The Child Care Crisis is Hurting Connecticut’s Economy

Investing in our state's child care system will benefit families, children, and the economy.

Connecticut is in a child care crisis, with parents struggling to find and afford child care spots and children left out of access to early education as a result. The stress this crisis causes parents and the ways it increases gaps in young children’s learning are bad enough. But on top of this, lack of access to quality child care also undermines Connecticut’s economy. Creating better access to child care is good for children’s development and success, and it’s good for adults – parents, teachers, the wider workforce, and state’s overall economic health.

To understand how investing in child care can benefit everyone, it’s important to know how the current crisis is holding our economy back by hurting families, child care workers, and all businesses and employers.

Hurting Families’ Financial Health

The average monthly cost of child care for a family of four in Connecticut with two young children is $2,188. To afford that cost, a family would need an annual income of more than $106,000 just to survive (not thrive) every year – and 39 percent of families in Connecticut make less than that. 

For perspective, experts recommend families spend no more than seven percent of their annual income on child care. To make the Connecticut average of $13,000 for just one preschool-aged child “affordable,” a family would need to make at least $186,000 – and much more than this for more than one child. 

From here, all but the wealthiest families are often stuck in one of three financial situations: 

• Families that are able to find child care stretch their budgets thin to pay for it. When a significant part of a family’s budget goes to child care, it means they can’t get ahead. There’s no chance to save for a rainy day, accumulate enough for a down payment on a house, put money toward a child’s later education, save money for retirement, or spend on other things. Without the ability to save, it also can mean families are less likely to be able to afford an unexpected expense, like medical bills or a broken down car. 
  
  
• Families that are able may try to cobble together child care with a patchwork of fixes – by having a parent who is working from home try to do both child care and work at the same time, by relying on family for help, by having their child in care only part time, by reducing their work hours, or something else. While this can work for some families, it’s not possible for a lot of people. Not everyone has nearby family or other community to help, not all parents work from home or on predictable schedules, and not everyone can afford to reduce their work hours. Lack of formal child care also means no safety net. In the early years of the COVID-19 pandemic, for instance, we saw the stress this kind of juggling caused parents and how often this pressure pushed women out of the workforce. 
  
  
• Other families that are able may decide to have a parent leave the workforce altogether, because the cost of paying for child care outpaces the size of their paycheck. Across the country, one in five parents has quit a job or been fired because of child care issues. While staying home with a child can be fulfilling and critical unpaid labor, it also should be a decision parents get to make because they want to, not because they were forced. Not every family can afford to forgo a parent’s paycheck, especially in single-parent homes. And because staying home is unpaid work, doing so means a family loses out on another income, while one parent loses out on the ability to save for retirement or to put money toward Social Security. Because of built-in biases about the work of caring for children, this often means women are the parents staying home. 

Lack of access to affordable child care that is close by and that meets families’ schedules puts an enormous strain on families’ financial health, and it has gotten worse since the beginning of the COVID-19 pandemic. Since the pandemic, the majority of parents across the country have been late to work, left work early, missed work, or been distracted to the point of being less productive due to lack of child care. More than one-third (37%) have had their pay or hours reduced, more than one in four (26%) have quit a job, almost one in four (23%) have been let go or fired, and more than four in ten (41%) have turned down a new job offer due to lack of child care. 

Hurting working women

The evidence shows that when a family is forced into one of the situations we described above and can’t find or afford child care, women disproportionately bear the burden.

Nationwide, mothers make 58 cents for every dollar made by fathers. While the “motherhood penalty” is complex, part of the reason for this wage gap is because women are disproportionately forced out of the workforce due to lack of child care. 

Mothers are 40 percent more likely than fathers to report that lack of access to child care hurt their careers. Experts say that if Connecticut fully funded and supported access to child care, 15,000 more mothers would be working.

When women are able to stay home to care for children, it still means going without a paycheck, less opportunity to build up salary base and promotions over time, and less ability to add to retirement, social security, or other benefits that build an entire family’s financial health over time. One national study found that improving access to child care would increase earnings for a mother of two by $97,000 over her lifetime, with Social Security alone adding up to $10,000 over 15 years. That research also found that access to child care would decrease senior poverty for women by around 21 percent.

The vast majority of mothers can’t afford – or understandably, don’t want to make – even this tough financial choice. Most families can’t afford to go without that income, and seventy-one percent of women with children are working nationwide. 

For single moms, trying to find and afford child care that works with their schedules and incomes can also be particularly hard. In Connecticut, one in four households are also single-parent, representing 58 percent of Black mothers, 48 percent of Latina mothers, and 17 percent of white mothers with young children.

Hurting an Underpaid Workforce

Early childhood educators do the essential work of nurturing and teaching young children. But low wages and limited benefits make it difficult for child care workers in Connecticut to support themselves and their families and make it hard for programs to find and keep early educators. This churn can lead to longer waiting lists and even program closures. At $15.34 per hour, the median wage for child care workers in Connecticut is barely over the state minimum wage and is less than that of animal caretakers. 

This workforce of more than 16,000 people in our state is almost completely women (95 percent), and the majority are women of color, meaning low child care worker wages disproportionately hurt white women and women of color.

Hurting Businesses, Employers, and the Whole Economy:

The child care crisis is not only putting a financial strain on families, it is also hurting Connecticut’s economy overall, for businesses and other residents. 

Connecticut loses $1.5 billion per year due to the lack of infant and toddler care alone. 

Businesses lose revenue due to fewer people being able to work as parents (disproportionately women) and due to lower productivity from parents who constantly try to juggle child care needs. When parents are forced out of the workforce to care for children, employers face the extra costs of hiring and rehiring for the positions they vacate. Employers also have to make up for absenteeism or reduced hours from parent workers. 

Every taxpayer – parent or not – also bears the brunt of the child care crisis. When parents are forced to reduce or go without their paychecks altogether, it creates a smaller tax base for the state as a whole. This means less money for the state to collect for programs and services that we all can use, like roads and infrastructure, public education, and more. 

Building a Brighter Future: What We Need

Investing in child care is about helping families and investing in Connecticut's future. To be clear, the benefits of early childhood education go far beyond the financial, for young children, adults, and society as a whole. Putting all of the cognitive, social, emotional, and health benefits of early education aside, though, the economic impact is obvious. Overall, making quality child care affordable and accessible would mean: 

• Financial growth and stability for parents, as they are able to normalize work schedules, including in higher-wage opportunities, and can increase savings and their financial safety nets when budgets are no longer stretched to the limit;
• Financial growth and stability for children, as their families are better able to save and build their wage bases over time, and as children who are in high-quality early education are more likely to graduate from high school and are more likely to become higher earners as adults;
• Economic Growth & Stability for Everyone: For every dollar Connecticut spends on quality child care, the state can expect to get between $1.07 and $1.13 back as a return on its investment (between 7 and 13 percent). In other words, investments in child care pay for themselves. The benefits are especially strong for historically disadvantaged children. Research shows that for low-income kids, quality child care yields a return on investment at the high end of the spectrum, at 13 percent. 

Every dollar put into early childhood education means a stronger economy, stronger family stability, and a brighter financial future for our entire state.

Right now, however, the state of Connecticut does not have a plan for robust, sustainable funding for early childhood education. While lawmakers have taken some small steps in recent years, it is not yet enough. 

For Connecticut to truly thrive, we need a child care system that is accessible, high-quality, and affordable for all families. We must fundamentally rethink how our state supports our youngest residents and their grown-ups.

When the legislature comes back into session, it’s critical that elected officials act to ease the child care crisis in our state by investing more in early education.