Inadequate Child Care Costs Indiana Employers $1.8B Annually

November 5th, 2018

Early Learning Summit Unveils Startling Data on How Inadequate Child Care Impacts Workforce

Approximately 350 business and community leaders attended the 2018 Indiana Early Learning Summit in Indianapolis last month to learn about the current status of early childhood education in the state and the importance of investment in early childhood education.  

During the annual event, the Indiana University Public Policy Institute presented a new study, Lost Opportunities: The Impact of Inadequate Child Care on Indiana’s Workforce and Economy.

The study was presented along with two panels. The first panel was about community impact with input from leaders in economic development and business as well as input from parents and local government representatives. The second panel was comprised of state legislators discussing the status of early childhood education and future legislative plans.

Laura Littlepage, senior researcher on the study, presented the material at the event.

Here are some key takeaways critical to the future growth of regional businesses in their efforts to attract and retain a workforce full of working parents.

4 Quick Facts

  1. Quality Early Childhood Education (ECE) is more than just babysitting. A key element to early childhood education is the educational aspect.
  2. Data shows that 90 percent of a child’s brain develops by age 5, and ages 0-3 are the most important years in terms of brain development.
  3. Annually, the average cost of quality education is almost $9,000 per child. This constitutes about 54 percent of the gross income for a single parent living at the poverty line. This cost is a major barrier for that parent to enter or stay in the workforce.
  4. Nearly 3 percent of working parents will quit their jobs in order to address child care needs.

Children in Need

  • Over 500,000 Hoosier children are ages 5 or younger with 65 percent of these children living in homes where all parents work.
  • More than 130,000 children are enrolled in known ECE programs, and nearly 50,000 of the children that are enrolled in a high-quality early childhood education program are enrolled in either a level 3 or level 4 in the Paths to Quality program.
  • In 2015, there were about 20 licensed child care slots available per 100 kids under the age of 6.

Economic Facts

  • Indiana’s economy is losing $1.1 billion a year due to childcare related absenteeism and turnover. That amounts to $119 million in lost tax revenue for the state.
  • Employers incur $1.8 billion in cost due to inadequate childcare annually.
  • Working parents with kids under age 5 will miss more than 13 days of work per year due to lack of childcare options.
  • Early childhood education as an industry has a worker deficit of more than 8,000.

Current Programs

  • Today, 20 counties in Indiana participate in a pilot program called On My Way Pre-K, which provides grants for low-income families to access high-quality early childhood education the year before the child will start kindergarten. Within our 11-county region, only Allen, DeKalb and Kosciusko are eligible to participate.
  • Estimated costs of a state-funded universal pre-school for 4-year-olds range from $187 million to $226 million. That’s anywhere from 0.8 percent to 2 percent of the state’s current spending on K-12 education.
  • Multiple studies have shown the return on investment for early childhood education ranges between 4:1 and 16:1.

At the end of the study, the author provides four recommendations:

  1. Tax credits for businesses that support early care and education
  2. Social impact bonds
  3. Shared services alliance
  4. Dedicated revenue source

To learn more, please read the full study.

If you’re passionate about early childhood education, contact Director of Regional Initiatives Amy Hesting to learn more or to help plan the 2019 Early Childhood Education Summit in Fort Wayne.

Early Learning Summit 2018