Basic economic
data on child care sector worksheet (requires Microsoft Excel)The child care industry represents a large and growing economic sector. In New York State, the child care sector was found to include 22,000 regulated establishments, employing 119,000 workers, serving 623,000 children and bringing in almost $4.7 billion in gross receipts annually.
Measuring the size of the child care sector: number of businesses (establishments), number of employees, product (children served) and sales (gross receipts)—is the first order of business in an economic analysis. This is the most important and time consuming part of the economic analysis.
Size of the Child Care Sector:
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In this section, we provide examples of the methods used to collect data and measure the size of the child care sector.
The child care sector includes for-profit, non-profit, and publicly funded establishments. There also are a large number of self-employed providers who may not be registered or licensed, and who are even harder to enumerate. In addition, some child care establishments are attributed to other sectors, including social services and education.
Different data sources capture different aspects of the sector and it is difficult to match the data from one source to another. Unfortunately, there is no single data source available that provides data on all types of care. Deciding which data sources to use and what portion of the sector to count (part and full-time, licensed, licensed-exempt, etc.) is a policy choice that research teams have to make collectively.
We recommend that researchers use sources that capture the majority of the child care providers in the area being studied. Study teams who conduct child care economic analyses typically end the process with a new appreciation for the importance of comprehensive data and a renewed commitment to more integrated child care data systems.
Most studies use licensing data from their state agencies and compare it to Child Care Resource & Referral network (CCR&R) data. State licensing data provide the number of licensed establishments, the legal capacity of children by age group, and staffing ratios that can be used to estimate employment. State market rate surveys are a source of data for the price of child care by type of provider, age group, location and, in some cases, actual enrollment. One advantage of state administrative data is the consistency in method of collection across establishments, employees, children served, and price of care. State administrative sources also can be used to calculate the amount of government investment in the child care industry. CCR&R data can confirm and enrich state data, and may provide local vacancy rates and average prices. CCR&R data often include larger numbers of family providers and license-exempt programs.1 Some study teams have conducted surveys or used an existing survey from another source to add to the available data.
National economic data sources such as the County Business Patterns, Economic Census, US Census Nonemployer Statistics, and Bureau of Labor Statistics report on certain aspects of the child care sector and can be used for a comparison with state and local administrative data. Most national economic data are available in two main categories: employer and non-employer (e.g. self-employed) establishments. When comparing state administrative data to national economic data on child care, study teams should pay close attention to the definition and coverage of the sector by each data source (see Appendix B for detailed information on national data sources). Most national data sources report on the number of child care establishments, size of labor force, gross receipts, and employee compensation, but none report on the number of children served by child care providers. National data sources provide only the aggregate number of establishments and do not distinguish between type of care, or licensed and unlicensed care.
Any economic sector is measured primarily by its size: total number of businesses, number of workers, product, and revenue. For the child care sector, this includes: number of child care establishments, size of the child care labor force, number of children served by paid care, and total gross receipts of the sector. Following is a detailed description of the methods used to measure the size of the child care sector.
The child care sector is composed of a large number of small businesses. The number of establishments is the first piece of data to collect and forms the basis for calculating many of the other measures. Most studies base the number of establishments on state licensing data. This typically includes centers, family and group family care homes, and registered after-school programs.
| New York State: 22,000 regulated child care establishments Kansas State: 8,650 licensed child care establishments |
Some government funded programs such as Head Start and pre-kindergarten are included in the licensing data and some might be license-exempt, depending on the regulations in each state. Knowing how the sector is structured is critical in order to avoid double counting or under counting the sector.
What to include in the count of establishments will depend on each state. For example, in Kansas publicly funded pre-kindergarten is totally within the public school system, so the study team decided not to include it in the total number of child care establishments, because it does not involve the private sector. By contrast, in New York State pre-kindergarten is funded both in private child care and public school settings. The New York team decided to include a complete count of all publicly funded pre-kindergarten, and thus added pre-kindergarten in public schools to the totals because it is regulated by the Department of Education and not already counted in the licensing data.
Some part-time programs may be license-exempt (nursery schools, summer camps) and not captured in the licensing data. Unless an alternative administrative record can be found that tracks these providers, they are generally left out of the analysis. At the local level, if CCR&Rs collect data on these providers, they can be added to the study. In Tompkins County, the CCR&R had data on nursery schools and other part-time programs so these were included in the count of establishments.
