Investing in Child Labor

While I was growing up, my mother often babysat as a way to supplement the household income.  It felt like something she was doing for the sake of our home, but digging into data now suggests it was even more beneficial to the overall economy.  In fact, childcare might be the unsung hero of the American economy in 2025, supporting $152 billion of annual activity and 2.2 million jobs.  Despite this heavy lift, it's a sector that’s struggling at its very core.  According to this report from the Conference Board, the average family now spends over $11,500 a year for care.  That’s more than college tuition at many schools, but childcare workers typically earn a median wage below most other professions which can lead to a dearth of workers in the profession.

There’s evidence showing how these costs and shortages echo through the broader workforce.  In rural areas, more than half of young children live in “child care deserts,” facing a stark lack of options compared to urban families according the the Montana Department of Labor and Industry.  Employer turnover in childcare tends to be higher than the national average because low pay and difficult working conditions prompt many to leave the field altogether.  When childcare breaks down, parents (mostly mothers) leave the workforce, holding back productivity in both the household and the nation.  A study from the First Five Years Fund (FFYF) suggests America’s economy suffers $122 billion a year due to challenges with childcare.

These challenges persist even though investing in childcare brings a significant return, making it worth paying attention to.  According to FFYF, every dollar invested in childcare can generate up to $7.30 in economic benefit.  There will be many perspectives on how to shore up this industry, with some arguing that parents need to pony up more money, or that firms should provide it as a benefit, while others might suggest that the government ought to intervene.  Whatever the solution, the data seem to point to investments in childcare being economically sensible in America by freeing up more technically skilled workers while employing others to look after the kids.