Policy experts constantly search for high-impact investments that provide the maximum societal benefit for each dollar spent. A substantial amount of evidence points towards investments in childcare as one of the most prudent investments a government can make that also has one of the greatest impacts on society.
It is therefore no surprise that efforts are now underway to increase investments in early childcare and education in the US. Despite the highly political discourse about childcare, the evidence and research conducted on the economic benefits of investments in childcare is impossible to ignore.
Let’s explore some of the most compelling evidence showing the effectiveness of good quality childcare and the reasons why this is a sound investment in every state.
The Need for Investment in Childcare
It might surprise you to know that the US was ranked by the Organization for Economic Co-operation and Development as 30th out of the 33 member countries in public spending on children and families. That includes investments in parental leave, childcare, and child allowances.
Not only that, the nature of American investments in childcare has been less direct. Much of the investments for children and families has come in the form of tax breaks, which can often be less accessible because they require a strong working knowledge of the overcomplicated US tax code. This is distinct from many European countries including the UK, Denmark, and Sweden, all of whom concentrate on cash and in-kind or service-based benefits for children and families.
Moreover, research conducted by the Pew Research Center in a global survey of 41 countries, shows that the US is the only nation that does not have a national policy on paid parental leave. Needless to say, the data shows the US lagging behind the rest of the industrialized world when it comes to investments in children, families, and social programs.
The response to the COVID-19 global pandemic has made this problem even more glaringly obvious by putting many families under financial and economic stress. The disruption of childrens’ school schedules has put lower and middle income families, in which both parents often work, under particular strain. Many of these working class families have had to spend more than they could afford on bloated childcare centers, that charge high prices while paying their workers extremely low wages, just to keep their households together.
The Economic Impacts of Investments in Childcare and Early Learning Programs on Children
Multiple studies show that investments in childcare and early learning programs improve learning outcomes, test scores, and future employment for children. This is true despite many misconceptions circulating about the childcare industry.
One controlled experiment in North Carolina, called the Abecedarian Project, showed that early childhood education and childcare programs resulted in highly significant learning outcomes for decades to come. The experiment showed a 1.8 increase in grade level reading achievement for students, and an increase in 1.3 grade levels in mathematics achievement. It also showed an increase of 4.4 points in overall IQ and of 4.2 points in verbal IQ.
The Abecedarian Project also documented powerful improvements in life outcomes at the age of 21. Students who had been enrolled in early education programs were 22% more likely to be enrolled in a 4-year college degree program at age 21. They were 20% more likely to hold skilled jobs, setting them up for future financial success.
Female students who had been enrolled in early childhood programs were also 19% less likely to become pregnant as teenagers. This cohort also had a statistically significant reduction in criminality compared to students who were not enrolled in early childhood programs. By age 30, study participants who benefited from early childhood programs were four times more likely to have earned a bachelor’s degree.
The Perry Preschool study, another experiment on the effects of early childhood programs, found that these programs led to increased academic achievement, including higher reading and math scores on standardized tests. Good quality daycare and preschool programs have the power to bolster students’ academic achievement for years to come.
Economic Effects of Investments in Childcare
Not only do investments in childcare improve learning and life outcomes in children, they also produce favorable effects on the economy as a whole. Some economic studies suggest a $2 return on investment for each dollar spent on these programs. Other studies suggest that this return on investment could be as high as $7 for every dollar invested.
One study by senior economist Timothy Bartik from Purdue University showed that for each dollar spent on early childhood programs, property values in the area increased by $13. This connection to improved property values stimulates local housing markets by attracting homebuyers to the region.
Early childhood programs save primary and secondary schools money by reducing grade retention. Schools save resources because they don’t need to reeducate students who have been held back a grade.
More broadly, robust evidence suggests that early childhood programs reduce incarceration rates, arrest rates, and the likelihood of populations to require government assistance in the future.
Investments in childcare have myriad benefits to the economy, to children, to new parents, and to a population’s standard of living.
The Importance of Childcare for Mothers and Families
The childcare crisis created by the COVID-19 pandemic has had an extremely damaging impact on mothers. Women who once took pride in being a family breadwinner were forced to stay at home, at great cost to their career, while their children took classes remotely.
This piece by the New York Times details the stories of many women who were forced to put their careers on hold due to the pandemic induced childcare crisis. Among these mothers are Jennifer Park Zerkel, who was forced to give up her tutoring business, April Williams, who was forced to quit her job as a newly promoted supply chain manager, and Leah Torres who gave up a lucrative sales career.
In 2020, for the first time, women made up more of the workforce than men. In a matter of a few months, that monumental progress was undone. Today, just 56 percent of women are working for pay. This is the lowest level since 1986.
Investments in childcare have the potential to empower women, family units, children, and society as a whole. The evidence showing the learning and life outcomes in children can not be ignored, regardless of political affiliation. Lowering the costs and improving the quality of childcare programs through ambitious investments will help bolster the economy and families alike.
Sandra Chiu works as Director at LadyBug & Friends Daycare and Preschool.