Types of Early Care and Education Establishments:
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For accuracy, studies should count all that it is possible to estimate accurately but should not add those portions that cannot be substantiated. For this reason, most studies do not attempt to count informal family, friend, and neighbor care. However, this can be a substantial part of the sector and the US Census Bureau Nonemployer data can give a rough estimate of the informal providers in the area being studied (see Appendix B).2
Most states have good administrative data on that portion of license-exempt providers approved to provide care for children receiving child care subsidies. The New York report counted the number of children served by license-exempt providers providing subsidy care, but did not include these providers in the total number of establishments. By contrast, the Tompkins County report included licensed-exempt providers who registered with the CCR&R. Tompkins County was able to include a more comprehensive count of providers because the local CCR&R had conducted an extensive survey of the child care sector in 2001.
| Table 1. Comparison of Child Care Establishment by Data Source | ||
| Data Sources | New York | Kansas |
| State Licensing Data (2002) | 22,000 | 8,645 |
| Estimate Based on National Economic Data | 52,950 | 10,329 |
| Nonemployer Establishments (US Census 2001) | 49,047 | 9,643 |
| Employer Establishments (County Business Patterns 2001) | 3,903 | 686 |
National economic data on the number of establishments can be used to compare and triangulate with the data from state licensing agencies and CCR&Rs. National sources for the number of employer establishments are primarily the Economic Census and the County Business Patterns. The data from these two sources can be added to the Nonemployer (self-employed providers) data series from the US Census Bureau to get an estimate of the total number of non-school-based child care establishments in the area studied (see Appendix B).
Child Care Resource and Referral Agencies:
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Table 1 illustrates how regulated care as a share of total establishments is extremely different for New York and Kansas. In New York, a large portion of the child care sector is in the self-employed sector and not counted in the licensing data. By contrast, Kansas licensed data captures more providers that are self-employed.
Study teams should pay attention to the sector’s structure. It is important to know what type of provider is dominant in your region in order to elaborate an effective policy that will reach the largest number of providers and children served. As Figure 1, from the New York report shows, it is often the case that the majority of providers are home-based small businesses, but the majority of children are served in center-based care. While 66 percent of establishments are home based, only 32 percent of the regulated child care capacity is home-based. Thus, policies to address the needs of providers may differ from policies designed to reach the majority of children served.
Child care employs:
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The number of employees is a critical measure of the size of the child care sector. Most studies use staffing ratios by type of care and age of children to estimate employment.
The general formula counts: one employee per family provider, 1.5 - 2 employees per group family provider, and the actual staffing ratio by children’s age group distribution in centers. This formula will vary by state based on licensing regulations. The employment estimates using staffing ratios are based on licensing data and include only the regulated (license and license-exempt) child care sector.
Some studies add staff for administrative support in centers, if the data are available. For instance, the New York study team used data from the Child Care Professional Retention Program (to estimate support and administrative staff for each center teacher). The New York report also used data from the Department of Education to estimate pre-kindergarten employment (not included in licensing data). Studies conducted by the National Economic Development Law Center (NEDLC) estimated the number of administrative and support staff based on a “typical” center. California assumed that each center employs a custodian, a cook, and an administrative assistant for every 80 children or more enrolled (Hildebrand and Upp, 2001a).
Some studies adjusted the employment data to account for the length of operating hours in most centers (over 8 hours). The New York study assumed that most centers stay open from 7 am to 6 pm, so there is an additional 0.38 FTE for every full time employee. Maine’s study used a similar method based on average hours per week that full-time and part-time facilities were open.
Estimating the Child Care Workforce:
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Other studies used survey data to estimate the number of employees in the child care sector. The Vermont report used data from a regional survey of child care providers to estimate licensed center and registered family care employment. Vermont’s employment estimate also includes administrative and support staff. In Vermont, the survey response rate was about 72 percent and researchers assumed the profile of the centers and family care providers that did not respond was similar to those that did. Maine also used survey data to measure employment. The number of child care employees was obtained from the State of Maine Child Care 2002 Market Rate Survey. This data was extrapolated to the state level based on data on licensed caregivers provided by Maine’s Department of Human Services.
National data sources also can be used to estimate the size of the child care labor force, but these sources only offer an aggregate number, which includes employees in both licensed and unlicensed facilities. As with the number of establishments, data on employment is available from the Economic Census, County Business Patterns, the US Census Nonemployer Statistics, and the Bureau of Labor Statistics. The Nonemployer data series (self-employed providers) from the US Census Bureau can be added to the employee data from the Economic Census or the County Business Patterns to get an alternate estimate of the total number of employees in the child care sector. As Table 2 shows, the comparison between national and administrative data on employment varies between Kansas and New York.
