In a recent Cleveland.com article, Jeremy Pelzer reported that the Ohio Chamber of Commerce has been expressing public concerns about Ohio’s child care market.
The general argument being made by Steve Stivers, president and CEO of the Ohio Chamber of Commerce, is that workers need child care options if they want to go to work. If child care options are too expensive or not readily available, potential workers will opt out of the workforce.
This will reduce Ohio’s labor force participation rate, which will drive up costs for labor and will run Ohio companies out of business.
This reasoning is sound and reflects an immediate problem for Ohio businesses. If workers cannot afford child care, they will opt to care for children on their own rather than pay the cost of child care.
Workforce participation of the parents is not the only economic impact of lack of child care, however. A potentially larger long-term economic impact comes from how lack of quality child care will affect the workforce trajectory of the kids themselves.
In his book on the topic, “Investing in Kids,“ Economic Development Economist Timothy Bartik tackles this question.
Bartik started his career as an economist focused on economic development incentives. Tax incentives for economic development are maligned by economists as a “race to the bottom” public policy tool that pits localities against one another and leaves them all worse off.
Bartik’s interest was in whether economic development incentives made sense to local policymakers themselves. He created a model that helped explain what the impact of economic development incentives was on local wages.
What Bartik found was that well-designed economic development incentives that did things like invest in export-heavy industries through tools like local infrastructure development and workforce training could have a positive impact on local wages.
After doing this work, Bartik was approached by a foundation who asked him a new question: could early childhood education be an economic development tool? Could investing in kids today lead to better local wages decades down the line?
Bartik tackled the question and found the answer is yes, investing in early childhood education today is investing in tomorrow’s local workforce. He found that not only was investing in early childhood education a good way to improve wages down the line, but that the gains realized by early childhood education were comparable to the gains realized by well-designed economic development incentives.
Also important about Bartik’s analysis is that he found these benefits accrued to local wages. So this means that even after accounting for the fact that many children will eventually move away from the place where they received their early education, localities will still end up with better wages down the road that more than pay for the up-front cost of providing early education for children in the first place.
According to the best evidence we have today, improving access to high-quality child care and early education is not just a key part of supporting today’s workforce. It’s also an effective policy lever for improving tomorrow’s.
This commentary first appeared in the Ohio Capital Journal.