8. DECENT WORK AND ECONOMIC GROWTH

Seven Facts About the Economics of Child Care | CEA | The White House

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Seven Facts About the Economics of Child Care | CEA | The White House
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Seven Facts About the Economics of Child Care | CEA  The White House

Report: The Economics of Child Care and the Sustainable Development Goals

Introduction

Those who care for children, the elderly, and people with disabilities are vital for the healthy functioning of our economy. Access to affordable, high-quality care allows individuals to enter the labor force, reduce absenteeism at work, and retain more of their income to spend on basic necessities like food and housing.

The Biden-Harris Administration’s Commitment to Affordable Care

The Biden-Harris Administration has demonstrated its commitment to supporting affordable care through direct investments such as the American Rescue Plan, the CHIPS and Science Act, and each of its annual Budgets. On the one-year anniversary of the Biden-Harris Administration’s Executive Order on Increasing Access to High-Quality Care and Supporting Caregivers, this report focuses on child care specifically, highlighting seven reasons the economics of child care necessitate policy interventions like those enacted and proposed by the Biden-Harris administration to make high-quality, affordable care available to more working families.

Reasons for Policy Interventions in Child Care

  1. The provision of child care is currently at an inefficiently low level.

    While the benefits of high-quality childcare extend to the entire society, the financial burden is primarily borne by individual families. This scenario is an example of what economists call positive externalities: longer-term benefits to society beyond what’s captured in today’s costs to families. It thus presents a textbook case for public subsidies for child care provision because relying on families alone to foot the bill will lead to the under-provision of care. First, access to high-quality care enhances academic outcomes for the children who receive it, but also those of their future classmates. Second, reductions in criminality associated with high-quality child care have large societal cost-savings. Third, a large literature links increased maternal labor supply to access to childcare. This not only improves outcomes for mothers affected but also enlarges the labor pool, benefiting local businesses and the economy broadly.

  2. The child care business model has been historically unsustainable.

    The child care market is a decentralized patchwork of providers caring for children in homes, centers, and schools. While this varied landscape helps to provide families the flexibility to choose the early care and education (ECE) options that best meet their needs, challenges in the market lead to a persistent gap between the cost of providing high-quality care and prices that families can afford. On the supply side, businesses struggle to invest in quality improvements such as increased compensation for staff or lower child-to-educator ratios while charging rates that families can afford. On the demand side, families face liquidity constraints given that child care costs are more likely to come at a time when parents are in the early and relatively unstable years of their careers. This mismatch leads to underprovided high-quality child care relative to demand from families.

  3. Child care costs have been growing rapidly; wages for child care workers remain low.

    Child care prices rose 210 percent—nearly three times as fast as the overall price index—from 1990 to 2019. While child care worker pay has seen recent increases, the median pay for a child care worker in 2022 was still under $30,000 per year. Persistently low wage prospects make attracting and retaining workers difficult, and issues with recruitment and retention can limit the supply of high-quality care. Public subsidies on the demand and supply sides of the market can target issues of cost and pay, allowing providers to invest in often costly, high-quality improvements such as worker compensation without raising prices faced by consumers.

  4. Low-income families face the greatest cost burdens.

    Families are often burdened with the cost of child care when they can least afford it: early in parents’ careers when incomes are lowest and they are saddled with other major expenses like mortgages and student loans. This makes borrowing against future savings to pay for child care difficult, limiting families’ ability to smooth their consumption. Costs are especially salient for low-income families, who tend to spend a greater share of their take-home income on necessities. Another stressor on those incomes—such as child care—makes it difficult for families to afford necessities like food and shelter. Due to cost and other access issues, low-income households also have the hardest time finding care.

  5. Investments in quality childcare produce enormous returns for children.

    The long-run benefits associated with high-quality early educational experiences mean that the return on these types of investments is often high: estimates of the long-run benefits of high-quality child care find a $7 to $12 return on every $1 invested in high-quality programs. Investments in quality care support children’s healthy development and early learning from birth, which lead to longer-term benefits for individuals and families that can spill over to their communities and the economy more broadly.

  6. Access to quality, affordable childcare allows parents to remain in the workforce.

    Despite record levels of female labor force participation, data suggest that working mothers tend to take on a disproportionate share of caregiving responsibilities, scaling back hours in the workplace or leaving the workforce altogether for extended periods of time. Employment changes like these can negatively impact a woman’s lifetime earnings and career trajectory. CEA analysis of Current Population Survey data found that, among employed mothers of children under age six, 27 percent are working part-time compared to 11 percent of employed fathers of young children and 21 percent of all employed women.

  7. Federal funding through the American Rescue Plan has played an important role in stabilizing the child care industry.

    Finally, recent work from the CEA has highlighted how Biden-Harris Administration action has benefited paid and unpaid caregivers: improving the economic prospects of workers—as reflected in wages and employment—and allowing individuals with caregiving responsibilities to participate more equally and fully in the labor market. This funding succeeded in slowing cost growth for families over a period when overall inflation was accelerating, stabilizing employment and increasing wages for child care workers, and increasing maternal labor force participation.

