NEW
YORK, July 9, 2024 /PRNewswire/ -- In the face
of a rapid and outsized decline in revenue triggered by the
pandemic, the US child care sector demonstrated strong perseverance
against significant challenges. Revenue for the industry reached
$68.5 billion in 2022, of which 86%
represented revenue from center-based care. However, the economic
impact varies greatly within and across states.
That's according to a new report from the Committee for
Economic Development (CED), the public policy center of The
Conference Board, examining the child care sector's response to
COVID-19 and its overall recovery.
Revenue in the child care sector declined 36% in Q2 2020, in the
early days of the pandemic, compared to 9% across all service
sectors. But by Q3 2021—about one year later—the sector had
returned to prepandemic revenue levels. And by Q3 2023, revenue
exceeded forecasted trends, reaching 26% above prepandemic levels.
Revenue was bolstered in part by a $52
billion supplemental infusion of federal relief funds
between March of 2020 and March of 2021 as Congress sought to
stabilize the child care market, providing parents access to child
care to return to work.
In Q2 2020, child care employment decreased 31%, or 290,000 lost
jobs, which resulted in a 28% decline in total compensation paid by
the industry. Industry employment has continued to recover but lags
behind prepandemic forecast levels. Wages surged more than 31%
above prepandemic levels but remain relatively low at an annual
wage of $28,185 in 2022 (in
center-based care).
"The resilience of the child care sector is evident, but it's
unclear what will happen once all federal and state relief
funds—which have been crucial to the industry's recovery—have run
out," said Cindy Cisneros, Vice
President, Education Programs, CED. "Child care is critical in
supporting working parents, children, and the US economy. Continued
attention is needed from both public and private stakeholders to
ensure the industry's stability and growth and provide working
parents with adequate care choices within their communities."
The CED signature report, Child Care in State Economies
(2024), is the second in a 3-part series produced with the
support of a grant from the W.K. Kellogg Foundation. Key findings
include:
The US child care sector experienced a significant economic
disruption due to COVID-19, with the decline in revenue for
employer-based child care roughly four times larger than the full
services sector.
- Revenue for child care facilities that are employers plummeted
by 36% in Q2 2020, compared to a 9% decline across all service
sectors during the same period.
- Throughout 2020, child care facilities, both employer
and nonemployer (home-based businesses offering child care
services), faced a revenue decline exceeding 10%.
The sector adapted mostly through employment and wage
adjustments, not permanently ceasing operations.
- There was a rapid and pronounced 31% reduction in employment in
Q2 2020, a loss of 290,000 jobs.
- Employment has recovered slowly, with the current total number
of child care workers not yet reaching the pre-pandemic trend level
despite full revenue recovery.
- Total wages paid to workers in the child care sector declined
28% in Q2 2020 but rebounded robustly.
- By Q2 2023, total wages for child care workers had surged more
than 31% above prepandemic levels, reaching $30 billion annually. The average annual wage for
child care workers increased by 27% in the period, reflecting the
sharp rise in total wages.
- But wages for child care workers remain relatively low. The
average worker in a child care center earned annual wages of
$28,185 in 2022.
Despite a steep downturn in child care usage during the
pandemic, the sector remained resilient, achieving a full revenue
recovery.
- The sector's recovery was notably supported by federal and
state interventions, including a total of $52 billion in supplemental federal aid.
- After a brief decline in 2020, the number of child care centers
began to expand, with a 5.3% increase in employer establishments
compared to prepandemic (an increase of 3,900 child care
centers).
- Revenue for child care centers grew by 25.8% from prepandemic
levels as of Q3 2023, although workforce numbers per establishment
have not fully recovered.
Family child care homes, long a more affordable option for
families, continued a steady decline.
- Home-based care declined by 17,235 since 2019.
- The average revenue for home-based care was $17,472, with estimated earnings of $10,400 after operational costs.
- The decline in home-based providers impacts the range of child
care options available to working parents, effectively reducing
access to what is typically the most affordable form of child
care.
The sector's growth underscores its critical role in
supporting working parents and the US economy.
- The child care industry plays a vital role in parental labor
force participation and significantly contributes to the economy,
with revenues reaching $68.5 billion
in 2022.
- As of 2022, there were 624,300 child care businesses, providing
jobs for 1.5 million people.
- The industry continues to shift from nonemployer
(home-based) to employer (center-based) establishments, indicating
a trend that may affect future affordability and
accessibility.
The economic impact of the child care industry varies
significantly across states.
- The economic impact of the child care industry across states is
influenced by the number of children in paid care and the types of
child care providers.
- Twenty-three states reported child care industry revenues
exceeding $1 billion, with
California the highest at
$9.1 billion and Wyoming the lowest at $87 million.
- Rural and Farm Belt states derive a larger portion of their
child care revenue from family child care homes, whereas urban and
certain states like New Hampshire,
New Jersey, and the District of Columbia see less revenue from
home-based providers.
- The state-level breakdown further underscores the diverse
economic roles of child care across the U.S., emphasizing the need
for continued attention and support to ensure the sector's
stability and growth and provide working parents with adequate care
choices within their communities.
About The Conference Board
The Conference Board
is the member-driven think tank that delivers Trusted Insights for
What's Ahead.™ Founded in 1916, we are a non-partisan,
not-for-profit entity holding 501(c)(3) tax-exempt
status in the United
States. ConferenceBoard.org
The Committee for Economic Development (CED) is the public
policy center of The Conference Board. The nonprofit, nonpartisan,
business-led organization delivers well-researched analysis and
reasoned solutions in the nation's interest. CED Trustees are chief
executive officers and key executives of leading US companies who
bring their unique experience to address today's pressing policy
issues. Collectively, they represent 30+ industries and over 4
million employees.
ConferenceBoard.org/us/Committee-Economic-Development
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SOURCE Committee for Economic Development of The Conference
Board (CED)