Linking Economic Development and Child Care

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Linking Economic Development and Child Care
Presented to

• Mildred E. Warner Ph.D.
• Dept of City and Regional Planning
• Cornell University
• http//economicdevelopment.cce.cornell.edu

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What is the Economic Importance of Child Care?

• Children - Human development (cognitive and
  social skills)
• Parents Choice career ladders, labor
  productivity
• Regions Child care employment, children served,
  regional economic linkage
• Society Sustainability, Social infrastructure

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Impact on Children

• Early Care and education promotes cognitive
  social and emotional development of children
• Expenditures (-) are now being reinterpreted as
  investments ().
• Concerns
• Too much emphasis given to high returns from
  model programs
• Focus on preschool alone is inadequate
• Targeting misses the importance of child care as
  a community infrastructure and broader societal
  benefits

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Wide Variation in Returns All Positive

• Model studies show wide variation in benefitcost
  ratios due to differences in person, place and
  context
• Abecedarian 31
• Chicago Parent Child 71
• Perry Preschool 71 (171 to age 40)
• Do not expect similar returns when take model
  programs to scale
• Universal preschool estimated benefit 11
• Middle class children receive great benefit from
  public preschool since least likely to receive
  private preschool without subsidies. To improve
  access and society benefit, focus on all
  children, not just poor children.

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Where Children Spend Their Time
Preschool is not enough! Why so much focus on
formal care when children spend so little time
there?
Average Time Allocation of Children Under 12 in
Two-Child, Two-Parent Families in 1997, Based on
Folbre 2006 analysis PSID-CD
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Need a More Comprehensive View

• Economic returns are highest when all levels of
  human ecology are considered

Regional Economy, Policy Environment ECE system
quality, supply
Parent Environment Workplace policy
Child Environment Home, child care
Morrissey, Taryn and M.E. Warner 2007. Why Early
Care and Education Deserves as Much Attention, or
More, than Prekindergarten Alone Applied
Developmental Science, 11(2) 57-70.
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Impact on Parents

• Florida Economic Impact study estimated 186,000
  families with children under age six where both
  parents work. (approx. 630,000 children under
  age 6 whose parents work). Estimated parental
  earnings of 5.6 billion.
• Quality child care reduces absenteeism (by
  30-40) and turnover in the parent labor force.
  The average parent misses 9-13 workdays per year
  due to child care failures.
• Parents need flexibility in three domains work,
  child care and family responsibilities (Emlen
  1998)
• Current child care choices are too constrained
• Attention to parents needs must be part of
  workforce policy
• Shellenback, K. 2004. Child Care and Parent
  Productivity Making the Business Case, Cornell
  Report

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The Historic Increase in Mothers Labor Force
Participation Rates in the U.S. Has Leveled Off
Attention to parents needs must be part of
workforce policy
Folbre, 2006 based on BLS
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Market and Household Care

• Quality child care is provided in the home and in
  the market.
• Home care is the foundation for labor force
  participation of parents and school readiness of
  children.
• We can not focus just on market or formal types
  of child care.
• We need a system that supports the child care
  sector, and supports parents in their dual role
  as parents and workers.

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The Value of Womens Child Care Services Exceeds
their Earnings
Folbre, 2006 based on ATUS 2003 using replacement
cost approach
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Iceberg Give Attention to Both Market and
Household Care
Formal Market Care Economic Development and
Educational Policy Informal Care Strategies to
improve quality Household Care Workplace and Tax
Policy
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Regional Economy and Policy

• Child Care is a critical community infrastructure
  (Planning Magazine June 2007)
• Incorporate in housing, transportation planning
  and infrastructure
• Child care should be included in community
  planning, transportation planning, disaster
  planning (FEMA, HR 3495)
• Data collection, reinvestment after a disaster,
  public/private partnerships

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Child care - Part of state and local economic
development policy

• According to a 2006 survey of New York States
  economic development and Chamber of Commerce
  Leaders
• 83 agree that childcare should be a part of
  economic development policy.
• 82 recognize that a lack of affordable,
  quality, convenient child care reduces worker
  productivity.
• 67 feel that businesses ability to attract
  and retain workers is hurt by lack of quality
  child care.
• 58 acknowledge an inadequate supply of quality
  child care in their community.

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Data Deficit

• We need better analysis of supply and demand for
  child care
• Dont over build child care centers without
  subsidies for parents
• We need a better sense of what parents want and
  can afford
• Average price of center care in Florida
  4,000-6,000
• Average annual wage in Florida 30,000
• Percent of income parents spent on child care
  6-17
• We need a better understanding of the structure
  of the ECE sector itself
• 15,400 providers, 46,500 workers, 626,000
  children (Florida Economic Impact study based on
  2000 data)

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Child Care A Critical Economic Sector

• We do not have enough data on the size and
  structure of the child care sector
• We do know Florida parents and their children
  need quality, affordable care.
• We also know child care has a large economic
  impact
• The child care sector has higher regional
  economic linkage than other sectors which receive
  more economic development attention (Tourisms
  hotels and lodging, Retail).
• Employment and output in child care are larger
  than for job training, higher education,
  hospitals and inter-urban passenger transit.

