The Case for Early Childhood Education as Health and Economic Policy

The Issue

Families across the United States are facing significant challenges due to the limited availability and affordability of high-quality early childhood care options for children under the age of 6. Child care access is especially challenging for those seeking to reenter the workforce. Rethinking child care, especially early childhood education, as health care is essential for achieving a better future and economic security for children, families, and caregivers across the U.S.

Early Childhood Education: Health and Economic Challenges

Children and their families experience more hardships throughout their lifetimes because the U.S. lacks quality early childhood education for children whose parents want to join the workforce during their children’s infancy and toddler years. Families with young children lose the opportunity for better health and increased wealth over their lifetimes when child care, including early childhood education, is unavailable to them.

What Is the Magnitude of Child Care in the U.S.?

Per data from the U.S. Census Survey, over 17 million households had young children under the age of 6 in 2022, and nearly 19 million children under the age of 5 in the U.S. as of 2023, according to UNICEF. In 2022, the U.S. Census Survey noted over one in three parents with children under the age of 6 reported that they did not work because they did not have any type of child care arrangement. A conservative estimate from a recent U.S. Department of Labor’s Women Bureau report reports that “more than $775 billion in additional economic activity per year” is lost because of the lack of labor force participation. The lack of accessible high-quality child care in general and particularly early childhood education, not only affects families, depriving them of opportunities for improved health and wealth, but also has a significant impact on the economic health of the country.

What Is the Effect on the Well-Being of Children?

Children’s brain development is fundamentally shaped by the quality of their early interactions and experiences, producing either robust or lacking foundations for their ability to learn, overall health, and behavior as they mature throughout their lives. During a child’s first few years, the brain forms over one million neural connections every second, “a pace never repeated again.” A recent U.S. Department of Health and Human Services (HHS) report from the Administration for Children and Families echoes that children benefit from high-quality early childhood education by learning important “foundational skills for math, reading, self-control, and positive relationships.” There are short-term effects on child cognitive development, executive functioning, and social skills at the kindergarten level and similar intermediate effects through primary and secondary school. There are also estimated long-term effects, including “higher educational attainment, better adult health,” and, according to the Centers for Disease Control and Prevention (CDC), “higher earnings throughout employment years.”

What Is the Effect on the Well-Being of Families?

Without high-quality early child care available, unpaid caregivers suffer the loss of the opportunity to achieve better health, wealth, and well-being through workforce participation. The long-term consequences include lower wages, missed promotions, lost job tenure, loss of skills, and less contribution to retirement plans, when they become employed or reemployed. The average lifetime cost of unpaid caregiving is $420,000 in lost earnings and retirement income for college-educated mothers, and $295,000 for all mothers in the U.S. This is economically significant for many families.

Further, the recent COVID-19 pandemic provided important insights into the support structure of early childhood care necessary for families with young children to thrive. During the pandemic, the CDC’s Morbidity and Mortality Weekly Report found that one out of four unpaid caregivers of children reported that their mental health had worsened. Resenting the caregiving role was associated with higher odds of an adverse mental health symptom while having support was associated with lower odds. The availability of high-quality early childhood education could mitigate the negative mental health effects that unsupported caregivers experience. It is time to rethink child care as essential health care for families, both children and caregivers.

Why Is High-Quality Early Childhood Care and Education Out of Reach?

Simply put, the market for early childhood education does not work well. There is an excess in demand and not enough child care slots offered. Multiple causes for this include:

• Workforce challenges including lack of competitive pay and high turnover.
• High costs associated with providing quality care.
• Fragile business models vulnerable to economic shocks.

Child Tax Credit

In comparison to other countries, the U.S. invests very little in family benefits at slightly more than half a percent of GDP compared to the Organization for Economic Co-operation and Development (OECD) average of 2.1% of GDP in 2019.

The Child Tax Credit is a tax break for families raising children. For 2021, the American Rescue Plan expanded the Child Tax Credit to $3,600 for a child under the age of 6 for families that qualify. In 2022 and 2023, the Child Tax Credit is again limited to $2,000, with $1,600 being refundable, for children under the age of 6.

Figure 1 — Child Care Employment, Total Employment (Thousands)

The Child Care Stabilization Act was a part of the American Rescue Plan Act, which was enacted to recover from the COVID-19 pandemic. Through this program, the federal government provided $24 billion in subsidies to child care providers and indeed did stabilize the market for child care according to a working paper by the Council of Economic Advisors (CEA) cited by the White House (Figure 1). The program supported “over 225,000 care providers serving as many as 10 million children”; eight out of ten licensed care providers in the U.S. received assistance. According to the same CEA report, funds from the Child Care Stabilization Act both increased the number of child care workers and increased the wages for those workers. Since the program’s expiration in November 2023, some individual state legislative and executive branches have been moving to address the child care crisis through various programs. However, child care providers feel the sting of losing federal support.

Policy Recommendations

A multipronged policy approach could provide affordable, high-quality early childhood education for any family who would like to access it by offering both demand and supply-side solutions to the problem. Stabilization efforts through the American Rescue Plan brought the industry back to baseline in terms of child care employment, but continued efforts are needed to address the crisis and improve the availability and affordability of child care in years to come:

• Expand the Child Tax Credit for families with young children aged 5 and under to $3,600 with full refundability, making the high cost of child care more affordable for working families.
• Continue the Child Care Stabilization Act through the next five years to expand the availability and affordability of early childhood care by fortifying existing care centers and investing in new ones.

The resulting policy effect would be an increase both in supply and demand to the benefit of children, their parents, and society. 

Conclusion

To treat child care as health care is to recognize the short- and long-term effects on the well-being of families both in health and wealth. The existing child care market is failing families by not providing the early child care education that is needed and wanted. To address both the supply and demand for child care, tax credits, and child care subsidies provide opportunities that benefit children, their parents, and society. Indeed, investing in children is investing in the future.

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