Conclusion

The Biden-Harris Administration has continued to uplift the importance of care and supporting care workers through various actions and funding. This report highlights the significance of affordable child care in achieving the Sustainable Development Goals (SDGs) and emphasizes the need for policy interventions to ensure high-quality, affordable care is available to more working families. By addressing the economic challenges and barriers associated with child care, we can create a more equitable society and improve outcomes for children, families, and the economy as a whole.

SDGs, Targets, and Indicators

1. SDGs Addressed or Connected to the Issues Highlighted in the Article:

  • SDG 1: No Poverty
  • SDG 3: Good Health and Well-being
  • SDG 4: Quality Education
  • SDG 5: Gender Equality
  • SDG 8: Decent Work and Economic Growth
  • SDG 10: Reduced Inequalities
  • SDG 17: Partnerships for the Goals

The article discusses the importance of affordable, high-quality care for children, the elderly, and people with disabilities. This connects to SDG 1 (No Poverty) as access to such care allows individuals to retain more of their income for basic necessities like food and housing. It also relates to SDG 3 (Good Health and Well-being) as high-quality childcare enhances academic outcomes for children and reduces criminality. Furthermore, it is connected to SDG 4 (Quality Education) as access to childcare improves educational outcomes. The article also highlights the gender disparities in caregiving responsibilities, which is relevant to SDG 5 (Gender Equality). Additionally, the economic benefits of affordable care and its impact on labor force participation and economic growth align with SDG 8 (Decent Work and Economic Growth). The article also touches upon the challenges faced by low-income families, indicating a connection to SDG 10 (Reduced Inequalities). Finally, the mention of federal funding and policy interventions reflects the importance of partnerships for achieving the goals, aligning with SDG 17 (Partnerships for the Goals).

2. Specific Targets Based on the Article’s Content:

  1. Target 1.2: By 2030, reduce at least by half the proportion of men, women, and children of all ages living in poverty in all its dimensions according to national definitions.
  2. Target 3.2: By 2030, end preventable deaths of newborns and children under 5 years of age, with all countries aiming to reduce neonatal mortality to at least as low as 12 per 1,000 live births and under-5 mortality to at least as low as 25 per 1,000 live births.
  3. Target 4.2: By 2030, ensure that all girls and boys have access to quality early childhood development, care, and preprimary education so that they are ready for primary education.
  4. Target 5.4: Recognize and value unpaid care and domestic work through the provision of public services, infrastructure, and social protection policies and the promotion of shared responsibility within the household and the family as nationally appropriate.
  5. Target 8.5: By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.
  6. Target 10.2: By 2030, empower and promote the social, economic, and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion, or economic or other status.
  7. Target 17.17: Encourage and promote effective public, public-private, and civil society partnerships, building on the experience and resourcing strategies of partnerships.

The targets identified are aligned with the specific SDGs mentioned earlier. They focus on reducing poverty (Target 1.2), improving health and reducing child mortality (Target 3.2), ensuring access to quality education (Target 4.2), recognizing and valuing unpaid care work (Target 5.4), promoting decent work and equal pay (Target 8.5), reducing inequalities (Target 10.2), and fostering partnerships (Target 17.17).

3. Indicators Mentioned or Implied in the Article:

  • Indicator 1.2.1: Proportion of population living below the national poverty line, by sex and age.
  • Indicator 3.2.1: Under-5 mortality rate.
  • Indicator 4.2.1: Proportion of children under 5 years of age who are developmentally on track in health, learning, and psychosocial well-being, by sex.
  • Indicator 5.4.1: Proportion of time spent on unpaid domestic and care work, by sex, age, and location.
  • Indicator 8.5.1: Average hourly earnings of female and male employees, by occupation, age group, and persons with disabilities.
  • Indicator 10.2.1: Proportion of people living below 50 percent of median income, by age, sex, and persons with disabilities.
  • Indicator 17.17.1: Amount of United States dollars committed to public-private and civil society partnerships.

The indicators mentioned or implied in the article can be used to measure progress towards the identified targets. These indicators include measuring the proportion of the population living below the national poverty line (Indicator 1.2.1), under-5 mortality rate (Indicator 3.2.1), developmental progress of children under 5 years of age (Indicator 4.2.1), proportion of time spent on unpaid domestic and care work (Indicator 5.4.1), average hourly earnings by gender and disability status (Indicator 8.5.1), proportion of people living below 50 percent of median income (Indicator 10.2.1), and the amount of financial commitments to partnerships (Indicator 17.17.1).

Table: SDGs, Targets, and Indicators

SDGs Targets Indicators
SDG 1: No Poverty Target 1.2: By 2030, reduce at least by half the proportion of men, women, and children of all ages living in poverty in all its dimensions according to national definitions. Indicator 1.2.1: Proportion of population living below the national poverty line, by sex and age.
SDG 3: Good Health and Well-being Target 3.2: By 2030, end preventable deaths of newborns and children under 5 years of age, with all countries aiming to reduce neonatal mortality to at least as low as 12 per

Copyright: Dive into this article, curated with care by SDG Investors Inc. Our advanced AI technology searches through vast amounts of data to spotlight how we are all moving forward with the Sustainable Development Goals. While we own the rights to this content, we invite you to share it to help spread knowledge and spark action on the SDGs.

Fuente: whitehouse.gov

 

Seven Facts About the Economics of Child Care | CEA | The White House

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