California families are facing a significant financial burden when it comes to infant care, with costs reaching up to a quarter of their household income. This financial strain is contributing to mothers leaving the workforce to care for their young children.
Economic Impact of Child Care Costs
The economic consequences of this situation are substantial. A new policy brief by the Stanford Institute for Economic Policy Research (SIEPR) estimates an annual loss of $23 billion in economic output. According to Policy Fellow Chloe Gibbs, “Our examination of the child care market makes the investment case,” adding that every dollar invested in quality early childhood care and education (ECE) could return three dollars or more.
Researchers modeled the cost of a universal child care program in California for children ages 0 to 3, estimating it could range from $4 billion to $21 billion annually, depending on participation levels and income eligibility. The SIEPR researchers collaborated with colleagues at the University of California at Irvine and the University of California at Berkeley to explore ways to deliver this care.
Challenges and Potential Solutions
The analysis highlights challenges within the current market for early childhood care and education, leading to a limited supply of high-quality options and reduced participation rates. Many parents are relying on informal arrangements or leaving the workforce altogether to provide care.
A robust public investment in child care in California could potentially allow over 100,000 mothers of young children to re-enter the workforce. The policy brief suggests a California ECE program targeting low- and middle-income families could cost between $4 billion and $8 billion annually, while a universal program could range from $12 billion to $21 billion annually.
Frequently Asked Questions
What portion of household income is spent on child care in California?
Annual child care costs across California consume a sizable portion of household budgets, up to 20 – 25 percent of median income.
What is the estimated economic loss due to mothers leaving the workforce to provide child care?
The toll amounts to a $23 billion annual loss in economic output.
Who authored the policy brief?
The policy brief was authored by Policy Fellow Chloe Gibbs and a team of SIEPR researchers, including T.V. Ninan, Caleb Brobst, and Abigail Sanchez.
As other cities like New York and San Francisco move toward universal child care, the question remains whether California – the world’s 4th largest economy – will follow suit.
