Why investing in childcare strengthens the economy

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Every day in the US, too many parents are forced to make difficult choices about whether to work or care for their young children – and the impact on the economy is devastating. In fact, fewer women on the labor market costs the United States $650,000,000,000 a year. Jessica Sager, co-founder and CEO of All our relativesa network of family childcare educators, shares her vision of the future for childcare in America – and the cost of inactivity.

Constance Frischen: Jessica, you and the All Our Kin community have long been advocates for family childcare at the federal level. Recently, President Biden signed an executive order that aims to expand access to affordable child care. What does this mean for working parents and caregivers?

jessica sager: It is certainly a step in the right direction and we are already seeing some impact. For example, the federal Office of Child Care has authorized states to do this set their childcare provider’s reimbursement rates to at least the 50th percentile of their market rate research — meaning providers in some states will see fees cover more (but not all) of their costs, and families will get more help in the form of child care subsidies. When we combine actions like this with federal legislation that mandates continued investment in childcare, then we have a real win.

Frischen: You work directly with family child care providers, who often live in under-resourced overburdened communities. What should we know about family care?

Sager: This is a workforce of mostly women who try to fill the gaps in the system by taking care of local children in their own homes. It’s an essential source of care for babies and toddlers, the primary source of concern for parents working evenings and weekends, and great for any family that wants an intimate, nurturing environment. And yet, the policies and funding we have for childcare, which are limited to begin with, often leave family childcare out of the picture.

Frischen: Your data shows that for every new family childcare business, four to five parents can go back to work. So there is direct leverage. But for many, early childcare is simply unaffordable. So how do you balance the small business demands of the educator with what parents can afford?

Sager: This is where the absence of government funding becomes blatantly obvious. Child care usually costs more than tuition in the state. At the same time, early childhood educators earn poverty-level wages, and it is also true that our child care system is built on exploiting the unpaid and underpaid labor of black and brown women. Childcare workers are still eight times more likely to receive poverty-level wages than their peers in K-12. But affordability for families and compensation for educators need not be opposed. They are, in fact, part of the same thing: a government-funded system that allows families to pay for care and teachers to earn a fair wage.

Frischen: How does All Our Kin get in there?

Sager: We built a responsive model to help educators build their own businesses, help them access the latest knowledge about child development, and deliver high-quality programs rooted in what children need to thrive. We have shown that in this way we can improve the quality of care, as well as the income and well-being of teachers. In fact, we’ve found that every dollar invested in supporting these programs can generate a return of $15 to $20 in regional economic benefits, stemming from higher incomes for educators and parents.

Frischen: How does All Our Kin support educators?

Sager: We have helped over 5,000 women set up businesses, meet their state’s licensing requirements, do all the basic training to open their program as a formal home childcare business. We support them in learning all aspects of that business from cash flow to marketing to tax deductions. It’s the kind of training that empowers educators to build the wealth they deserve. Then we turn to educational coaching and professional group learning on a variety of topics: child development, family involvement, mental health and other crises that children and families may experience.

Frischen: We know that millions of American parents are quitting their jobs to care for their children. That is really bad for the economy. What are the implications here?

Sager: American companies are struggling to find staff. When we think of economic recovery, we should think of working parents and childcare. This problem is especially true for women. We know that a lack of access to childcare causes mothers to leave the labor market, which can cost up to a few euros $600,000 over their lifetime. During the pandemic, we saw many women leave the workforce. Now, in 2023, there will be 217,000 fewer women working than in February 2020, compared to 1.3 million more men.

Frischen: What’s in store for public funding proposals? In addition to the Executive Order you talked about earlier, creative ideas are currently being discussed, such as making it a condition that companies provide childcare if they want federal funding. Are you hopeful?

Sager: Yes, I am hopeful. While we still need Congress to enact lasting change at the federal level, we are seeing state and local legislatures take drastic action to compensate educators and provide for families. In Washington, DC, for example, the city council has allocated $10,000 to $14,000 to every child care educator as an interim measure so they can continue to do this work they love while we strive to pay them something closer to the actual cost of care. Meanwhile, voters in New Mexico actually voted on an amendment that made early childhood education a constitutional right.

We also see teachers taking action. In Connecticut, the home of All Our Kin, a coalition of organizations, early childhood educators and parents recently held statewide rallies for the 2nd Annual “Morning Without Child Care.” When educators are able to take on the state, run rallies, testify at legislative hearings, that gives me the most hope of all. Morning Without Childcare was created nationwide actionwhich will take place on May 8 this year. So keep an eye out!

Frischen: Jessica you speak of caregivers as educators – the ‘first teachers’ of our children. This must be related to what you said about giving the profession the respect it deserves.

Sager: Yes, it’s who they are! Family educators lay the foundation for children’s cognitive, social and emotional development, with links to the development of executive functions – the ability to plan, execute plans and successfully contribute to life. Their work will reverberate throughout children’s lives – as will the public investment we make in learning and education in these early days.

Jessica Sager is one Ashoka friend since 2017.