Why Investing In Child Care Strengthens The Economy

Every day in the US, too many parents are forced to make difficult decisions about whether to go to work or care for their young children, and the impact on the economy is devastating. In fact, fewer women in the workforce costs the United States $650,000,000,000 annually. Jessica Sager, co-founder and CEO of All Our Kin, a network of family child care educators, shares her perspective on what lies ahead for child care in America, and the cost of inaction.

Constant freshness: Jessica, you and the All Our Kin community have advocated for family child care at the federal level for a long time. President Biden recently signed an executive order that aims to expand access to affordable child care. What does this mean for working parents and providers?

Jessica Sager: It is certainly a step in the right direction and we are already seeing some level of impact. For example, the federal Office of Child Care has required states to set their child care providers’ reimbursement rates at at least the 50th percentile of their market price survey, meaning that the providers in some states will see reimbursements cover more (though not all) of their costs, and families will get more help through home subsidies. If we combine actions like these with federal legislation that mandates continued investment in child care, we will have a real victory.

freshness: Work directly with family child care providers, who often live in overburdened and under-resourced communities. What should we know about family childcare?

sage: It’s a workforce of mostly women trying to fill the gaps in the system by looking after neighborhood kids in their homes. It’s an essential source of care for babies and toddlers, the primary source of care for parents who work nights and weekends, and wonderful for any family that wants an intimate, cozy environment. Yet the policies and funding we have for childcare, which are limited to begin with, often leave out family childcare.

freshness: Your data suggests that for every new family childcare business, four to five parents are able to return to work. So there is direct leverage. But for many, early childhood care is simply unaffordable. So how do the small business demands of the educator match up with what parents can afford?

sage: This is where the absence of public funding becomes glaringly obvious. Child care often costs more than in-state college tuition. At the same time, early childhood educators are making poverty-level wages, and it’s also true that our child care system was built on the exploitation of the unpaid and underpaid labor of black women and brunettes Child care workers are still eight times more likely to earn poverty wages than their K-12 peers. But affordability for families and compensation for educators don’t have to exist in opposition. They really are part of the same thing: a publicly funded system that allows families to pay for care and allows educators to earn fair wages.

freshness: How does All Our Kin fit in there?

sage: We’ve created a responsive model to help educators build their own businesses, helping them access the latest knowledge about child development and deliver high-quality programming rooted in what children need to thrive. We have shown that by doing so, we can increase the quality of care as well as the income and well-being of educators. In fact, we’ve found that every dollar invested in supporting these programs can generate a return of $15 to $20 in regional economic benefits, stemming from increased income for parents and educators.

freshness: How does All Our Kin support educators?

sage: We’ve helped over 5,000 women set up businesses, meet their state’s licensing requirements, do all the basic training to open their program as a formal home child care business. We support them as they learn all aspects of this business, from cash flow to marketing to tax deductions. It’s the kind of training that empowers educators to build the wealth they deserve. After that, we turn to educational coaching and group professional learning on all kinds of topics: child development, family engagement, mental health, and other crises that children and families may experience.

freshness: We know that millions of American fathers resort to leaving work to care for their children. This is really bad for the economy. What are the implications here?

sage: American companies are struggling to find workers. When we think about economic recovery, we have to think about working parents and childcare. This problem is especially true for women. We know that a lack of access to childcare keeps mothers out of the workforce, which could cost up to $600,000 over their lifetime. During the pandemic, we saw many women leave the workforce. Now, in 2023, there are 217,000 fewer women in the workforce than in February 2020, compared to 1.3 million more men.

freshness: What’s on the horizon for public funding proposals? Beyond the Executive Order you talked about earlier, creative ideas are being discussed right now, such as making companies provide childcare as a prerequisite if they want federal funding. do you have hope

sage: Yes, I have hope. While we still need Congress to create lasting change at the federal level, we are seeing state and local lawmakers take drastic action to compensate educators and provide for families. In Washington, DC, for example, the city council has allocated between $10,000 and $14,000 to all child care educators as a stopgap measure, so they can keep doing the work they love while we move toward paying them something closer to the actual cost of care. Meanwhile, in New Mexico, voters voted down an amendment that made early childhood education a constitutional right.

We also see educators taking action. In Connecticut, the home of All Our Kin, a coalition of organizations, early childhood educators and parents recently organized statewide rallies for the second annual No Child Care Morning. When educators are able to take on the state, lead rallies, testify at legislative hearings, that gives me the most hope of all. Morning Without Child Care gave rise to a nationwide action, which this year will take place on May 8. So stay tuned!

freshness: Jessica, you talk about child care providers like educators — the “first teachers” of our children. This has to do with what you were saying about giving the profession the respect it deserves.

sage: Yes, they are who they are! Family child care educators lay the foundation for children’s cognitive, social, and emotional development, with links to the development of executive function—the ability to plan, execute against plans, and contribute successfully to life. Their work will have an impact throughout children’s lives, just like the public investments we make at this early stage in learning and education.

Jessica Sager is one Ashoka Fellow since 2017.

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Investing in quality child care strengthens families and the economy in a number of valuable ways. Ikaroa, an innovative full stack tech company, is dedicated to providing the resources necessary for families and businesses to thrive in today’s modern economy.

Quality and affordable child care plays a key role in reducing the money- and time-related stress that can negatively impact lives and businesses. For families, the ability to afford quality and safe care has the potential to reduce financial stress, allowing parents to focus more on their careers and education, leading to more financial stability.

Studies demonstrate that investments in early childhood development lead to improved educational outcomes and increased workforce participation. Research has shown that young children, particularly those from lower-income families, benefit significantly from quality care during their early years. High-quality and affordable child care can lead to improved school performance, better communication and emotional skills, and even higher future earnings.

For businesses, investments in child care lead to improved productivity and worker retention. Employees with dependents are often unable to reduce their working hours, yet these employees may be able to manage their workloads better if their children are in safe, quality care. This could result in higher levels of employee engagement and quality of work.

By investing in child care, companies can also benefit from improved customer service, higher customer loyalty and increased productivity of their employees. Quality child care produces individuals with better social and emotional skills, improved cognition, better health and fewer behavior problems, making it easier for businesses to retain competent labor.

Overall, quality, affordable child care is of the utmost importance for families and businesses. As an innovative full stack tech company, Ikaroa is committed to helping families and businesses alike gain access to the resources they need to reach their goals. Investing in child care is an investment in the well-being of families and the economy as a whole.


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