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Refocus Economic Development Policy

• The Primary Focus is Export Growth Promotion and
  Industrial Recruitment
• Manufacturing and information technology seen as
  primary drivers.
• Tax abatements and infrastructure development are
  the primary policy tools
• Service sectors and local demand are largely
  ignored
• Focus is on industry, not workers
• Kay, Pratt and Warner. 2007. Role of Services in
  Regional Economy Growth, Growth and Change
  38(3)419-442.

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Importance of Local Services

• Local services, like child care, account for the
  largest employment and highest growth across the
  US.
• You can not export child care
• Need high staffchild ratios to ensure quality
• Economic policy has traditionally ignored local
  services such as child care
• Household production shifted to market
• Supply spontaneously generates
• Quality in such a market based approach is low
• Need economic development policy to strengthen
  the sector

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ECE Market Challenges

• ECE is an underdeveloped market sector
• Providers lack economies of scale
• Low profitability leads to high turnover and
  suppresses quality
• Providers and parents lack information to
  distinguish quality
• Parents lack effective demand to influence supply
  and quality of care
• Market challenges can be addressed with economic
  development solutions
• Warner, et al 2004. Economic Development
  Strategies to Promote Quality Child Care, Ithaca,
  NY Cornell Univ.

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Economic Development Principles and Strategies

• Strategies to strengthen the ECE sector
• Tax Credits for child care to support parents,
  programs, workers and employers (Geoff Nagel)
• Consumer Information for parents and providers
  (Quality Rating Systems Harriet Dichter)
• Business Management shared services and other
  collective management strategies (Louise Stoney)
• Workforce Development funds to train child care
  workers, support working parents and strengthen
  the child care sector (Abby Thorman)
• Capital Finance for facilities and operating
  capital (CRA, NMTC, CDBG)
• Infrastructure Planning transportation (ISTEA)

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ECE Can Strengthen and Refocus Economic
Development Policy

• Bringing ECE to the economic development table,
  has the potential to rationalize economic
  development policy
• Shift the focus from industrial attraction, to
  investments in productivity and sustainability
• ECE offers economic development benefits in the
  short term, not just the long term
• Economic development policy is based on
  incentives this would be a new approach to
  improve sustainability in the ECE sector

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Cautions Economic Development Policy

• Economic development approaches are a complement,
  not a substitute, to broader public sector
  support.
• Economic development incentives must be applied
  with caution, because competition erodes quality
  in care work.
• Economic development policy itself is often
  poorly designed.

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Broader Policy Implications

• In the long term quality ECE improves the human
  capital critical for a competitive economy.
• Market failures in our ECE system
• Our market based system of care undermines
  quality
• Markets focus on short term, but society needs
  long term investment
• Parents seek convenience and low cost, but
  children and society need high quality
• This is why our competitor OECD nations provide
  greater levels of public investment in ECE.
• Market failures must be addressed with public
  sector solutions investment, regulations

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The U.S. Under-Invests in Children and Families

• We don't see a collapsing care system because we
  don't see care as a system to begin with.
• (Mona Harrington 1999 Care and Equality (p 25)
• Public Expenditure
• Enrollment in publicly funded ECE
• Ages 1-2 U.S. 6, Europe 3-74
• Ages 3-5 U.S. 53, Europe 66-99
• Expenditure US lt 0.5 of GDP on ECE, Europe 2-6
  of GDP
• Work Place Policy
• Full time work U.S. 40 hrs/week, Europe 35-39
  hrs/week
• Required vacation U.S. 0 days, Europe 20-25
  days/year.
• Maternity leave U.S. 0 weeks, Europe 12 42
  weeks
• Sources Kammerman 2001, Gornick and Myers 2003

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Why Does the U.S. Under-Invest in ECE?

• It depends on how we frame the debate
• Private Frame - Early care and education is the
  private responsibility of parents - Failures are
  moral, not structural
• Beginning to see ECE as a public responsibility
  too
• Welfare Frame focuses on poor children only
  Head Start, subsidies.
• But these have expanded since Welfare Reform
• Education Frame Public responsibility for
  education begins at age 5
• Increased public support for pre-school
• Economic Development Frame focuses on
  infrastructure for the market not support for
  both market and family care
• Economic developers see child care as social
  infrastructure for economic development

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A Comprehensive Solution

• Institutional Support for ECE Programs to ensure
  quality.
• Publicly Funded Infrastructure to ensure ECE
  professional development, program monitoring,
  consumer education, data collection and employer
  education.
• Financial Aid for Families to ensure access to
  quality.
• Work Place Policies (e.g. paid parental leave,
  flexible work schedules with full benefits) to
  ensure parents can pursue careers and have time
  to nurture their children.
• Stoney, Mitchell and Warner 2006. Smarter Reform
  Moving Beyond Single Program Solutions to an
  Early Care and Education System, Community
  Development The Journal of the Community
  Development Society 37 (2) 101-115

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Where do we go from here?

• Cultivate connections between economic
  development leaders and child care partners in
  your community
• Share leadership and expertise.
• Tap into new sources of private (banks, credit
  unions) and public funds (CDBG, USDA, tax
  credits) for child care
• Link to transportation dollars
• Improve data systems include child care data in
  economic development and transportation planning
• Include child care leaders in economic
  development planning.

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Resources http//economicdevelopment.cce.cornell.
edu
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Cornells Linking Economic Development and Child
Care Project Reportscan be found at
http//economicdevelopment.cce.cornell.edu