New research finds that the economic cost of the infant and toddler childcare crisis in the United States has more than doubled to $122 billion, impacting businesses, the working parents they employ, and ultimately taxpayers in terms of lost tax revenue.
The ReadyNation study broke it down as $78 billion in lost parental income, $23 billion in lost business output, and $21 billion in lost tax revenue for a total economic loss of $122 billion. In 2018, the total U.S. economic impact was less than half that amount ($57 billion), underscoring how much the pandemic has exacerbated the infant and toddler childcare crisis.
Using data on the proportion of the U.S. Gross Domestic Product (GDP) and the population each state represents, ReadyNation derived the estimated economic impact in New Jersey as $3.6 billion.
Productivity challenges affect both employers and employees. Almost two-thirds of parents of infants and toddlers facing childcare struggles reported being late for work or leaving work early, and more than half reported being distracted at work or missing full days of work, the report said.
An overwhelming 85% of primary caregivers said problems with childcare hurt their efforts or time commitment at work. These challenges had predictable impacts: more than one quarter of caregivers said they’ve been reprimanded at work, and nearly one quarter have been fired.
As a result, the nation’s 14.1 million working parents with children under age 3 lose $78 billion per year in earnings and job search expenses, the report said.
Meanwhile, productivity problems cause employers to lose $23 billion annually in revenue and hiring costs due to the childcare challenges experienced by their workforce. Taxpayers, in turn, are impacted by the loss of $21 billion a year in lower federal and state tax revenue, which affects the services that governments can provide, the report said.
Interrelated challenges combine to build a childcare crisis for working parents and businesses, the report said. More than half (51%) of U.S. residents live in a childcare “desert,” where there are more than three children under age 5 for every licensed childcare slot. Availability is especially limited for families who have infants and toddlers, have low incomes, work nontraditional hours, or live in rural areas.
The high cost of childcare is also a challenge for many families. In 34 states and the District of Columbia the average cost of center-based childcare exceeds that of in-state public college tuition. The quality of childcare also suffers from a high rate of provider turnover due in part to low wages.
“Beyond its impact on the workforce and economy today, the infant-toddler childcare crisis damages the future workforce by depriving children of nurturing, stimulating environments that support healthy brain development while their parents work,” ReadyNation said.
“A failure to strengthen the country’s fragile childcare infrastructure will lead to more and more economic damage to employers, workers, and taxpayers,” ReadyNation said.
ReadyNation, part of the bipartisan nonprofit Council for a Strong America, leverages the experience, influence, and expertise of more than 2,000 business executives to promote public policies and programs that build a stronger workforce and economy. To read the technical report “Childcare and Working U.S. Families: A Post-Pandemic Analysis” go here.