Understanding Child Care in the Regional Economy

Mildred E. Warner Ph.D.Dept of City and Regional Planning

Cornell Universityhttp://economicdevelopment.cce.cornell.edu

Presented to the Community Development SocietySt Louis, MOJune 28, 2006

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What is the Economic Importance of Child Care?

» Children - Human development (cognitive and social skills)

» Parents – labor mobilization, career choice

» Regions – Child care as an economic sector

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Special Issue on the Special Issue on the Economic Importance of ChildcareEconomic Importance of Childcare

Regions• Putting Child Care in the Regional Economy: Empirical and Conceptual

Challenges and Economic Development Prospects, Mildred E. Warner, Cornell University

• Beyond Looking Backward: Is Child Care a Key Economic Sector? James Pratt and David Kay, Cornell University

• Rethinking the Child Care Sector Nancy Folbre, University of Massachusetts-Amherst

Parents• Choice and Accommodation in Parental Child Care Decisions, Marcia K.

Meyers and Lucy Jordan, University of Washington• Child Care, Female Employment and Economic Growth, Jean Kimmel,

Western Michigan UniversityChildren

• Costs, Benefits, and The Long-Term Effects Of Preschool Programs, W. Steven Barnett and Debra J. Ackerman, NIEER, Rutgers University

Policy Implications• Smarter Reform: Moving Beyond Single Program Solutions to an Early

Care and Education System, Louise Stoney, Anne Mitchell, Alliance for Early Education Finance and Mildred E.Warner, Cornell University.

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Conceptual Challenges: Conceptual Challenges: RegionsRegions

• Which linkages to count?» Backward, forward, both

• What part of the sector to count?» Paid vs unpaid, market vs nonmarket, formal vs

informal

• Implications for Economic Development Policy

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Linkages - Forward and Linkages - Forward and BackwardBackward

• Multipliers measure backward supply purchases. Child Care ranks high.

• Child Care is most important for its forward linkages in the economy

• Child care’s linkage jumps from 20th in ranking among similarly sized sectors in NYS to 4th when a total linkage measure is used.

(Pratt and Kay 2006)

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Counting Child Care Workers Nationally : Most of the Iceberg Lies Below the Water Line

State teams find 20% to 300% more child care workers than Census data report

1.7 million paid workers (CPS 2000)

800,000 additional paid workers

(Burton et al 2002)

2.4 million unpaid care workers

(93% unpaid relatives)(Burton, et al 2002)

Unpaid Parental Care(12% of total U.S. Paid Work

Time, 2005 ATUS)

}800,000 paid workers (BLS 2000)

(Warner 2006)

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Importance of Household Importance of Household Production to the Economy Production to the Economy

• BEA has developed satellite household accounts.» Unpaid household labor ranges from 58% (opportunity

cost) to 23% (quality adjusted specialist) to 12% (minimum wage) of GDP depending on valuation method used

» Household production increases GDP by 26% in 2004– down from 48% in 1946.

» Rise in GDP accompanied by decline in household production

» Rising returns to market work relative to household production

(Abraham and Mackie 2005, Landefield and McCulla 2000)

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Economic Development PolicyEconomic Development Policy

• Time to move beyond export promotion as the primary focus

• Need to invest in services that strengthen the local economy

• Look at connections between the market and household production

• Strengthen market care without undermining family care

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Conceptual Challenges: Conceptual Challenges: ParentsParents

• Look at parents’ allocation of time between market and family work

• Recognize parents need flexibility in three domains: work, child care and family responsibilities (Emlen 1998)

• Choices are too constrained• Attention to parents’ needs must be part of

workforce policy(Folbre, Kimmel, Meyers and Jordan, 2006)

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Parents’ Time UseParents’ Time Use• American Time Use Survey shows• Three types of child care:

» Primary – developmental» Supervisory» On call

• With increased market work parents reluctant to reduce primary care (2.6 hours vs 3.2 hours)

• Value of unpaid parental care is 60% of the cost of raising a child.

