Stabilizing the Workforce with Affordable Child Care and Competitive Wages

Across the nation, the health of local economies depends largely on the stability and growth of its workforce. Community-based organizations and businesses that grapple with retention are faced with the direct costs associated with recruiting new employees, as well as the cost of lost productivity due to turnover. Among those hardest hit by turnover are child care providers, who cannot operate at full capacity when they are short on staff. In addition, empty classrooms directly impact the local economy: without access to child care, working parents are unable to maintain employment. Here, we explore the link between child care and the local economy.

In the United States, approximately 21 million parents of children under age 6 are in the labor force (2024). What happens when child care is simply not available, or is too expensive for part of the population?

A report from the US Chamber of Commerce Foundation, Untapped Potential: South Carolina, looks at the connection between economic growth and access to child care. In South Carolina, child care disruptions cost the state close to a billion dollars every year. A significant number of employers bear this cost through employee turnover and absenteeism. Parents also bear the cost by losing out on economic opportunities. One tenth of working parents report leaving a job because of a lack of access to reliable child care. This has implications for lost income, earning potential, and career advancement for employees. South Carolina is not alone; these employment challenges are widespread across the nation.

We heard similar views last month at Business Day in Santa Fe, which was hosted by the New Mexico Chamber of Commerce. In most places, cost is the primary barrier to finding high-quality child care. Championing access to universal child care, Lieutenant Governor Howie Morales indicated that investing in early care and education is key to diversifying New Mexico’s economy. Many parents with young children are faced with a dilemma if they are both in the workforce: use one partner’s salary to cover child care costs or forgo that salary altogether and stay home to care for children. New Mexico’s investment in universal child care is designed to remove this dilemma and stabilize and expand the workforce, in order to grow the state’s economy.

What can communities, businesses, and other organizations do to support working families? First, gather economic data to better understand the problem. According to the MIT Living Wage Calculator, child care expenses typically make up a substantial portion of a family’s expenses, after housing. Employers can find out if they are paying employees enough to meet basic needs by comparing living wages to current wages. Can employees afford to work and pay the cost of child care for their young children? Are your wages competitive with other employers in your area?

Second, everyone who is invested in the economic health of communities should get curious about the needs of working parents. That includes businesses, governmental entities, and chambers of commerce. Cost is only one of many potential barriers. What else is preventing families from accessing child care? It could be location, schedule, lack of openings, limited eligibility criteria, or something specific to the area. Communities cannot move toward a solution without understanding the underlying condition. Data about working parents can be collected by employers, local government, or other stakeholders, in order to set a new direction for local child care.

As more states begin to move the dial on child care solutions, some employers and communities are approaching the challenge head on. Innovation looks different in every community: employer-paid child care, on-site child care, flexible work schedules, and other incentives are all part of the toolkit that working parents need. Helping families solve their child care dilemma can be a powerful tool for recruitment and retention. Businesses that can engage in solutions to support working families can lower the cost of turnover for their company, while investing in workforce stability and growth for the whole economy.

We’re just scratching the surface on workforce shortages and child care. In future blogs, we’ll offer more insights and recommendations.

Do you know of an organization, community, or business that is working to address these challenge and build bridges to better child care? Foundations for Families is launching a Community Impact Award to recognize all different kinds of success, when it comes to supporting working families.

Foundations for Families strengthens communities by promoting excellence in systems of education and coordinated efforts toward full employment and family self-sufficiency. We work with many different types of organizations across the country by providing customized services to meet your needs. We invite you to explore our Consulting Services. Please reach out to explore how we may be able to assist your agency or program.

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