Better Access to Childcare Would Boost Women in Workforce & Generate $72.8bn for US Economy

Increasing women’s participation in the workforce by even one percent would dramatically increase economic opportunities for women; resulting in additional growth and prosperity, confirmed a new report.

For women alone, a one percent increase would translate into an additional $72.8 billion in income in the US, according to a new report produced by the Committee for Economic Development (CED), the public policy centre of The Conference Board. But as the report points out, the ability to access paid childcare is one of the main barriers to participating in the labour force; and for those important economic benefits to be realised.

ROLE OF PAID CHILDCARE

The Economic Role of Paid Child Care in the US, Part 3: Economic Growth Modelling, is the latest instalment in a four-part report series examining the issue. The first two reports analysed extensive data sets on working mothers’ use of paid childcare; as well as the labour force participation of men, women, and especially women with children aged 14 and younger. The new report drills into decades of the Census Bureau’s Current Population Survey estimate;s and determines factors affecting labour force participation.

“The labour force participation rate for women and men has been declining over time; a trend that the pandemic has only exacerbated,” noted Lori Esposito Murray, President of CED. “For women, access to childcare is a major factor in deciding whether to participate in the workforce. As our new groundbreaking study demonstrates, increasing the labour force participation rate of mothers would unlock numerous economic benefits for women, their families, and for the country generally.”

KEY INSIGHTS

Key findings from the new report, revealed the following insights:

1. A one percent increase in the labour force participation of women ages 18-54 would produce multiple economic benefits.

• The women who would need to enter the labour force: 569,100 more women would enter the labour force; including 210,700 mothers of children 14 and younger, and 44,900 mothers with children under age five.
• The impact on paid childcare: More than 126,000 children would enter paid childcare; including 121,800 children 14 and younger and 47,900 children under age five.
• The impact on personal income: Total real personal income would increase $72.8 billion; including $26.9 billion for mothers with children 14 and younger, and $5.7 billion for those with children under age five.

2. Short-term changes in the prevalence of paid childcare correspond with three key factors.

• Labour force participation: Increases in mothers working are associated with increases in the number of children in paid care; particularly for mothers with children under age five.
• Actual hiring of mothers: Mothers are more likely to use paid care when they have a job rather than when they are searching for work.
• Increased income: The use of paid care increases as income rises.

3. Long-term changes in the prevalence of paid childcare correspond with three key factors.

• Maternal labour force participation: The share of children in paid care (for both age groups– mothers with children 14 and younger as well as mothers with children under age 5) has a significant long-run relationship with economic variables in the time period tested.
• Real income: Real personal income per capita has a stable relationship with paid care usage.
• Overall male and female labor force participation: Overall male and female labour force attachment rates are also interrelated with the share of children in paid care. This is additional evidence of a broader and more general relationship between labour force participation and paid childcare use over the long run.

4. Key factors that drive paid childcare use in the US.

• Labour force participation: Use of paid care highly relates to maternal workforce participation.
• Household income: As household incomes rise, so does the likelihood of using paid childcare.
• Educational attainment: The likelihood of using paid care also increases as the level of education increases.

5. Three factors affect the shape of state economic growth.

• Educational Attainment: Achieving higher levels of education leads to higher average incomes at the state level; (which in turn increases the likelihood of the use of paid care).
• Capital: Capital investment influences regional economic growth.
• Traded Activity: Goods and services that are exported for sale outside a local market boost income within a region. The growth factors are highly interrelated. For example, higher levels of education are generally associated with increased force participation rates and higher income. Capital investment acts as a complement to boost work force participation and productivity. Many basic industries that produce goods for extra-regional trade tend to be the heaviest users of capital.

You can access the full report, produced with funding from the WK Kellogg Foundation, by clicking here.

The Marshall Plan for Moms’ latest report also revealed how employer-supported childcare benefits can help companies bring women back to work and win the war for talent; following their exodus from the workforce during the Covid-19 pandemic. Click here to read more.