The Economic Impact of Child Care

Quality Child Care is Economic Development

Vermont’s economic prosperity relies on its most important asset: Vermonters. To create a thriving economy today and for the future, employers must be able to depend on a stable and focused workforce.

Quality Child Care is Important to the Bottom Line

Working families rely on the child care system in order to arrive at work ready to be productive. In Vermont, more than 70% of children under age 6 have all of their parents in the labor force and approximately 21,670 kids under age 5 are likely to need some form of child care.1 When working parents can rely on high-quality, affordable child care, their productivity increases, absenteeism is reduced and turnover is minimized.

When Child Care is Unstable for Their Employees, Businesses Lose Out

  • Research shows that over a six-month period:    

► 45% of parents are absent from work at least once due to child care issues, missing an average of 4.3 days.2
►65% of parents’ work schedules are affected by child care challenges an average of 7.5 times.3

  • These child care challenges cost US employers an estimated $3 billion annually.4
     
  • The cost and inaccessibility of early care and learning programs often forces tough choices for employees who may have to choose to stay at home rather than putting their kids in child care—creating an unstable workforce for employers.
     
  • Employee retention is a key driver of customer retention. Studies show an inverse correlation between employee turnover and sales: the greater the turnover, the weaker the sales. 

Attracting New Jobs and Vermont Employees

One of Vermont’s most critical economic challenges is to attract new skilled workers for the state's businesses. When new workers with young families are considering opportunities, there is an immediate checklist of requirements. This list includes the availability of:

  1. Affordable housing  
  2. High-quality, affordable child care   
  3. A quality public education system

Early Childhood Investment is Workforce Development

Employers need individuals who have strong cognitive, communications and social and emotional skills. Science tells us that the most critical time for development occurs during the early years, laying the foundation for success in school, relationships and future work. To encourage healthy development, young children need access to quality learning environments.

Research demonstrates that every dollar invested in early childhood yields a 10% annual rate of return.5

Consistent investment throughout life is important to sustain and build upon early gains in skills, but dollar-for-dollar early interventions yield a much higher rate of return.

This graph, developed by Nobel-winning economist James J. Heckman, shows that early investment is the best workforce development investment.

Mitigating Public Education Costs

Investment into high-quality, affordable child care can help mitigate future costs in the public education, health care and corrections systems because children with a strong foundation during the early years are more likely to enter kindergarten prepared and ready to succeed. Children with high-quality early childhood experiences:

  • Score higher on school-readiness tests
  • Are 40% less likely to need special education or be held back a grade
  • Are 70% less likely to commit a violent crime by age 186

Even a small cost savings in special education, for example, could have a significant impact on a sector of educational spending that has nearly doubled since 2001, while student population has declined.

Vermont Has a Child Care Challenge

  • Nearly 80% of infants and toddlers likely to need child care in Vermont do not have access to high-quality programs
  • Middle-income families with two children are paying up to 40% of their income on child care.
  • Child care workers earn on average less than $25,000, which is less than a livable wage.

It’s a Solvable Problem

To create a thriving economy today and in the future, we must invest in high-quality, affordable early care and learning programs. This is a solvable problem that is already recognized by the state as an important issue to address for our children, families and businesses. In 2015, the Vermont Legislature formed the Blue Ribbon Commission on Financing High Quality, Affordable Childcare. The Commission was a diverse body of Vermonters, including three business representatives. It was chaired by Charlotte Ancel, a recognized business leader with one of Vermont’s largest utilities. The job of the Commission was to determine the hallmarks of a quality child care program and to recommend to the Legislature and governor strategies to support high-quality, affordable child care in Vermont. The Commission issued its report in December 2016 (you can read the full report here). It is up to us to turn those recommendations into reality.

Vermont's Business Leaders Speak Out for Child Care


  1. LGK analysis of data from US Census Bureau and Vermont Department of Health.
  2. http://www.childaction.org/providers/booklets/docs/Solutions%20for%20Emp..., p. 2. Primary source: http://abc.fpg.unc.edu/.
  3. IBID.
  4. Shellenback, Karen. “Child Care & Parent Productivity: Making the Business Case. Cornell University, 2004.
  5. http://heckmanequation.org/content/resource/invest-ealy-childhood-develo....
  6. Watson, Sara. “The Costs of Disinvestment.” Partnership for America’s Economic Success, 2010.
  7. Vermont Insights K-Readiness Survey Data, data for recent years.
  8. Vermont Insights K-Readiness Survey Data, 2014-15.
  9.  IBID.

 

Vermont Business Leaders Speak Out for Child Care 

"I know it's a difficult subject for all of us out there who pay property taxes, and we support our local education through those property taxes—to be business owners and see another potential layer of cost. But I do believe that—seeing it with my own kids working in the business—that it does enhance [employees'] ability to focus on their jobs, to stay local and not leave the state."

~ Jim Parker, president of Clear Water Filtration, Parker Aviation Enterprises, and Vacutherm

"I am a strong supporter of high-quality, affordable child care to ensure we thrive as individuals, businesses and communities."

~ Sara Byers, president & co-owner of Leonardo's Pizza
"It's important to have businesses try to do their part; it's really important for communities to step up; but ultimately I think we need policy change."

~ Jerry Greenfield, co-founder of Ben & Jerry's

What Other Business Leaders are Saying:

“A highly talented and educated workforce is the linchpin for maintaining and elevating a competitive economy… It’s not a moral assertion, it’s a practical one…The jobs will go where the well-prepared workers are.”

~Paul Koonce, CEO of Virginia’s Dominion Generation Group

“Economically speaking, early childhood programs are a good investment, with inflation-adjusted annual rates of return on the funds dedicated to these programs estimated to reach 10% or higher. Very few alternative investments can promise that kind of return.”

~Ben Bernanke, chairman of the US Federal Reserve

79% of Vermont infants and toddlers likely to need child care don't have access to high-quality programs. Learn more about Vermont's child care shortage here.


What You Can Do

Informational Resources:

"The Economic Impact of Child Care" handout

►"Vermont's Business Leaders Speak Out" videos:

6.5-minute video

3-minute video

"Child Care Matters to Businesses, Too" TV ad

Take Action!

Click here to see the action steps you can take to support positive change for Vermont's children.