Blog

By Marsha Basloe, President, Child Care Services Association

During a child’s earliest years, brain development occurs that sets the architecture for all future learning (e.g., the wiring needed for healthy child development across social, emotional, physical, and cognitive areas).[1]  This is what makes high-quality child care for infants and toddlers so important.

At the same time, infant and toddler care is the hardest to find. The supply of infant and toddler care pales in comparison to the needs of working parents. A report by the Center for American Progress found that 44 percent of families in North Carolina live in a child care desert where the demand for child care by working families far exceeds the supply.[2]

Even when families can find it, too many struggle with the cost, particularly for infants and toddlers. Throughout North Carolina, the average annual price of child care for an infant in a child care center is $9,254.[3]  The average annual price of child care for an infant in a family child care home is $7,412.[4]

Data from: NC Labor

For perspective, for a single mother earning minimum wage ($7.25 per hour) working full-time, she would earn $15,080 per year. The cost of center-based infant care would be 61.4 percent of her income. The cost of infant care in a family child care home would be 49.2 percent of her income. If she earns twice the minimum wage ($14.50 per hour), about $30,160 per year – the cost of child care in a center would be 30.7 percent of her income. The cost of infant care in a family child care home would be 24.6 percent of her income. If she earns three times the minimum wage ($21.75 per hour), her annual income would be about $45,240 per year. Center-based infant care would cost 20.5 percent of her income; infant care in a family child care home would cost 16.4 percent of her income.

To help families with the cost of child care, the North Carolina Division of Child Development and Early Education (DCDEE) offers qualifying families a subsidy.[5] The state pays most of the cost and families have a 10 percent co-pay. Unfortunately, not all families who qualify can receive assistance and more than 30,000 eligible children throughout the state are on a waiting list for child care financial help.[6] It is important to note that the waiting list is only a snapshot in time because some families don’t join the list when they hear about the length of it. So, the waiting list reflects only those who qualify for help and who also add their names to the waiting list in case more funding becomes available to support additional families.

For families with infants and toddlers, the supply and cost are both struggles. It’s unrealistic to think that families can access the licensed market if they have to pay a huge percentage of their income to cover the cost. Why is that a concern to all North Carolina taxpayers? There are several reasons.

  • Quality of child care and long-term taxpayer bills. When parents can’t afford the licensed market, if they must stay in the workforce to make ends meet, then they will try to make do with a variety of unlicensed care options. Given the brain development that is underway during a child’s earliest years, it is critical that a child be in a setting that promotes his or her healthy development. That’s one of the reasons for the rated child care license[7] in North Carolina and one of the reasons the NC General Assembly restricted the receipt of child care subsidies to programs with at least a 3-star rating. Supporting healthy child development is important, particularly for infants and toddlers when the brain is developing the fastest.  Taxpayers will pay more in the long-term when a child enters kindergarten without the skills to succeed through additional costs for remediation, for special education, and for those children who must repeat a grade (e.g., repeating a grade is not “free”).
  • Labor force participation. Without affordable child care, parents reduce their hours or opt-out of the workforce. Ninety-four percent of workers involuntarily working part-time due to child care problems are women.[8] In North Carolina, 457,706 children under age 6 have working parents.[9] If one-third to one-half of these children under 6 are infants and toddlers, that’s 151,043 to 228,853 children who may need some type of child care while their parents work.
  • Employers & Employees. Employers depend on working parents. And, working parents with young children depend on some type of child care.

As the General Assembly meets to discuss budget priorities, child care assistance should be at the top of the list. Given the extraordinary cost of child care for infants and toddlers, the General Assembly may want to consider reviewing other models to support access to high-quality infant and toddler care.

In June 2018, the District of Columbia City Council unanimously passed the Birth to Three for All DC Act.[10] The legislation charts the path for a comprehensive system of supports for children’s healthy growth and development with a specific focus on services for families with infants and toddlers. The Act is broad — investing in home visiting and child developmental screening, however, with regard to child care for infants and toddlers, the Act expands child care subsidy eligibility for infants and toddlers to all families by 2027, caps the percentage of annual income a family would pay toward child care expenses at 10 percent of gross income by 2028, and phases in competitive compensation for early educators. The District is now in its second year of implementation with $16 million in funding for FY2020.[11] City Council members say it’s a high priority to increase funding as part of the 2021 budget, and work on that front is underway.[12]

There are certainly differences in passing legislation that supports a city (even a large city like Washington, D.C.) compared to a state. However, the concept is innovative. It recognizes that the cost of infant and toddler care is so high that all families may struggle with the cost. It recognizes that access to high-quality infant and toddler care is important to a child’s healthy development. And, it recognizes that a compensation strategy for the child care workforce is needed to support high-quality programs.

It is time to rethink the state’s approach to child care subsidy, and especially how families with infants and toddlers are supported in accessing high-quality child care. In the new year, let’s give thanks for what we have and think through policies that can best support our children in the future. 


[1] Harvard University Center on the Developing Child, Brain Architecture.

[2] Center for American Progress, America’s Child Care Deserts in 2018.

[3] Child Care Aware of America, The US and the High Price of Child Care: 2019.

