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1 Child Care is not Child’s Play The Economic Impact of the Child Care and After-School Industry in Washington Jill Nishi, Director Office of Economic.

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Presentation on theme: "1 Child Care is not Child’s Play The Economic Impact of the Child Care and After-School Industry in Washington Jill Nishi, Director Office of Economic."— Presentation transcript:

1 1 Child Care is not Child’s Play The Economic Impact of the Child Care and After-School Industry in Washington Jill Nishi, Director Office of Economic Development City of Seattle Report prepared by the Northwest Finance Circle

2 2 Overview Economic impact of the child care industry Benefits of child care Market inefficiencies Recommendations

3 3 Defining child care Early childhood education: education & care of children birth to 5 – Licensed child care centers & homes – Preschool programs, Head Start, ECEAP School-age care: licensed & unlicensed programs for children ages 5-12 – Before & after school – Summer & school breaks Licensed care: meets state standards for health & safety Unlicensed care: programs not requiring a license – Part-time preschools – Family, friend & neighbor care – Arts & sports programs, tutoring, day camps, drop-in clubs

4 4 Washington’s child care industry Generates $836 million in revenue Creates more than 30,600 jobs Contributes to the infrastructure necessary to support a strong economy Provides long-term benefits – Prepares children to succeed in school – Sets foundation for a skilled productive work force of the future

5 5 Child care: generating revenue and creating jobs The child care industry contributes directly to our state and local economies. Over 9,000 licensed facilities create jobs and earn gross annual revenues of $836 million Licensed child care businesses EmployeesAnnual Wages Washington9,01230,600$566 M King County2,041 8,537$175 M Seattle 620 2,491$ 50 M Note: 2002 data

6 6 Child care: Washington industry employment comparison Manufacturing— aircraft and parts 76,874 Child Care56,900 Licensed: 30,600 Unlicensed: 26,300 Agriculture— crops 51,387 Apparel Retail24,204 Hotel23,791

7 7 Child care: generating revenue and creating jobs The child care industry contributes to the economy through its spending in other sectors. Multiplier effect of child care labor income in Washington (2000) – Licensed child care employees earn $566 M in wages – These employees’ spending generates $1.64 B in other kinds of sales – Resulting in $65 M in taxes (sales and B&O)

8 8 Child care: generating revenue and creating jobs 2003 State of Washington invested $50M in child care Yielding a federal government match of $350M State child care investments brought $7 to Washington for every $1 invested

9 9 Consumer demand for child care 56% of employed parents use child care Working parents use an average of 26 hours a week for children birth to five; 16 hours a week for school-agers

10 10 Economic impact of working parents’ wages Parent Impact: $13 B in wages Average annual household earnings in Washington: $51,974 Families with at least one working parent: 250,000

11 11 Child care: increasing worker productivity By making employment possible for parents By helping working parents to be more productive By supporting businesses to attract and retain parents in low-and moderate-wage jobs.

12 12 Child care: increasing worker productivity Stable child care reduces employee absenteeism and improves productivity Child care problems cause working parents to miss days at work, arrive late, leave early or use work time to deal with these problems. Equivalent of 6 work days per year lost due to child care problems Cost to employers: $112.5 M/year

13 13 Child care: supporting business Child care subsidies help employers – Child care subsidies help low-wage parents afford to work. 8% of our state’s working parents receive child care subsidies. – The City of Seattle helps over 600 families afford child care so they can work. – Over 1/3 of City of Seattle subsidies support employees working in retail and medical service sectors.

14 14 High quality child care: a high return on investment Studies show: High linkage between quality early learning and school readiness and school success Every $1 invested in high quality early education yields $7 in savings to the public Children in high quality early learning programs are more likely to: – Graduate from high school – Attend college – Own their own home

15 15 Child care: a failed market good The child care industry can’t offer a high quality “product” at a price most families can afford. Public investment has not bridged the gap between what families can afford and what a high-quality child care product costs.

16 16 Child care: a failed market good Because public investment is low, the cost to families is high The average family of 4 spends more than 20% of their budget on child care. – In King County, child care consumes over 25% of the average family budget

17 17 Child care: a failed market good Early education can’t be delivered effectively without adequate resources—employers, working families and children are not getting their needs met The child care industry needs external supports from the public and private sectors

18 18 Summary The child care sector is an important source of jobs and revenue generation High demand for child care exists throughout the state Child care improves worker productivity in the short term In the long term, high quality child care is an investment in our future workforce High quality child care requires a higher level of private and public investment

19 19 A call to action: Workforce development and business assistance Recommendation #1 – Ensure child care sector workforce training needs are met – Provide small business assistance in conjunction with child care resource and referral programs to help child care businesses be competitive, meet regulatory standards and be responsive to consumers

20 20 A call to action: Sustainable financing Recommendation #2 – Raise state subsidy reimbursement rates to the 75 th percentile of the market rates. – Offer cash incentives, such as tiered reimbursements and bonuses – Include funding for early learning and after school services in the State of Washington’s basic education formula – Extend current B&O tax exemptions to include those licensed child care providers serving children up to age 12 – Offer tax incentives for private developers to incorporate space for child care in new housing or business developments; or to offer free or below-market-value rent to child care programs

21 21 A call to action: Equity and access Recommendation #3 – Expand eligibility for state child care subsidies to 300% of the federal poverty level – Foster public/private partnerships to match government subsidy dollars with private sector contributions

22 22 A call to action: Consumer education Expand consumer education and accountability measures. – Quality rating systems (such as Educare) – Expand consumer information and referral – Institute accountability measures, such as developmental assessments of children to ensure children are thriving – Periodic consumer satisfaction surveys

23 23 Conclusion The child care industry is part of the fabric of our economic infrastructure. If we are to reap the benefits this industry can produce, we need to: – Expand public and private investment – Work in partnership with state, regional and local economic development organizations to strengthen the industry and maximize its contribution to our state's economy.


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