Massachusetts faces both a child care problem and a workforce problem — but the two are inextricably linked. As the economy continues to recover from the coronavirus pandemic, finding ways to access high quality, affordable, flexible child care is essential to unlocking the state’s full economic potential.
A new study by the Massachusetts Taxpayers Foundation demonstrates how urgent the situation is. Before accounting for people who left the workforce during the pandemic, working families lose $1.7 billion in wages annually when they miss work or have to reduce hours because they don’t have enough child care options. But it’s not just families. Employers lose $812 million due to lower productivity, costs due to turnover and rehiring expenses. Meanwhile, the Commonwealth sees $188 million in state tax revenues disappear every year due to lower earnings and lost wages.
To understand how widespread the problem is, consider the nearly 300,000 working parents in the Commonwealth with children under the age of 5. Nearly two-thirds of these parents miss roughly 14 days of work a year due to child care issues — which equates to 112,000 parents losing $457 million in earnings. Another 20,000 working parents, nearly 1 in 10, had no choice but to move from full-time to part-time jobs because of child care issues, reducing their hours permanently and losing some $1.2 billion in wages. Meanwhile, another 35,000 parents left the workforce entirely, costing employers approximately $563 million a year in extra rehiring and retraining expenses. This is bad for families, bad for children, and bad for employers and the economy.
The high cost of infant care presents one of the biggest challenges. Massachusetts is the most expensive state in the nation for infant care, and at $21,000 per year, is almost 25 percent above the national average and more expensive than tuition and fees at a four-year public college. Child care costs for toddlers are not much lower, averaging $15,095 a year. Despite Massachusetts having one of the highest median incomes in the nation, a typical family with an infant and toddler in full time day care may spend nearly 40 cents of every dollar they earn on child care. That is not a recipe for success.
The issue is complicated further by changing workforce dynamics and demographic shifts underway in Massachusetts. These include a drop in the number of people of prime working age (between 20-54), a rise in the population of those over 65, and a declining birth rate. Collectively, these trends suggest a shrinking workforce, but also highlight why it is so critical to get parents who are working — or want to work — the support they need.
So what can be done? There are many options on the table and they deserve serious consideration. Governor Charlie Baker has suggested policymakers immediately replenish the Commonwealth Cares for Children program, which supports child-care providers, irrespective of any other public subsidies they receive, by some $450 million. He also proposed increasing the dependent care credit to defray the cost of child care. Meanwhile, the Early Education and Care Economic Review Commission recently released its report identifying immediate, short-term and long-term improvements to the system. Among their recommendations was a suggestion that providers be paid based on enrollment rather than attendance to smooth out revenues. This is a sound idea and should be implemented.
With the pandemic having changed how we work, child care must be changed to better meet the needs of employees and employers. With engagement on this issue from government, the private sector, and community leaders across the Commonwealth — we can finally make child care the priority it needs to be. As MTF ‘s report points out, there is a cost for inaction. Representative Katherine Clark, the third-ranking Democrat in the US House of Representatives, succinctly put it: “For too long, America has failed to recognize child care for what it is: an essential piece of our economic infrastructure. Just like roads and bridges, child care is fundamental infrastructure to our economy.”
Indeed, it is — child care stakeholders need to work together to create a sustainable and affordable care system.
Eileen McAnneny is president of the Massachusetts Taxpayers Foundation.