While some pre-elementary children of working parents spend their days under the care of grandparents or other relatives, more than half are cared for in licensed child care facilities. So when the COVID-19 pandemic shuttered businesses and closed schools, many parents were forced to leave the workforce in droves. Over the last two years, the crisis has become so dire that the Federal Reserve Bank of St. Louis’s economists believe the impact of the pandemic may force dramatic changes in the child care industry for years to come.
According to their findings, between January and April 2020, employment in the child care sector declined by 33%, almost three times the national average of overall employment. Today, as the economy recovers and Americans attempt to return to work, parents are faced with declining child care facility capacities, leaving them scrambling to find placement.
This sharp decline in the child care sector’s capacity, combined with inflation and the subsequent need for higher wages to meet basic cost-of-living needs, are steadily increasing the cost of adequate child care. In fact, child care costs an estimated 14% of median household incomes, and the expense of child care has continuously risen much faster than the prices of other everyday needs.
The lack of affordable child care is often cited as a factor keeping parents and caregivers out of the labor force. Many two-income families are left grappling with the financial decision to continue with a second income or forfeit it to stay home and care for their children. And while this decision might make sense in the moment, it can have a long-term impact on the parent’s ability to reenter the workforce and receive competitive salaries.
The good news – as of June 2021, child care employment in Arkansas has fully recovered, much faster than the national average. But wages for early childhood educators remain low, and the cost of care is more expensive than many families can afford.
State and federal policymakers must take steps to 1) support the establishment and expansion of quality child care; 2) recognize adequate compensation is critical for early childhood educators, and 3) make child care affordable. While much remains uncertain about the future of the child care industry, policy recommendations like these are important to consider as the industry continues to change.