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News from EPI Public investments in early childhood care and education would have far-reaching benefits

In It’s time for an ambitious national investment in America’s children, EPI researchers outline the benefits of a large public investment in early childhood care and education (ECCE)—to children, families, society, and the economy.

“Two of the most glaring weaknesses in the U.S. economy in recent decades have been stagnant economic mobility and decelerating productivity growth,” said EPI Research and Policy Director Josh Bivens. “An ambitious investment in child care and early childhood education is a key way to address both of these problems”.

The authors propose a range of investments including expanded public funding for home visits by trained nurses to help parents both before and after childbirth, providing resources to allow parents to access high-quality early childhood care and education,  and investments to boost the quality of jobs and workers in early childcare settings.

“High quality child care and early childhood education has substantive, long-lasting benefits for children and for society writ large,” said Elaine Weiss, National Coordinator of the Broader, Bolder Approach to Education. “Kids that have had these opportunities early in life go on to do better in school and eventually do better in the labor market.”

These investments would yield a number benefits for children, helping to close educational achievement gaps between low- and high-income children and reduce interactions with the criminal justice system later in life. Public investment in ECCE would also free up family resources and help more women enter the labor force, which could boost GDP by as much $210 billion. Investing in child care would also boost wages for child care workers, who are among the lowest-paid workers in the country. The additional tax revenue and reduced government expenditures that would result from investing in ECCE could provide government with roughly $70 billion in additional annual funding, which would provide substantial potential financing for these investments. In the long run, as the benefits from a more-productive workforce that results from better ECCE come to fruition, these investments would essentially be entirely self-financing even from a narrow government budget perspective.

“Inequities in education and opportunity begin long before children start school, and they stay with people for their entire life,” said Valerie Wilson, Director of EPI’s Project on Race, Ethnicity, and the Economy. “The benefits to an ambitious national investment in child care and early childhood education go beyond helping children and their families. Such an investment would mean a more equal, more just, and more prosperous society.”

The paper also reviews the current state of families’ access to high-quality child care in America, noting that high-quality child care is out of reach for many families, not just those with low incomes. Child care costs are one of the most significant expenses in a family’s budget. Monthly costs for a household with one child (a 4-year-old) range from $344 in rural South Carolina to $1,472 in Washington, D.C., and costs are higher for families with multiple children.

Infant care is even less affordable. Only South Dakota and Wyoming have infant care that meets the Department of Health and Human Services’ current definition of affordable—consuming 10 percent or less of a family’s income. In Massachusetts, which has one of the highest center-based infant care costs, child care is considered unaffordable for over 80 percent of families.

The report highlights the fact that the high cost of quality child care is in spite of very low wages often received by child care workers. These workers face a substantial penalty for working in the early child care sector, even after controlling for a range of labor force characteristics. These low wages do not lead to affordable care for most families, but do stand in the way of efforts to improve quality of care by providing little incentive for attracting, training, and retaining a talented, motivated workforce. Any national investment in early child care and development must include resources to boost the quality of jobs and workers in the sector.

“Child care is extraordinarily expensive and yet child care workers are among the lowest paid workers in the country,” said economist Elise Gould. “An ambitious public investment in early childhood care and education will not only make caring for young children more affordable for families, it will raise wages for workers.”

Lastly, the paper reviews the patchwork of policies intended to make child care more affordable, including the child and dependent care tax credit (CDCTC), the employer-provided child care tax exclusion, and subsidies, such as the Child Care Development Fund. It finds that while these policy efforts provide valuable help to families that manage to tap then, the scale of resources is too small and the policies are not well-targeted enough on families in the most need. For example, the benefits of nonrefundable tax credits (one of the more expensive child care policy expenditures currently undertaken by the Federal government) go mostly to well-off families, and subsidies for low-income families are inadequate and too-narrowly targeted. An ambitious, comprehensive national investment is essential to solving the child care crisis in America.