INDIANAPOLIS – Indiana is losing out on billions in economic activity each year due to lack of child care, a new study shows.
The analysis conducted by Indiana University's Public Policy Institute and funded by Early Learning Indiana examines how child care-related work disruptions impact Hoosier business, the workforce and the state's overall economic output.
It was unveiled at an Early Learning Summit Tuesday.
“Our state is finally acknowledging the fact that child care is impacting the workforce,” said Madeleine Baker, the CEO of the Early Childhood Alliance in Fort Wayne.
Due to the lack of access to child care, Hoosier businesses spend nearly $1.8 billion annually to pay wages of absent employees, for overtime and temporary workers, and for costs associated with reduced productivity, the study found.
Overall, Indiana's economy loses nearly $1.1 billion each year because of reduced consumer spending, income and job loss, and the ripple effects of the lack of child care. This equates to a $118.8 million annual tax revenue loss for the state.
The study also estimates that, on average, working parents with children younger than 5 are absent from work 13.3 days each year because of child care issues. Additionally, about 11,000 working parents quit their jobs to address child care needs.
“We often think of the long-term and well-proven impact high-quality early care and education has on children. However, this analysis clearly demonstrates that Hoosier businesses, workers and communities are also being dramatically impacted in the short term,” said Maureen Weber, Early Learning Indiana president and CEO. “When parents can't access early care and education, they can't work – and that hurts everyone's bottom line.”
The study, which took place between March and September, was led by a 17-member advisory committee chaired by Baker and former Indianapolis Mayor Greg Ballard.
Baker also differentiated between baby sitters and day care versus child care. She said the latter is essentially starting the educational foundation early on and taking advantage of the brain growth in the first five years of a child's life.
That board found that increasing access to high-quality early care and education in Indiana could mitigate the large costs for the state and businesses.
Previous research estimated that a high-quality Indiana program would yield a $4 return on every dollar invested. The advisory board made several recommendations that they determined to be the most feasible for the state:
• Tax credits could be provided to businesses that donate to early care and education providers or to organizations offering scholarships. This would be similar to Indiana's current tax credits for donations to K-12 education scholarships.
• Social impact bonds were identified as another feasible model. This involves private investors directly funding early care and education programs and receiving back the investment (plus interest) if the programs meet predetermined criteria.
• Several advisory board members suggested that local dedicated sources could be implemented – such as local referendums or asking the legislature for permission to increase county food and beverage taxes.