The Human Services and Policy Center (HSPC) at the University of Washington has compiled a catalog of state data sources to measure the size of the child care labor force (Breuning et al, 2003). HSPC is also working in collaboration with the Center for Child Care Workforce to develop a framework and methodology for measuring the U.S. child care workforce more accurately than is presently done.
Total employment can be used to compare the size of the child care sector to other local industries. Figure 2, from the Kansas report, shows a comparison between child care employment and other important industries in Kansas. Data on employment in other industries is available from the Economic Census, the County Business Patterns, Bureau of Labor Statistics, and economic modeling programs such as IMPLAN.3
| Table 2. Comparison of Child Care Employment by Data Source | ||
| Data Sources | New York | Kansas |
| Estimate Based on State Licensing Data and Staffing Ratios, 2002 | 119,564 | 14,730 |
| Estimate Based on National Economic Data | 101,987 | 16,215 |
| Nonemployer Establishments (US Census 2001) | 49,047 | 9,643 |
| Employer Establishments (County Business Patterns 2001) | 52,940 | 6,572 |
| Note: The New York data also include employees in school-based settings and these are excluded from the national economic data on child care employment. | ||
Some studies use wage data from the Bureau of Labor Statistics (see Appendix B) to compare average wages for child care workers with average wages in other service industries. The Florida and Vermont reports compare child care workers’ wages to other low paying jobs in those states. Florida’s report compares state child care workers’ and preschools teachers’ average wages in Florida to the national average for these two occupational categories. The study found that Florida wages in both categories are lower than the national average (Florida’s Children Forum, 2003).
Some studies used staff recruitment and retention data to illustrate how low wages in the child care field lead to high turnover rates. Maine’s report found that high turnover rates force child care providers to spend more of their revenue re-hiring and re-training new employees, thus reducing their capacity to expand their programs to meet the growing demand for care. Minnesota’s report found that high turnover has a negative effect on the sustainability and quality of the child care industry.
The children served by the child care industry are its product, yet comprehensive data on the number of children served is unavailable. The number of children served is needed to estimate the gross receipts of the child care sector. This data also can be used to estimate the demand-supply gap in the child care market.
Most studies use licensing data to estimate the number of children served. The general formula used by study teams is to multiply the number of providers by the legal capacity of each. State licensing regulates the overall capacity for family and group family care, and staffing ratios of centers by age of child. Capacity may over count the number of children served due to vacancy rates, but it may be hard to get data on actual enrollment.
Child care Serves:
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In some states, the licensing agency or the CCR&Rs might keep an updated database on enrollment. The Minnesota and Tompkins County (NY) reports used actual enrollment data from their state and local agencies. California, Rhode Island and Kansas adjusted the number of children served by the licensed capacity using vacancy rates. Vacancy rate estimates may be available from point-in-time surveys, such as market rate or CCR&R surveys. New York did not have data on vacancy rates. Maine’s study team used the 2002 Child Care Market Rate and Workforce Study Survey enrollment results (children ages 0-13) and extrapolated to the state level based on Maine’s Department of Human Services data.
Some studies also included a count of some of the children served in license-exempt care. Children served by license-exempt providers approved to care for children receiving government subsidies are available from state administrative data. Some states have a large number of subsidy children placed in license-exempt care. According to the Child Care Bureau (2000), 26 percent of all US children (55 percent in some states) receiving subsidies are placed in license-exempt care. The Tompkins County study included the number of children served by license-exempt providers who “register” with the local CCR&R. The New York State report included the number of subsidy children served by license-exempt providers.
Most studies also count the number of children served by government-funded programs, such as Head Start and pre-kindergarten. These programs can be found in both licensed and license-exempt establishments. Study teams should make sure they are not double counting the number of children served in licensed establishments when they add data on children from education-related data sources.
Some studies used national survey data such as the National Survey of America’s Families to estimate number of children served by paid child care (see Appendix C). Such an approach assumes that each state reflects the national average. We have found quite a bit of variation in use of paid care across the states and recommend that national surveys that do not have state level estimates, be used for comparison purposes only. In some cases there are representative data available at the state level to estimate number of children served.4
Other studies compared the number of children served by licensed care with the number of children in need of care while parents work. In order to make this comparison, study teams use data from the US Census Bureau on the number of children living in families where all parents present are in the labor force (see Appendix C).5 For example, the Census data show that 764,721 children under age 6 are living with working parents in New York State, however, the estimated number of children (ages 0-13) served in licensed care is only 623,000 children. Maine’s report shows that only one in four children in need of care while their parents work, is placed in licensed care. Some of the children not counted in New York’s and Maine’s administrative data are likely to be in paid care and some are in the care of non-paid relatives. Again, children served are the product of the child care sector. Estimating potential need for care (children of working parents) and actual licensed supply can provide an estimate of the supply - demand gap and the need for market expansion.
