Ohio’s Economy Could Be Impacted by Billions Due to Struggling Child Care

This article was originally published in Ohio Capital Journal.

Access to child care and securing a solid workforce at child care centers is a “crisis” for which many federal and state entities have been searching for solutions.

For advocates and economic experts, the role of businesses and employers is becoming more and more important to not only ending the child care struggle in Ohio, but also keeping the state from taking a big economic hit because of it.

In a recent panel discussion hosted by the Federal Reserve Bank of Cleveland, policy advisors and local child care advocates emphasized the need for public-private partnerships, and creating more incentives for the workforce to stay in child care.

Get stories like these delivered straight to your inbox. Sign up for The 74 Newsletter

“The question really isn’t whose responsibility is it, but in whose best interest it is, and there’s a real business case for employers,” said Sarah Savage, senior policy analyst and policy advisor for the Federal Reserve Bank of Boston.

Savage said on-site care and subsidies for child care are “rarely offered” even among organizations with 5,000 employees or more, citing a private study from 2023 by Mercer .

That study showed 10% of employers with 5,000+ employees offer on-site care, with 40% of businesses that size offering none of the services listed, including child care referrals, tutoring, subsidies or reimbursement.

Businesses have their own roles to play, but the child care sector can’t improve without first looking at its own staffing issues, according to Kyle Fee, policy advisor for the Federal Reserve Bank of Cleveland.

Fee said the workforce struggles are a “key constraint in the child care situation,” with many of the patterns shown in workforce retainment and pay found to be “typical of low-wage occupations.”

Citing a 2019 national survey of early care and education, Fee said 1/3 of child care centers had staff turnover of 20% or higher, with turnover higher in centers with lower pay. That turnover was also linked to the combination of pay and the amount of child care and educations services offered at those centers, according to Fee.

The profile of the workforce shows primarily younger female workers, who are “more diverse in terms of race and ethnicity than the broader workforce,” Fee said.

In 2022, the child care workforce had the 10th lowest annual median wage nationally, just ahead of fast food workers and cashiers, and Fee said estimates for Ohio “tend to be slightly lower.”

“The pay for a child care worker does not provide a living wage for single adult plus one child in any state,” Fee said.

Those numbers account for those that stay in the workforce, a consistently decreasing population, according to Fee’s analysis.

He found that from 2010-2022, an average of about 15% of child care workers left the occupation, above the 8-9% of preschool and kindergarten teachers who left their profession in the same period.

In 2022, job turnover in the child care sector was 65% higher than turnover in “typical occupations,” according to Fee.

On average, half the workers who leave the child care profession don’t re-enter the workforce at all.

“The emphasis here again is pointing on the churn among child care workers in and out of the workforce that needs further exploration,” he said.

Groups in Ohio are attempting to improve the wage conditions for workers, but also keep up the quality of centers to persuade more families to enroll.

Nancy Mendez, president and chief executive officer of Northeast Ohio child care advocacy organization Starting Point, said they have been working on collaborations with Cuyahoga County to provide pre-K scholarships for those up to 300% of the federal poverty line and have used federal ARPA dollars to provide scholarships, along with bonuses for child care staff.

“We’re trying to do our best to help stabilize this system,” said Mendez, whose organization helps child care centers maintain quality and connects parents to services in the area.

But improving wages means increasing tuition which can lower enrollment as families lack the money to keep up with rising costs of child care and everything else, leading to a never-ending cycle for centers, according to Mendez.

“There’s this chicken-and-egg thing here that’s going on that they really can’t solve,” Mendez said.

The organization saw the COVID-19 pandemic’s impacts on many economic sectors throughout the state, with child care seeing a hard and sustained effect.

“We were waiting for this tsunami of low enrollment and staffing issues to kind of move on with everybody else, but what we saw was our workforce issues just continue to exacerbate,” Mendez said.

Starting Point heard from 60% of the child care centers and homes they work with, who reported they were “operating at low enrollment and mostly because of staffing issues.”

To break even, Mendez said child care facilities need to be at more than 70% enrollment at least.

The lack of affordable child care combined with the staff shortages have created a situation that Mendez and policy advisors on the panel say will have its impacts on the economy. Mendez said neighboring states like Pennsylvania and Michigan have seen estimated economic losses of more than $2 billion because of a lack of child care.

“I wouldn’t be surprised if we’re looking at about $2 billion that we lose annually in Ohio due to breakdown in child care or the inability to access child care,” she added.

Legislative measures have been introduced to try to create an employer-state partnership on child care costs, along with efforts to create a tax credit targeted at child care and family costs and even a tax credit to Ohioans who contribute to child care facilities. Many of the measures are Republican-led, giving them more likelihood for passage in the GOP supermajority House and Senate.

However, the Ohio General Assembly is on break until the Fall, likely until after the November election. So, the measures won’t see possible action until the tail end of the General Assembly’s term. If no action is taken by December, the measures would need to be re-introduced in the new year.

Ohio Capital Journal is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Ohio Capital Journal maintains editorial independence. Contact Editor David Dewitt for questions: info@ohiocapitaljournal.com . Follow Ohio Capital Journal on Facebook and X .