Press Releases | Cost of Child Care

News from EPI Up to 16 million children could benefit from a high quality early child care and education system

A new report by EPI Senior Economist Elise Gould and Budget Analyst Hunter Blair explores the implicit and explicit costs of the currently underfunded early child care and education (ECE) system, and looks at the additional costs and benefits of financing a high-quality ECE system.

The authors explain that the current ECE system is substantially “funded” through low teacher pay and inadequate supports for ECE teachers, who are primarily women, specifically women of color. Nationally, the median hourly wage for ECE teachers is just $12.12—and nearly one in five live below the official poverty line.

While the many ECE teachers are underpaid, the cost to parents for ECE is high. Center-based care for four-year-olds ranges from $4,493 a year in Arkansas to nearly $18,980 a year in D.C.—while ECE for infants ranges from $5,760 in Mississippi to $24,081 in D.C. All told, parents currently spend about $42 billion on early care and education, while federal, state, and local governments spend just $34 billion.

The authors find that, altogether, a fully phased-in and comprehensive ECE system would require an annual investment in the range of $337 to $495 billion, serving between 11.5 and 16 million children. In fiscal terms, it would take just 16 years for the government budget benefits of the investment to exceed annual government costs.

“High-quality early child care and education is not only the morally right thing to do for millions of children, parents, and teachers, it’s also a worthy investment of our tax dollars,” said Blair. “But current public investments are beyond inadequate. Right now, it’s like policymakers aren’t even trying.”

The report, which was produced in collaboration with Lea J.E. Austin and Marcy Whitebook of the Center for the Study of Child Care Employment (CSCCE) at U.C. Berkeley, also finds that parents forgo roughly $30–35 billion in income because the current high cost of ECE leads many parents to leave the paid labor force, or reduce their paid work hours, to care for their children. This leads to a loss of tax revenue of about $4.2 billion each year. In a high-quality system that invests in ECE teachers and pays them like their K–8 peers, these teachers will see their wages rise by $80.3 billion each year, which will lead to a gain in tax revenue of about $42.9 billion.

“The current early care and education system is failing teachers, parents, and children across the country,” said Gould. “While a substantial down payment has already been made through the resources that are currently dedicated to the care and education of young children, it will take a concerted investment by policymakers to create a stronger and more sustainable system for all.”

Today, EPI has also released a series of mini-reports co-authored by EPI’s Gould and Zane Mokhiber, along with Austin and Whitebook of the CSCCE. These reports offer data for all 50 states, plus D.C. on the amount a high-quality ECE system would cost, and how many teachers, parents, and children would benefit from such a system.

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