[4] Ibid.

[5] NC Division of Child Development & Early Education: Subsidy Services.

[6] North Carolina Center for Public Policy Research, June 7, 2019.

[7] NC Division of Child Development & Early Education: Star Rated License.

[8] Committee for Economic Development, Child Care in State Economies: 2019 Update.

[9] U.S. Census Bureau, Table B23008, Age of Own Children Under 18 Years in Families and Subfamilies by Living Arrangements by Employment Status of Parents, 2018 American Community Survey, 1 Year Estimates.

[10] B22-0203 – Infant and Toddler Developmental Health Services Act of 2017 (now known as “Birth-to-Three for All DC Act of 2018”).

[11] Significant Birth to Three Funding Passes in the DC Council, May 28, 2019.

[12] D.C. reaped benefits of expanded preschool. Now we must focus on even younger children.

Marsha Basloe, President of Child Care Services Association

It’s common sense that parents with young children need access to child care in order to obtain and retain a job, which makes child care providers a vital part of local and state economies.  That’s why a report released by the Committee for Economic Development, Child Care in State Economies: 2019 Update is so important. The report reviews the market-based child care industry (which includes centers and home-based child care providers) and estimates that child care has an overall economic impact of $99.3 billion – supporting over 2 million jobs throughout the country.

What the report shows is that there is a strong link between child care and state and local economic growth and development. And, that the child care industry causes spillover effects (additional economic activity like the purchase of goods and services and job creation or support within the community) beyond those employed within child care or the business income of those operating centers or home-based programs.

Here in North Carolina, child care programs have an overall economic impact of $3.15 billion ($1.47 billion in direct revenue and $1.67 billion in spillover in other industries throughout our counties and cities).  Child care programs have an overall jobs impact throughout the state of 64,852, which includes 47,282 individuals who are employed within child care centers or who operate a home-based business plus another 17,570 in spillover jobs – created through the activity of those operating child care programs.

The economic impact of child care matters because it helps drive local economies. When parents can access child care, they are more likely to enter the workforce and stay employed.

Access to affordable child care also supports parents who seek additional education or job training, which can result in higher earnings over an individual’s lifetime. For example, according to U.S. Census Bureau data, the difference between the income of a parent in North Carolina with a high school degree and a parent who dropped out of high school is $6,231 annually[i], but over a lifetime, that’s $249,240 the parent would earn just by going back to school to earn a high school diploma.  If that parent were to enroll in community college, and obtain an Associate’s degree, he or she could earn $10,652 more annually[ii] or $426,080 more over a lifetime compared to a parent who has not graduated from high school.

Earnings for those with a college degree are that much higher — $17,748 annually[iii] for a parent who has a Bachelor’s degree compared to a parent with an AA ($709,920 more over a lifetime). When parents have access to child care, both labor force participation grows (and with that, the ability for parents to support their families) and also the potential for parents to return to school to increase their earnings over the long-term becomes possible.

Child Care Costs & Labor Force Participation

In North Carolina, the average annual cost of child care is expensive. For center-based infant care, the cost is about $9,254 per year, and for home-based care, it’s $7,412.[iv] The cost of center-based infant care exceeds the cost of tuition at our 4-year universities and is 19.2% of state median income. With an understanding of the economic impact of child care, it’s concerning that parents may opt out of the workforce or reduce their hours at work when they can’t afford to pay the cost of child care. It not only means that parents could be less likely to be self-supporting, but that local economies are impacted as well – twice in fact. First, they are impacted by families who without employment may depend on welfare and second, communities are impacted by revenue foregone (no earnings or reduced earnings by those who reduce their hours means less revenue to support basic community needs such as police and fire protection, or local schools).

The CED report finds an economic return related to the use of child care subsidies that support parents in entering or staying in the workforce. CED estimates that for every additional federal dollar spent for child care subsidies to help parents work, there’s a $3.80 increase in state economic activity.

Child Care has a Two-Generational Impact

While I’ve mentioned the economic impact of child care on state and local economies, there is also the two-generational role that child care plays with regard to families and young children. Child care is a work support for parents, but it also enables children to be in a setting that promotes their healthy development and school readiness (while their parents work).  In this way, child care not only has a direct impact on the economy today, but also impacts the economy of tomorrow.

The impact of child care is broad-based:

  • There’s the direct impact of economic activity or revenue generated by those in the child care industry (centers and home-based providers),
  • There’s the indirect impact or spillover impact that results within communities from the operation of these businesses,
  • There’s the employment impact of jobs within the industry and spillover jobs as a result of the industry,
  • There’s the employer impact as parents who have access to child care reliably show up for work and are productive while at work, and
  • There’s the impact on children who have access to quality child care that supports their healthy development.

Check out CED’s Child Care in State Economies: 2019 Update report today.


[i] U.S. Census Bureau, Table S2001, Earnings in the Past 12 Months, 2017 American Community Survey. https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ACS_17_1YR_S2001&prodType=table

[ii] Ibid.

[iii] Ibid.

[iv] The US and the High Cost of Child Care:2018, Child Care Aware of America, http://usa.childcareaware.org/advocacy-public-policy/resources/research/costofcare/