Child Care is not Child

1
Child Care is not Childs PlayThe Economic
Impact of the Child Care and After-School
Industry in Washington

• Jill Nishi, Director
• Office of Economic Development
• City of Seattle
• Report prepared by the Northwest Finance Circle

2
Overview

• Economic impact of the child care industry
• Benefits of child care
• Market inefficiencies
• Recommendations

3
Defining child care

• Early childhood education education care of
  children
• birth to 5
• Licensed child care centers homes
• Preschool programs, Head Start, ECEAP
• School-age care licensed unlicensed programs
  for children ages 5-12
• Before after school
• Summer school breaks
• Licensed care meets state standards for health
  safety
• Unlicensed care programs not requiring a
  license
• Part-time preschools
• Family, friend neighbor care
• Arts sports programs, tutoring, day camps,
  drop-in clubs

4
Washingtons child care industry

• Generates 836 million in revenue
• Creates more than 30,600 jobs
• Contributes to the infrastructure necessary to
  support a strong economy
• Provides long-term benefits
• Prepares children to succeed in school
• Sets foundation for a skilled productive work
  force of the future

5
Child care generating revenue and creating jobs

• The child care industry contributes directly to
  our state and local
• economies. Over 9,000 licensed facilities create
  jobs and earn gross
• annual revenues of 836 million

Licensed child care businesses Employees Annual Wages
Washington 9,012 30,600 566 M
King County 2,041 8,537 175 M
Seattle 620 2,491 50 M
Note 2002 data
6
Child care Washington industry employment
comparison
Manufacturingaircraft and parts 76,874
Child Care 56,900 Licensed 30,600 Unlicensed 26,300
Agriculturecrops 51,387
Apparel Retail 24,204
Hotel 23,791
7
Child care generating revenue and creating jobs

• The child care industry contributes to the
  economy through its spending in other sectors.
• Multiplier effect of child care labor income in
• Washington (2000)
• Licensed child care employees earn 566 M in
  wages
• These employees spending generates 1.64 B in
  other kinds of sales
• Resulting in 65 M in taxes (sales and BO)

8
Child care generating revenue and creating jobs

• 2003

State of Washington invested 50M in child care
Yielding a federal government match of 350M
State child care investments brought 7 to
Washington for every 1 invested
9
Consumer demand for child care

• 56 of employed parents use child care
• Working parents use an average of 26 hours a week
  for children birth to five 16 hours a week for
  school-agers

10
Economic impact of working parents wages
Average annual household earnings in Washington
51,974
Parent Impact 13 B in wages
Families with at least one working parent 250,000
11
Child care increasing worker productivity

• By making employment possible for parents
• By helping working parents to be more productive
• By supporting businesses to attract and retain
  parents in low-and moderate-wage jobs.

12
Child care increasing worker productivity

• Stable child care reduces employee
  absenteeism and improves productivity
• Child care problems cause working parents to
  miss days at work, arrive late, leave early or
  use work time to deal with these problems.
• Equivalent of 6 work days per year lost due to
  child care problems
• Cost to employers 112.5 M/year

13
Child care supporting business

• Child care subsidies help employers
• Child care subsidies help low-wage parents afford
  to work. 8 of our states working parents
  receive child care subsidies.
• The City of Seattle helps over 600 families
  afford child care so they can work.
• Over 1/3 of City of Seattle subsidies support
  employees working in retail and medical service
  sectors.

14
High quality child care a high return on
investment

• Studies show
• High linkage between quality early learning and
  school readiness and school success
• Every 1 invested in high quality early education
  yields 7 in savings to the public
• Children in high quality early learning programs
  are more likely to
• Graduate from high school
• Attend college
• Own their own home

15
Child care a failed market good

• The child care industry cant offer a high
  quality product at a price most families can
  afford.
• Public investment has not bridged the gap between
  what families can afford and what a high-quality
  child care product costs.

16
Child care a failed market good

• Because public investment is low, the cost to
  families is high
• The average family of 4 spends more than 20 of
  their budget on child care.
• In King County, child care consumes over 25 of
  the average family budget

17
Child care a failed market good

• Early education cant be delivered effectively
  without adequate resourcesemployers, working
  families and children are not getting their needs
  met
• The child care industry needs external supports
  from the public and private sectors

18
Summary

• The child care sector is an important source of
  jobs and revenue generation
• High demand for child care exists throughout the
  state
• Child care improves worker productivity in the
  short term
• In the long term, high quality child care is an
  investment in our future workforce
• High quality child care requires a higher level
  of private and public investment

19
A call to action Workforce development and
business assistance

• Recommendation 1
• Ensure child care sector workforce training needs
  are met
• Provide small business assistance in conjunction
  with child care resource and referral programs to
  help child care businesses be competitive, meet
  regulatory standards and be responsive to
  consumers

20
A call to action Sustainable financing

• Recommendation 2
• Raise state subsidy reimbursement rates to the
  75th percentile of the market rates.
• Offer cash incentives, such as tiered
  reimbursements and bonuses
• Include funding for early learning and after
  school services in the State of Washingtons
  basic education formula
• Extend current BO tax exemptions to include
  those licensed child care providers serving
  children up to age 12
• Offer tax incentives for private developers to
  incorporate space for child care in new housing
  or business developments or to offer free or
  below-market-value rent to child care programs

21
A call to action Equity and access

• Recommendation 3
• Expand eligibility for state child care subsidies
  to 300 of the federal poverty level
• Foster public/private partnerships to match
  government subsidy dollars with private sector
  contributions

22
A call to action Consumer education

• Expand consumer education and accountability
  measures.
• Quality rating systems (such as Educare)
• Expand consumer information and referral
• Institute accountability measures, such as
  developmental assessments of children to ensure
  children are thriving
• Periodic consumer satisfaction surveys

23
Conclusion

• The child care industry is part of the fabric of
  our economic infrastructure. If we are to reap
  the benefits this industry can produce, we need
  to
• Expand public and private investment
• Work in partnership with state, regional and
  local economic development organizations to
  strengthen the industry and maximize its
  contribution to our state's economy.