Gross receipts are the total revenue received by child care providers. The Kansas and New York studies estimated gross receipts by multiplying child care enrollment by price of care (accounting for type of care, child’s age and geographic location) and adding in direct government payments to providers.
Gross receipts of child care:
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It is difficult to get an accurate estimate of gross receipts. National studies consistently find consumer expenditure survey estimates to be lower than provider based engineering estimates (Smith, 2002; Giannarelli, 2000). We recommend using engineering estimates based on provider enrollment and fees because that links most directly to the source for data on establishments, labor and children served and thus provides internal consistency to the report. However, such engineering estimates may overstate revenues to the extent there is a vacancy rate, part time children using only half of a full day slot, or weeks when a slot is empty due to child turnover.
The formula used by most studies to estimate provider fees is: the total licensed capacity adjusted for vacancy rate, if vacancy data are available, times the average price of care by type of care and age of child. Average price of care data are available from either state market rate surveys or CCR&R data on local prices.
| GROSS RECEIPTS = Provider Fees {(Total capacity - vacancy rate) * (price by type of care, age of child and location)}, + Government direct payments to providers (such as CACFP, quality and retention grants), + Government funded programs (which have no parent fees, such as Head Start and pre- kindergarten)
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| Gross receipts estimates can be used to compare the relative size of the child care sector to important industries in the area studied, or other industries that require similar training and skills as child care |
In the Kansas and New York studies, the average price of care was calculated by multiplying weekly charges (by age group and type of care), times the number of weeks in care. Our method assumed that for all categories except school age child care, children are in care 52 weeks a year. School-age child care weekly charges were multiplied by 40 weeks, and summer care costs were multiplied by 12 weeks.6 Table 3 shows how the New York Study team estimated provider fees. Other studies have used similar techniques but used different assumptions for number of weeks and price of care. These are choices study teams will have to make.
In the Kansas and New York State reports conducted by Cornell, we compared the IMPLAN gross receipts estimates, which are based on the US Bureau of Labor Statistics Consumer Expenditure Survey, with our project team derived estimates. The provider fees portion of our gross receipts estimate is the closest proxy to what IMPLAN measures. However, to compare to IMPLAN we subtract government subsides from provider fees because parents do not pay that portion. We find our estimates to be 15 to 25 percent higher IMPLAN’s gross receipts.
| Table 3. Provider Fees: Estimate for New York State | ||
| Total | Formula | |
| Centers | $2.18 Billion | Weekly Cost of Care by Age x Capacity by Age x 52 weeks (for infant, toddler and preschool care) + [Part-time school age Weekly Cost x Capacity x 40 Weeks (school year)] + [Full-time Weekly Summer Cost x Capacity x 12 weeks (summer)] |
| Family Care | $0.55 Billion | Weekly Average Cost Across All Age Brackets x
Total Capacity x 52 weeks |
| Group Family Care | $0.38 Billion | Weekly Average Cost Across All Age Brackets x
Total Capacity x 52 weeks |
| School-Age Care | $0.53 Billion | Part-time Weekly Cost x Total Capacity x 40 weeks
(school year) + [Full-time Weekly Summer Cost x Total Capacity x 12 weeks (summer)] |
| Total | $3.64 Billion | |
| Economic Analysis of the Early Care and Education Sector in New York, Cornell University Technical Report, July 2003. Data source: NYS Office of Children and Family Services, Market Rate Survey, 2002 | ||
The next component of gross receipts is government-funded programs that do not charge tuition, such as Head Start, Early Head Start and pre-kindergarten. Data on these programs are available from state and federal agencies. The other component of gross receipts is government direct payments to providers to improve quality, nutrition (Child and Adult Care Food Program), and staff retention. These represent an important source of revenue beyond provider fees. Subsidies to license-exempt providers can also be added because they are not already counted in the licensed provider fees.7 New York included these subsidies, but the Kansas report did not. Table 4 shows how gross receipts were estimated for the Kansas report.
