Facts In Action

Did you know? In Massachusetts, early care and education:

• is a $1.5 billion industry, which is about 5 times larger than the commercial fishing industry;
• employs 29,555 full-time employees, which is only slightly fewer than the legal services industry;
• enables $13.1 billion to be earned annually by families with children under age six; and that
• on average for every dollar invested in early care and education there is a $4-$7 return savings on public expenditures.

Traditionally, early care and education are thought of solely in terms of their benefits to young children, over-looking this industry's tremendous economic impact for all citizens. The National Economic Development and Law Center (NEDLC) recently released a report analyzing the economic impact of early care and education.

The way the report organizes the field's impact falls into three categories. Early care and education:

• is an industry
• creates and sustains the workforce and
• provides financially quantifiable benefits to children over the duration of their lifetime.

Early care and education takes place in many classrooms and family homes across the state. Collectively these sites form an "industry". The size of an industry is measured by the amount of money spent on its goods and services - sum the amount of parent fees and public subsidies spent on early care and education. In Massachusetts, the early care and education industry has an estimated value of $1.5 billion. This is five times larger than the commercial fishing industry ($252 million), and also substantially larger than the wireless telecommunications industry ($671 million).

Early care and education additionally supports the economy through the spending of federal and state dollars. In fiscal year 2002, federal and state spending for early care and education in Massachusetts was $627.3 million. This money was spent on programs such as the Income Eligible Voucher Program, Community Partnerships for Children, Head Start, Quality Improvement, and Early Intervention.

In summary, it is important to recognize that comprehensively the early care and education industry is a key component of the Massachusetts economy.

Providing early care and education services creates jobs and sustains parents' participation in the workforce. In 2003, the industry provided jobs equal to 29,555 full-time positions. NEDLC calculated this number using minimum state law staff-child ratios and rounded this to become a whole number of full-time positions; thus the report warns 29,555 is potentially a considerable underestimate of the actual number of people employed full and part time in the field. In comparison, the telecommunications industry sustains about 25,929 jobs and the legal services industry supplies about 31,258 jobs.

In addition, by having child care and early education available, parents are able to maintain employment across all sectors of the economy. Working families sustain the economy, particularly in Massachusetts, where one in ten participants in the labor force has a child under age six. These parents collectively earn $13.1 billion annually. Access to early care and education also allows parents to pursue higher educational degrees. As is the case in many states, including Massachusetts, people with higher educational degrees tend to have higher incomes and use fewer governmental support programs. For states and localities, higher incomes and less use of public services means increased tax revenue and also a savings in public spending.

High quality early care and education also benefits private sector companies. High quality child care is an excellent recruiting and employee-retention tool. As jobs become more specialized, a benefit such as quality child care may be a deciding factor for parent-employees. Furthermore, reliable child care has been found to reduce employee absenteeism and increase their productivity; both of these directly improve a business' bottom line.

Ultimately, early care and education is essential to the issues of workforce creation and development. Early care and education creates jobs, enables parents' employment, and directly benefits business' bottom line.

Although not conducted in Massachusetts, the long-term studies documenting the economic benefits of investing in early care and education are quite reliable and can generally be applied to other settings. Major studies of the High Scope/Perry School program, Carolina Abecedarian Project, and the Chicago Parent Child Centers, have demonstrated that there are predictable future savings from present investment in early care and education. Generally, the ratio is for every $1 invested in early care and education, there is a savings of $4-$7 throughout that same child's life through their reduced use of public support programs, i.e. remedial education, public assistance, or criminal justice. These studies are discussed at more length later in the issue in "In Brief: Is ECE Worth the Investment?" (Page 5).

In summary, investing in early care and education is a wise financial investment because there is a significant return on investment, despite the initial costs.

The NCEDL report contains much more information on this topic. Seek out the full report if you are also interested in learning about the average annual cost for full-time licensed care vs. the state's median family income, child care capacity in the state, or about how labor trends relate to the growing need for early care and education in this state. In addition, in this issue's Ideas for Action you will find suggestions on how to incorporate data into your advocacy efforts.

Early care and education has tremendous financial benefits and impacts for all citizens. Providing high-quality care impacts much more than just one child's life; it effects the economic success of an entire state.

Source: National Economic Development and Law Center. The Economic Impact of the Child Care and Early Education Industry in Massachusetts. (2004) http://www.doe.mass.edu/els/news04/nedlc_report.pdf

Facts in Action, July 2004