How Supporting Early Care and Education Supports a Stronger Economy

How Supporting Early Care and Education Supports a Stronger Economy

The American Families Plan proposes increased public funding for child care, Head Start, and preschool. But how will this proposal benefit Americans without young kids?

Here’s what recent research tells us about the widespread benefits of spending on children.

Employers see benefits for their employees and businesses when families have child care and early education supports.

Even before the pandemic, employers reported interest in providing family supports. In a 2019 study, employers reported that market conditions affecting competition for talent were important factors in their support for child care.  

But those employers saw a primary role for public policy around paid leave and child care. They reported feeling ill-equipped to provide child care, perceived child care benefits as costly, and saw child care as more of a public responsibility than an employer one.

Evidence shows investing in young children yields high dividends. Every dollar spent on early care and education (ECE) is estimated to lead at least $3 in cost savings.

Research shows children attending high-quality ECE programs are more likely to enter school ready to learn, advance in school, and succeed academically and socially than unenrolled children.

In the long run, high-quality early childhood programs can help children grow into healthy adults who can support themselves and contribute to economic growth.

Retired Americans have a vested interest in ensuring parents are paying into Social Security. The Social Security Administration projects that by next year, annual Social Security revenues will fall short of costs. But the pandemic has led to a dramatic decline in workforce participation, including among the ECE workforce.

If parents don’t have the support they need to be able to work, the Social Security shortfall will likely be exacerbated. Fully funding child care subsidies to support quality ECE could incentivize parents with young children to work and pay into Social Security.  

Of course parents benefit when ECE is more accessible—meaning they can find and afford it through reasonable effort, and it both supports child development and meets parents’ needs. Currently, child care costs are one of the highest in families’ budgets—often exceeding the cost of college.

And more than one-half of Americans live in child care deserts, with too few licensed child care options to meet local demand. Options are even more limited for families with low incomes and families in rural areas.

Even when programs are available, families face constraints in finding affordable care that is close to home or work and that meets their scheduling needs and children’s developmental needs.

Demand for infant and toddler care and services for Early Head Start far exceeds supply. Families with children with special needs face unique challenges. And the pandemic imposed huge setbacks in preschool access, reversing recent funding progress.

Working parents who don’t work a 9–5 job can have a hard time finding care. Variability exists across states, but potential demand for child care and early education overnight, during weekends, in the evenings, and early in the mornings is high among working parents.

New federal funds could help build the supply of care to reduce disparities in access and reduce the amount families spend on care.

How could policymakers ensure increased funding for child care, Head Start, and preschool effectively supports employers, ECE providers, and families?

Fund state and districts’ ability to compile and use evidence about supply variation across and within states, communities, and neighborhoods

Policymakers and administrators need to know about the availability and gaps in ECE supply, but many states lack a comprehensive listing of the number and location of child care, Head Start, and preschool openings within communities and neighborhoods.

Many states, like Oklahoma, have taken steps understand the supply of ECE, but consistent funding is needed for regular updates and to strategically build the supply of care.

Center-based child care providers have been hit hard by pandemic-related closures, and the supply of home-based providers has declined. Though researchers have suggested strategies to build supply, additional research could make sure these strategies meet existing needs.

Identify the diversity of families’ needs and desires for different types of early care and education

Many states and communities use surveys to understand families’ child care, Head Start, and preschool needs. But they must meet families where they are, using their language and engaging respectfully.

Community engaged methods can ensure a more equitable approach to understanding families’ ECE needs. Without families’ input, increases in ECE funding could be supporting services parents don’t want or need.

Tailor consumer education strategies to support families at different stages of child care search and selection

States are required to provide child care information to the public and offer families child care search and referral supports. New funds could expand current state activities to help raise awareness of ECE and available local options so families have reliable information to aid in search and selection.

Support alignment and collaboration of ECE services to provide more equitable access

Preschool, child care, and Head Start are funded and administered differently, but about one-third of ECE programs use funds from each to offer seamless and comprehensive services to children and families. Without funding dedicated to alignment and collaboration across these systems, federal expansion dollars could reinforce existing silos that lead to service fragmentation and barriers for families.

Research on how to best support programs’ ability to braid funds (PDF) across child care, Head Start, and preschool is needed. Evidence about how ECE programs can work together to meet families’ needs could ensure taxpayer dollars are efficiently spent to support working parents and the care children need to grow up healthy.

The Urban Institute has the evidence to show what it will take to create a society where everyone has a fair shot at achieving their vision of success. 

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