• Value of women’s child care exceeds their earnings.

Folbre 2006, based on ATUS

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Relative Value of Child Care, Other Non-Market Work and Market Earnings in 2003 (adults living in households with children 12 or under, no older children)

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

men women

Market Earnings

Non-child related householdmanagement

Non-child related household work

Child Care

The Value of Women’s Child Care Services Exceeds their Earnings

Folbre, 2006 based on ATUS 2003 using replacement cost approach

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The Historic Increase in Mothers’ Labor Force Participation Rates in the U.S. Has Leveled Off

Percentage of Married Women With Child under 6 in the Labor Force

0%

10%

20%

30%

40%

50%

60%

70%

Folbre, 2006 based on BLS

Attention to parents’ needs must be part of workforce

policy

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Conceptual Challenges: Conceptual Challenges: ChildrenChildren

• Huge range in cost benefit ratios due to differences in person, place and context» Perry Preschool 17 to 1» Chicago Parent Child 7 to 1» Abecedarian 4 to 1

• Don’t expect model program returns when you take this to scale.

• Look at children in context• Focus on all children, not just poor children

(Barnett and Ackerman 2006)

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sleeping or personal care

48%

awake but not engaged in activity with

adult16%

in institutional care13%

in activity with adult non-

relative2%

in activity with adult relative

2%

in activity with at least one

parent19%

A Child’s Eye View

Average Time Allocation of Children Under 12 in Two-Child, Two-Parent Families in 1997, Based on Folbre 2006 analysis PSID-CD

Why so much

focus on formal

care when children spend so little time

there?

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A Comprehensive SolutionA Comprehensive Solution• Institutional Support for ECE Programs to ensure

quality.• Publicly Funded Infrastructure to ensure ECE

professional development, program monitoring, consumer education, data collection and employer education.

• Financial Aid for Families to ensure access to quality.• Work Place Policies (e.g. paid parental leave, flexible

work schedules with full benefits) to ensure parents can pursue careers and have time to nurture their children.

Stoney, Mitchell and Warner 2006.

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The U.S. Under-Invests in The U.S. Under-Invests in Children and FamiliesChildren and Families

We don't see a collapsing care system because we don't see care as a system to begin with.

(Mona Harrington 1999 Care and Equality (p 25)

Public Expenditure• Enrollment in publicly funded ECE

» Ages 1-2: U.S. 6%, Europe: 3-74%» Ages 3-5: U.S. 53%, Europe: 66-99%

• Expenditure: US < 0.5% of GDP on ECE, Europe 2-6% of GDP

Work Place Policy• Full time work: U.S. 40 hrs/week, Europe 35-39 hrs/week • Required vacation: U.S. 0 days, Europe 20-25 days/year.• Maternity leave: U.S. 0 weeks, Europe: 12 – 42 weeks

Sources: Kimmerman 2001, Gornick and Myers 2003

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Why Does the U.S. Under-Why Does the U.S. Under-Invest in ECE?Invest in ECE?

• It depends on how we frame the debate» Private Frame - Early care and education is the private

responsibility of parents - Failures are moral, not structural• Beginning to see ECE as a public responsibility too

» Welfare Frame focuses on poor children only – Head Start, subsidies.

• But these have expanded since Welfare Reform

» Education Frame – Public responsibility for education begins at age 5

• Increased public support for pre-school

» Economic Development Frame focuses on infrastructure for the market not support for both market and family care

• More than 60 state and local teams addressing child care as social infrastructure for economic development

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CautionsCautions

• Don’t lose sight of the private nurturing role of parents – support them structurally, not just morally.

• Welfare approaches can undermine efforts to improve quality and universal access.

• Expanded preschool alone will not solve the problem• Economic development approaches can create perverse

incentives in a sector like ECE.• Need to conceptualize the issue from the perspective of

children, parents, providers and the regional economy, in the short and long term.