Child Care Crisis will Impact the Economy for a Generation

by Lauren Duke, IEDC Fellow 

As communities throughout the country make decisions about schools reopening and online learning, parents are struggling to maintain work while tending to their children. When evaluating the economic crisis brought on by COVID-19, the nation’s already simmering childcare crisis is emerging as the primary obstacle to long term economic recovery. This crisis brings a myriad of consequences, primarily severe economic implications for women and children. 

The Impact on Women

Women have been disproportionately affected by childcare challenges due to existing gender inequities. In an article by Politico, economist Betsey Stevenson outlined the implications for women, particularly the increase in women leaving the labor force as a result of the pandemic. According to a study by McKinsey, women make up 39 percent of the workforce, but account for 54 percent of overall job losses. Without action addressing the childcare crisis, women will lose valuable years of employment and economic advancement by taking on a disproportionate amount of caregiving responsibilities. 

Low-income women and their children face greater obstacles than those women and families with higher earnings. Single mothers are more likely than married mothers to be in the labor force and are disproportionately represented in low-wage jobs, while minority mothers reported even higher numbers of employment and low wages. Because these women are predominantly represented in low-wage jobs, they are less likely to have the flexibility to work from home. As schools closed in mid-March, mothers in essential jobs were forced to make decisions between providing childcare and maintaining employment. 

While many households with dual incomes have been able to manage childcare throughout the pandemic, single and low-income mothers have been forced out of the workforce to assume traditional roles. According to Stevenson, women that leave the labor force for any period of time earn substantially less across their lifetime. Communities will face long-term, generational economic disparities if their women and mothers are forced to leave the workforce for the duration of this crisis.

Investing in Children as a Solution

Investment in childcare is not only essential for preserving and assisting an entire generation, it will also alleviate the burden on women. According to Stevenson, early childhood education is the best investment a taxpayer can make—this investment leads to higher future earnings and positive social effects. Data suggests that students need interaction with peers to improve language skills, literacy, and social bonding, according to Brookings. Young children are also believed to be less likely to spread the virus, which proves encouraging as communities decide about reopening schools and childcare centers. Moreover, investing in childcare now will battle the economic implications of school closures for women, as mothers have freedom to work outside of the home.

Both private and public childcare facilities are facing challenges as they attempt to reopen in some communities. While there are opportunities for some to reopen, many centers have faced permanent closures since shutdowns in March. States are also facing revenue shortages and a lack of staff for childcare centers and educational institutions. This suggests that reopening is going to lead to crowded classrooms while the virus is still active in many states. This reality means that children will go without the value of in-person education, and families will face economic challenges as they adapt to new family structures. 

The negative economic implications of the childcare crisis can be addressed primarily through public policy. Introducing tax incentives for companies that hire back women that have employment gaps will encourage an influx of working women in communities, for example. Economic developers must recognize the inequities that have emerged since the beginning of the pandemic in order to objectively make decisions regarding economic recovery. Women need community support to ensure that they are contributing to the tax base through meaningful paid work; this can only be done if localities commit to offering affordable childcare to each and every child. 

Instituting emergency childcare grants can assist in safely providing education and caregiving for children whose parents need to maintain part-time or full-time employment may allow the United States to improve the inequalities among children and women exacerbated by COVID-19. Focusing on younger children by utilizing closed high-schools as childcare centers can also alleviate strain and strengthen the social and tax benefits of strong early childhood education. Economic developers can work with local school boards to evaluate how each space can be best utilized to contribute to safe, socially distanced education of all adolescents, but particularly young children.