address the issues of access, affordability, and quality.
Key findings in Arkansas:
- An estimated $200 million is lost annually in tax revenue due to childcare issues
- Approximately 11% of parents voluntarily left a job due to childcare issues.
- Thirty-four percent of respondents reported that they or someone in their household has left a job, not taken a job, or greatly changed jobs because of problems with childcare in the last 12 months.
- Seventy-six percent of parents who voluntarily leave their jobs do so when their child(ren) is two years old or younger, indicating that childcare for infants and toddlers is the greatest need.
Missouri
Reshaping the Childcare Landscape
The Chamber Foundation partnered with the Missouri Chamber of Commerce and Industry on this report to better understand the unique needs of working parents in Missouri and examine the current childcare landscape.
Missouri’s unemployment rate is well below the national average at slightly over 4 percent. While a competitive labor force points to a strong and improving economy, it also creates incentive for local governments and businesses to increase their support for access to childcare. Without suitable childcare options, many Missouri parents will be forced to exit the workforce. Aside from the negative financial impacts these decisions have on households and the state’s economy, fewer workers also put pressure on businesses that are already struggling to attract and retain employees in a tight labor environment.
Missouri's economy loses an estimated $1.35 billion annually due to childcare issues
Our report estimates how often parents are missing work or educational opportunities because of insufficient childcare. With that information in hand, we model the financial impact to the Missouri economy to understand the untapped economic potential due to childcare breakdowns. The results highlight the challenges facing families with young children and clearly show the need for flexible access to high-quality, affordable care. It is essential that any proposed solution be developed by and tailored to the unique needs and distinct challenges of each community, and directly address the issues of access, affordability, and quality.
Key findings in Missouri:
- An estimated $280 million is lost annually in tax revenue due to childcare issues
- Approximately 9 percent of parents voluntarily left a job due to childcare issues
- Twenty-eight percent of respondents reported that they or someone in their household has left a job, not taken a job, or greatly changed jobs because of problems with childcare in the last 12 months
- Fifty-seven percent of parents who voluntarily leave their jobs do so when their child(ren) is two years old or younger, indicating that childcare for infants and toddlers is the greatest need
Texas
Building Strong Foundations for the Future
The U.S. Chamber of Commerce Foundation partnered with the Texas Chamber of Business and Industry and Early Matters to understand how much breakdowns in childcare are currently costing Texas.
Texas is one of the fastest growing states in the nation and among the Best States for Job Opportunities according to US News. Having a dynamic and competitive labor force increases the incentive to focus on supporting childcare efforts in the state. As the population increases, finding and affording childcare will become an even larger issue for parents that are eager to enter the workforce. Without suitable childcare options, many Texans will be forced to exit the workforce, which has negative financial impacts on their household and limits the talent pool available to businesses in an already competitive labor environment.
Texas loses an estimated $9.39 billiion annually from its economy due to breakdowns in childcare
Our report estimates how often parents are missing work or educational opportunities because of insufficient childcare. With that information in hand, we model the financial impact to the Texas economy to understand the untapped economic potential due to childcare breakdowns. The results highlight the challenges facing families with young children and clearly show the need for flexible access to high-quality, affordable care. It is essential that any proposed solution be developed by and tailored to the unique needs and distinct challenges of each community, and directly address the issues of access, affordability, and quality.
Key findings in Texas:
- An estimated $1.80 billion is lost annually in tax revenue due to childcare issues
- Approximately 7 percent of parents voluntarily left a job due to childcare issues
- Thirty percent of respondents reported that they or someone in their household has left a job, not taken a job, or greatly changed jobs because of problems with childcare in the last 12 months
- Fifty-five percent of parents who voluntarily leave their jobs do so when their child(ren) is two years old or younger, indicating that childcare for infants and toddlers is the greatest need
- Data: Cicero Group
- Reports: Polygraph Creative