Massachusetts child care report tallies lost wages, productivity
Hourly workers in Massachusetts collectively miss out on more than $1.6 billion in wages every year because of unmet child care needs, part of a roughly $2.7 billion drag on the statewide economy stemming from inadequate child care, a new report estimates.
Putting a dollar figure on an issue familiar to parents across the state, the Massachusetts Taxpayers Foundation (MTF) said in a report published Thursday that a shortage of early education and care slots and sky-high prices for those available punch a financial hole in the pockets of workers, employers and state government.
The business-backed foundation projected that employers lose nearly $812 million every year due to lost productivity, turnover and replacement costs when workers need to step away to care for their children, in addition to the estimated $1.66 billion in lost wages that families face.
And because of lower wages and spending, state government also collects $187 million less in taxes every year as a result of poor child care access, MTF said.
"If we are to unleash all of Massachusetts's economic potential, we must enhance our child care infrastructure and increase accessibility in the state," authors wrote in the report. "The future of our workforce and economy depend on it."
The think tank's analysts projected a significant economic boost if parents of young children who are currently not working decided to join the labor force, a step that is impossible for many families who cannot afford to place their kids into programs.
MTF said Massachusetts has roughly 100,000 parents who do not work and have children under 5 years old. If 10 percent of those adults worked full-time hours making the state median wage, they would collectively earn $859 million and steer $33 million more in income tax to the state every year, MTF said.
Getting more parents of young children to work could also help address a workforce crisis fueled by an aging Massachusetts population, the organization said. Since 2014, the number of Bay Staters between the ages of 20 and 54 has declined, birth rates continue to lag the national average, and the population 65 and older is booming.
"Parents with reliable and accessible child care throughout the early years of their child's life are able to stay in the workforce without significant career disruptions that can impede their advancement," MTF wrote. "This results in higher lifetime earnings and retirement savings, as long breaks in employment often mean lower wages upon return, especially for women."
The consequences of a flawed child care system are also concentrated among women. According to MTF's analysis, one in five Massachusetts children live in a two-parent household where only one parent works. In 90 percent of those cases, the father is employed, MTF said.
"Massachusetts has both a child care problem and a workforce problem, which both need to be addressed to support an economic recovery from a global pandemic," MTF President Eileen McAnneny said in a statement. "An affordable and accessible child care system can help us overcome our workforce challenges, promote economic growth and support Massachusetts' reputation as a top state in which to live and work."
Challenges in the child care sector have harangued both parents and policymakers for years. A special commission concluded last month that many Massachusetts families pay 20 to 40 percent of their household income toward early education and care, making the Bay State one of the least affordable for those services in the country.
COVID-19 exacerbated longstanding problems, further depleting the number of workers in the field and available slots below already-strained levels. As MTF noted in its report, even after the impact of federal relief, Massachusetts had 6,200 fewer child care seats in fall 2021 than it did before the pandemic hit.
"Access to high-quality, affordable child care is a foundational component to ensure everyone can participate in our economy. It enables parents to work and businesses to thrive," Eastern Bank CEO Bob Rivers said in a statement provided by MTF. "It is essential that we in the business community understand the responsibility we have to solve these challenges and make Massachusetts a more vibrant, inclusive place for all."
Beacon Hill leaders are eyeing some action to relieve the growing pressure.
Gov. Charlie Baker proposed doubling the dependent care tax credit in a $700 million package of tax relief, and the House Ways and Means Committee's fiscal 2023 state budget would inject more than $110 million into the early education and care sector, including a reserve to increase provider salaries.