Why Investing In Child Care Strengthens The Economy

On a daily basis in the U.S., too many parents are forced to make hard choices about whether to go to work or care for their young children – and the impact on the economy is devastating. In fact, fewer women in the workforce costs the United States $650,000,000,000 a year. Jessica Sager, Co-founder and CEO of All Our Kin, a network of family child care educators, shares her perspective on what’s ahead for child care in America — and the cost of inaction.

Konstanze Frischen: Jessica, you and the All Our Kin community have championed family child care at the federal level for a long time. Recently President Biden signed an Executive Order that aims to expand access to affordable child care. What does this mean for working parents and providers?

Jessica Sager: It’s certainly a step in the right direction, and we’re already seeing some level of impact. For example, the federal Office of Child Care has mandated states to set their child care provider reimbursement rates at at least the 50th percentile of their market rate survey – meaning that providers in some states will see reimbursements cover more (though not all) of their costs, and families will have more assistance by way of child care subsidies. If we combine actions like these with federal legislation that mandates ongoing investment in child care, then we will have a real win.

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

Sager: This is a workforce of primarily women who are trying to fill the gaps in the system by looking after neighborhood children in their own homes. It’s a critical source of care for infants and toddlers, the primary source of care for parents who work evenings and weekends, and wonderful for any family who wants an intimate, nurturing setting. And yet the policies and funding that we do have for child care, which are limited to start with, often leave out family child care.

Frischen: Your data suggests that for every new family child care business, four to five parents can return to work. So there is a direct lever there. But for many, early child care is simply unaffordable. So how do you match the small business demands of the educator with what parents can afford to pay?

Sager: This is where the absence of public funding becomes glaringly obvious. Child care usually costs more than in-state college tuition. At the same time, early childhood educators are earning poverty-level wages, and it’s also true that our child care system was built on exploiting the unpaid and underpaid labor of Black and brown women. Child care workers are still eight times more likely to be receiving poverty-level wages than their peers in K-12. But affordability for families and compensation for educators don’t have to exist in opposition. They’re really part of the same thing: a publicly-funded system that allows families to afford care and allows educators to earn fair wages.

Frischen: How does All Our Kin come in there?

Sager: We’ve built a responsive model for helping educators set up their own businesses, helping them access the latest knowledge about child development and deliver high-quality programming that’s rooted in what children need to thrive. We’ve shown that in doing so, we can increase the quality of care, as well as educators’ earnings and well-being. In fact, we’ve found that every dollar invested in supporting these programs can deliver a return of $15 to $20 in regional economic benefits, stemming from educators’ and parents’ increased earnings.

Frischen: How does All Our Kin support educators?

Sager: We’ve helped over 5,000 women set up businesses, meet their state’s licensing requirements, do all the foundational training to open their program as a formal, in-home child care business. We support them as they learn 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. After that, we turn to educational coaching and group professional learning on all kinds of topics: child development, family engagement, mental health, and other crises that children and families might experience.

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

Sager: American companies are struggling to find workers. When we think about economic recovery, we need to be thinking about working parents and child care. This issue is particularly true for women. We know that lack of access to child care pushes mothers out of the workforce, which could cost some up to $600,000 over their lifetimes. During the pandemic, we saw many women leave the workforce. Now, in 2023, there are 217,000 fewer women in the workforce than in February 2020, as opposed to 1.3 million more men.

Frischen: What’s on the horizon for public funding proposals? Beyond the Executive Order you spoke about earlier, there are creative ideas being discussed right now, like making it a precondition that companies provide child care if they want federal funding. Are you hopeful?

Sager: Yes, I am hopeful. While we still need Congress to create lasting change at the federal level, we are seeing state and local lawmakers taking drastic action to compensate educators and supply families. In Washington, DC, for example, the city council has allotted $10,000 to $14,000 to every child care educator as an interim measure, so that they can keep doing this work that they love while we move towards paying them something closer to the true cost of care. Meanwhile, in New Mexico, voters actually voted on an amendment that made early childhood education a constitutional right.

We’re also seeing educators take action. In Connecticut, All Our Kin’s home base, 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, lead rallies, testify at legislative hearings, that’s what gives me the most hope of all. Morning Without Child Care gave rise to nationwide action, which this year will take place on May 8. So stay tuned!

Frischen: Jessica, you speak about child care providers as educators — our children’s “first teachers.” This must be linked to what you were saying about giving the profession the respect that it deserves.

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

Jessica Sager is an Ashoka Fellow since 2017.