Child Care in State Economies - 2015

The purpose of this report is to aid policymakers and business leaders in better understanding the child care industry’s role in the economy.

The economic role of the industry is examined using three distinct perspectives—the traditional labor force view of child care as a means for parents to work; the child care industry’s macroeconomic role in the U.S. economy; and the role played by child care in regional economic growth and development.

Much of the existing research on the economics of child care focuses on the traditional role child care plays in enabling parents to work. This remains child care’s single most important economic contribution and makes it of vital importance to a large number of working parents. The dimension of child care that is not as well understood is the supporting role child care plays in regional economic growth and development. Child care supports regional growth primarily through its indirect support of increased labor force
participation and the education of the workforce in a region.

The report evaluates the economic role of child care at the state level in extensive detail. The structure of the child care industry varies greatly across the states, largely as a result of the state-level framework in place for both regulating the industry and administering child care assistance programs. Substantial variation is present in child care usage rates, the cost of care, and the mix of child care providers at the state level. These differences play a large role in determining the size of the potential economic linkages
between the child care industry and the broader economy.