Director, Global Employment Policy & Special Initiatives, U.S. Chamber of Commerce
April 27, 2022
The struggle to find childcare that many parents are facing right now is also a top concern for the business community. Businesses and policymakers are paying close attention to our nation’s childcare situation because a robust childcare system supports a healthy workforce and economy.
In the wake of the COVID-19 pandemic, the scarcity and high cost of childcare has become even worse and is a notable factor in the ongoing worker shortage crisis as childcare breakdowns are preventing parents from returning to work.
To help make sense of childcare’s impact on the labor force, our Data Deep Dive: A Decline of Women in the Workforce explores data on women in the workforce and childcare breakdowns.
The Childcare Economy
The childcare industry is a critical to the American economy. Not only does the sector generate its own economic output, but since childcare ensures that working parents can go to work, the industry also acts as a support to every other industry. In other words, when the childcare industry is strong, it boosts other sectors, too.
Unfortunately, even before the COVID-19 pandemic, the childcare system in this country was in serious need of attention and reform. There has long been a shortage of accessible and affordable childcare centers in the U.S., meaning many working parents were left without the support system they need to go to work every day.
In the last two years, the pandemic has only magnified this issue with 16,000 childcare centers being forced to close their doors, and many providers having to operate at limited capacity.
Breakdowns in the childcare industry are impacting families, business, and the economy in many ways:
- Parents are having difficulty finding quality childcare and balancing caring for children at home with work
- Children are missing educational opportunities and social interactions
- Childcare providers are fighting to stay open
- National, state, and local economies are hemorrhaging millions, if not billions of dollars, as the industry struggles to fully support the labor force.
The nationwide worker shortage crisis has also taken a toll on the childcare industry. Before the pandemic, there were 920,000 workers in the childcare sector. Childcare employment plummeted by more than 30% at the height of the pandemic and is still 7% lower today.
The Impact on Working Parents—Especially Women
The challenges plaguing childcare also disproportionately affect women, who make up a super-majority of the childcare workforce, 40% of whom are women of color.
As providers have reduced capacity and hours in the last two years, many parents have been forced to leave work to care for their children. According to a U.S. Chamber of Commerce Foundation study, 58% of working parents reported leaving work because they were unable to find childcare solutions that met their needs. Furthermore, 32% of women cited the need to be home to care for family members as a barrier to returning to work.
The childcare barrier is one reason why the U.S. currently has six million unemployed workers and an additional1.4 million marginally attached workers. It is also preventing many parents from returning to work. Dropping out of the workforce to care for children greatly disadvantages women, often in the form of lower wages and missed promotions.
A Costly Problem
In 2019, childcare accounted for 0.3% of U.S. GDP with a gross output of $63 billion—and that number could be even higher if the system worked as it should. On top of that, a U.S. Chamber of Commerce Foundation study found that breakdowns in childcare cause states to lose an average of $1 billion in economic activity annually. Part of the lost revenue stems from the cost of parents missing work because quality childcare was not available—or unaffordable.
To that second point, even when parents can find a childcare provider, high costs prevent many children from being enrolled. The national average cost of childcare ranges from $11,000 to $29,000 annually. Averages in high-cost areas like Washington D.C. can reach $35,000 a year. In some instances, it is more cost effective for a parent to stay home than to pay for childcare.
The lack of childcare affects more than just parents. Because of gaps in the childcare system, businesses are unable to fully re-staff their operations, leading to more closures and operating hour reductions across all industries. Absences and employee turnover costs employers anywhere from $400 million to $3 billion a year, according to a U.S. Chamber Foundation study.
The lack of accessible, affordable childcare is unsustainable for everyone. For many years, the U.S. Chamber of Commerce Foundation has said that access to childcare is a workforce issue—and has developed solutions for businesses and working parents. The Foundation’s Employer Roadmap: Childcare Solutions for Working Parents proposes ways in which businesses can lead in solving this crisis.
Businesses can improve their childcare offerings by creating clear pathways of communication with employees. Surveying employees’ needs provides the opportunity for employers to learn more about the most immediate issues working parents are facing and to create solutions that will address those challenges. Internal changes and investments can support working parents too, including flexible scheduling, onsite childcare, and vouchers or subsidies.
Public advocacy also remains an important tool in encouraging state and local governments to invest in community-based programs that will support childcare.
The U.S. Chamber and U.S. Chamber Foundation are helping employers discover and develop talent through the America Works Initiative. For more information, contact Jenna Shrove at firstname.lastname@example.org.
America Works Initiative
The U.S. Chamber and U.S. Chamber Foundation’s America Works initiative is mobilizing industry and government to swiftly address America’s deepening worker shortage crisis by providing research on underlying workforce issues, policy recommendations, and practical workforce solutions for businesses.
About the authors
Stephanie Ferguson is the Director of Global Employment Policy & Special Initiatives. Her work on the labor shortage has been cited in the Wall Street Journal, Washington Post, and Associated Press.