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

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. 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. 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
Employees
Annual Wages
Washington
9,012
30,600
$566 M
King County
2,041
8,537
$175 M
Seattle
620
2,491
$ 50 M
Note: 2002 data

6. Child care: Washington industry employment comparison
Manufacturing—aircraft and parts
76,874
Child Care
56,900
Licensed: 30,600
Unlicensed: 26,300
Agriculture—crops
51,387
Apparel Retail
24,204
Hotel
23,791

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

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. 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. 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. 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. 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. 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. 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. 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. 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. A call to action: Sustainable financing
Recommendation #2
Raise state subsidy reimbursement rates to the 75th 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. 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. 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. 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.