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Empirical Evidence on Child Care Supply and the Child Care Workforce

Thursday, November 5, 1:45 to 3:15pm, Property: Boston Marriott Copley Place, Floor: 4th Floor, Room: Salon B

Session Submission Type: Panel

Abstract

Early childhood education is one of the most important public investments that can benefit future wellbeing and economic prosperity. Several states and municipalities have launched substantial expansions to child care funding, and major federal child care expansions have been proposed at the federal level. A central part of political discussion around those expansions has been uncertainty and concern about costs and potential supply-side effects. These concerns are likely to have continued relevance in an era of rising federal deficits and resurgent concern about inflation. At the same time, low pay and challenging workforce conditions for the ECE workforce undermine efforts to expand access and improve quality. There is an urgent need for improved evidence about supply in the child care market to inform these discussions. This session presents four papers on supply and workforce issues, examining both the costs and benefits of investing in child care supply.

Paper 1 examines the impacts of supply-side grants instituted by states in response to an influx of federal funding that was allocated to stabilize the child care market under the American Rescue Plan Act. Many of these programs where continued with state resources after the expiry of COVID-19-related funding. The paper conducts an in-depth quantitative analysis of data from six states, using regression discontinuity design to estimate the effects of the funding on provider outcomes such as total paytroll, employment, closures, and employee turnover.

Paper 2 examines high workforce turnover as a critical barrier that frustrates quality improvement efforts in child care. Analyzing more than 100 interviews with providers participating in three different child care workforce investment programs from Texas, the project analyzes a training paradox where investments in worker training and credentials may increase already-high rates of exit from child care employment, and therefore fail to have the intended impact of stabilizing the child care workforce. The project offers recommendations for more effective policy design.

Paper 3 provides an unprecedented comprehensive analysis of how the child care workforce has evolved over 25 years, from 2000-25. Drawing on the Census Bureau’s Longitudinal Employer-Household Dynamics (LEHD) database, the project studies how key workforce quality metrics such as experience, age, education, and turnover/retention have changed over time and relates these changes to sectoral shifts such as changes in the prevalence of chains and changes in the child care sector’s competitive position with respect to other industries.

Paper 4 presents new evidence on the elasticity of child care labor supply, studying how local expansions and contractions in other industries affect the child care worker numbers and wages. Using data from the Current Population Survey (CPS) and American Community Survey (ACS), the project identifies industries that employ child care customers but whose workforces are isolated from child care supply. Employment shocks in these industries provide a means to identify how much wages need to rise to expand the number of child care workers.

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