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National: The National Economic Impacts of the Child Care Sector

Project status

Completed Fall 2002

Lead Agency

National Child Care Association

Contact Person

Lynne White
Executive Director
National Child Care Association
1019 Rosser Street
Conyers GA 30012
1-800-543-7161
Fax 770-388-7772
Nccallw@mindspring.com

Research Firm

Steven Moss
(Mcubed Consulting)

Measurements

  • Number of Establishments
  • Child Care Labor Force
  • Number of Parents with Children in Paid Care
  • Multiplier Effects on Local Economy
  • Governmental Transfers / Subsidies
  • Tax Receipts / Fiscal Impact

Outreach

  • Long Report (15+ Pages)
  • Newspaper Article / Media Coverage
  • Conducted a Series of Presentations
  • Involved Business / Economic Development

Case Study

Case Study: National
“The National Economic Impact of the Child Care Sector”
Date of Study Completion: Fall, 2002

Initiation:

Membership

The National Child Care Association, Inc. (NCCA) hired a consulting firm, M. Cubed, to analyze the economic impact of the child care industry on the national economy. The chair of their Business Development Task Force, Task Force members, and the Executive Director of NCCA all provided support for the project and served as its advisory committee.

Context

NCCA recognized that national trends indicate an increased demand for child care among all income groups and that formal child care centers contribute significantly to the national economy. NCCA initiated the study in order to gather much needed data to quantify child care’s economic contribution.

The goal of the study was to collect concrete data to quantify the economic impact of child care in order to buttress policy positions for the support of the child care industry.

The Study:

Sector Definition

The study uses the “formal child care sector” for its analyses, which they define as care provided to children prior to when they enter kindergarten at licensed child care centers and family homes . After School programs are included as well.

In assessing the number of those employed in the child care sector, non-child care worker support and administrative staff were included in the data collection.

Data Analysis

Measurement* National
Number of Establishments 500,143
Child Care Labor Force 934,000
Children Served not reported
Gross Receipts not reported
Number of Parents with Children in Paid Care X
Multiplier Effects on Local Economy X
Governmental Transfers / Subsidies X
Tax Receipts / Fiscal Impact X

*Not all studies included the same components making it difficult to compare the numbers provided in this chart with those of other studies. In its definition of the number of establishments, this study included licensed and regulated center and family care, and did not include regulation-exempt home-based care (informal care), regulation-exempt center care or pre-K in public schools. The report did not quantify the amount of gross receipts for the child care industry.

The authors of the study described the challenge of defining child care and quantifying formal care. To address the complicated nature of data collection on the child care industry, NCCA worked with M. Cubed, a consulting firm that had previous experience working on California ’s economic impact of child care study.

Unique Findings:

  • By the year 2010 the U.S. is expected to add another 1.2 million children aged four and under, a 6 percent increase. 
  • The cost to develop space in a new high quality facility per child is $12,500, versus the national average of $11,000 spent per child. 
  • More Americans are directly employed in the licensed care sector (934,000) than as private/secondary school teachers (432,000). 
  • Child care’s productivity impacts ($904 billion) are greater than the Gross Domestic Product contribution of many higher profile industries including construction ($426 billion), and retail trade ($792 billion).

Impacts:

Organizational Change and Outreach

NCCA has presented the results of the report both to policy makers in Washington D.C., as well as several presentations to their membership in an effort to disseminate the results nationally.

Policy

Rather than specific policy recommendations, the National report makes a broad appeal to policy makers by urging them to recognize the importance of supporting child care based on the report’s nation-wide findings. The report closes by stating: “ State and federal policies fully or partially finance every other essential infrastructure supporting the economy. For example, gasoline taxes pay for highways and mass transit; home mortgage tax deductions and other policies make housing more affordable; and public education is financed by property taxes and other revenue sources. It would appear to be time for policymakers to provide the private early care and education infrastructure the same support as other economically critical sectors.”

Interview with:
Lynn White, Executive Director
National Child Care Association, Inc.
August 5th, 2004

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