Child care crisis costs U.S. businesses

The Covid-19 pandemic brought to the surface both cracks and resilience in the American economy, with child care taking center stage as day cares shuttered, schools went remote and parents attempted to juggle their children with their jobs.

While employment in the child care sector has made a post-pandemic return to baseline, according to the latest data from the Bureau of Labor Statistics, a shortage of workers and available slots for children in some areas is weighing on the sector.

Costs are also going up for families. A February report from Bank of America showed costs for families increased between 15% and nearly 30% in terms of the average child care payment per household, year on year, during the fourth quarter of 2023. The largest increase was seen among households with average incomes of between $100,000 and $250,000 annually.

Policy advocates argue that child care, including for infants and toddlers, is an economic issue that affects all Americans, not just those with young kids.

Billions in stabilization funds from the American Rescue Plan Act earmarked for the child care sector expired last fall, which could lead to increased costs for families or centers closing their doors.

ReadyNation, an advocacy group of more than 2,000 business executives, lobbies in support of policies and programs at both state and federal levels that support a strong workforce and economy, including child care.

The group released a report in 2023 that found the nation’s infant-toddler child care crisis costs the U.S. an estimated $122 billion in lost earnings, productivity and revenue every year. That is up from $57 billion in 2018, before the pandemic exposed and exacerbated holes in the system for working families and the companies that rely on them.

ReadyNation’s study found a combination of “Covid-19 and insufficient policy action have now significantly worsened the crisis.”

“All taxpayers are impacted by this. We need to realize that the loss of taxpayers is $1,470 every year per working parent because of lower income taxes being paid and lower sales taxes because of lack of purchasing power from people that are 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 child care providers.

“Supporting the early childhood workforce could include such things as making sure child care providers have access to benefits. We all know how much benefits matter, whether it’s health-care benefits, or the ability for them to find high-quality child care for their own children,” Fishman told CNBC. “Programs that support additional training and education for child care providers are important as well.”