| Table 4. Gross Receipts of the Kansas Child Care Industry | |||||
| Private Sector | Providers | Children Served | Weekly Rate | Weekly Receipts | Yearly Total |
| Center Care | 1,067 | ||||
| Center Infant (0-11 months) | 7,099 | $134 | $954,734 | ||
| Center Toddler (12-17 months) | 2,748 | $114 | $313,193 | ||
| Center Toddler (18-29 months) | 3,734 | $106 | $395,283 | ||
| Center Preschooler (30-59 months) | 13,952 | $95 | $1,319,495 | ||
| Home-based Child Care | |||||
| Licensed Homes | 3,786 | ||||
| Infant (0-17 months) | 8,499 | $86 | $731,411 | ||
| Preschool (18-59 months) | 14,168 | $87 | $1,235,193 | ||
| School age (59 months and up) | 9,075 | $79 | $712,699 | ||
| Registered Homes | 2,769 | ||||
| Infant (0-17 months) | 4,431 | $87 | $383,985 | ||
| Preschool (18-59 months) | 5,539 | $80 | $442,024 | ||
| School age (59 months and up) | 3,256 | $73 | $238,296 | ||
| Group Homes | 752 | ||||
| Infant (0-17 months) | 2,424 | $98 | $237,141 | ||
| Preschool (18-59 months) | 2,956 | $86 | $254,712 | ||
| School age (59 months and up) | 1,603 | $77 | $123,622 | ||
| Part-Time Care and Education | 271 | ||||
| Licensed as Preschool | 8,313 | $33 | $272,494 | ||
| Licensed as School-Age Care | 11,237 | $54 | $606,967 | ||
| Total Private | 8,645 | 99,035** | $8,221,250 | $427,505,020 | |
| Government Funded Programs* | Children | Public Funding | |||
| Early Head Start . Kansas | 1,183 | $7,973,754 | |||
| Early Head Start—Federal | $6,983,741 | ||||
| Head Start—Federal | 6,801 | $43,517,705 | |||
| Government Quality Payments to Providers | |||||
| Smart Start (Tobacco Settlement) | $3,000,000 | ||||
| SRS Early Learning Quality Grants | $4,276,403 | ||||
| Child and Adult Care Food Program | $23,882,436 | ||||
| Total Government |
7,984 | $89,634,039 | $89,634,039 | ||
| Total | 107,019 | $517,139,059 | |||
| Investing in the Child
Care Industry: An Economic Development Strategy for Kansas,
a report by Mid-America Regional Council, April 2003 Data Source: Kansas Dept.
of Social and Rehabilitation Services, 2002. * Only government funds that increase gross receipts for child care providers were included. Funds for licensing and administration were excluded. ** This number may include a portion of the children in the Government Funding section. Data do not allow us to separate the children served by government program funds placed in private care settings. |
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Measuring the size of the child care sector shows that it is an important sector in its own right. The New York State study found over 22,000 small businesses, employing 119,000 workers, serving 623,000 children and generating approximately $4.7 billion in gross receipts. The Kansas study found the sector includes 8,650 businesses, 14,000 workers, serves 100,000 children and generates approximately $500 million in gross receipts.
Studies supported by the Cornell team have not attempted to collect tax information because many child care providers are non-profit and many of the for-profit family providers make little profit after accounting for labor costs. Study teams should collect data of interest to their stakeholders. This is why it is so important to work with advisory committees to define the primary goals and targets of the study before collecting data on the sector. The Tompkins County study team was concerned with access and affordability of care for moderate and low-income families who work in the county. The Kansas study team sought to show that child care subsidies are an important economic investment for the state. The economic development framework helps focus attention on the economic contributions of the child care sector. Measuring the size of the sector is extremely important because it shows that child care is worthy of economic attention from policy makers, businesses, and economic developers.
1 Both state administrative and
CCR&R data have some limitations and this varies across states. If possible, study
teams should triangulate state licensing and CCR&R data to get a better estimate
of the size of the sector.
2 For example, the New York study found 14,648
regulated family providers in the state, but the Census Nonemployer statistics for
2001 reported 49,047 self-employed family providers who pay taxes as sole business
proprietors. The difference between these two figures is a rough estimate of the
number of unlicensed family providers (34,399) in New York.
3 The IMPLAN regional modeling program uses data
from several sources including the Bureau of Labor Statistics, Bureau of Economic
Analysis, and the US Census Bureau. The IMPLAN modeling software provides data for
528 sectors of the economy including child care.
4 The National Survey of America’s Families has
representative data for 13 states (see Appendix D).
5 This number includes children living in dual-parent
households (both parents in labor force) and children in single parent households
(parent in labor force).
6 The licensing data did not indicate differences
in summer and school year enrollment. It is possible that some school age programs
are closed in the summer, however, the NYS team assumed these children were still
in some form of full-time paid care.
7 Subsidies for parents using licensed providers
should not be added as they are already included in the estimate of provider fees.