Kids Cost More Than You Think – Why Should Employers Care?

Kids Cost More Than You Think – Why Should Employers Care?

Have you ever had an employee miss work because they needed to be home to take care of their child? It’s likely that all employers have faced this issue at some point. Kids get colds, and sometimes mom or dad needs to be there to wipe noses. But what about situations that require more than just a day, such as a parent that has no access to daytime child care? What kind of impact is produced by employees that have to stay home to care for their children full-time?

Well, it turns out the impact is about a $1.1 billion loss for Indiana’s economy and about $1.8 billion in direct costs for employers annually.

That’s according to the Indiana University Public Policy Institute (PPI), who published their research in a report titled Lost Opportunities: The Impact of Inadequate Child Care on Indiana’s Workforce & Economy. PPI conducted research to assess economic repercussions on the state and businesses resulting from child care related work disruptions (i.e. absenteeism and employee turnover).


Wait, How Much?

It turns out that a lack of early care and education is costing Indiana a great deal. Specifically, the report stated that:

  • Indiana loses nearly $1.1 billion in economic activity every year due to child care related absenteeism ($580.7 million) and turnover ($519 million).
  • These child care related disruptions cost the state an additional $118.8 million in lost tax revenue every year.
  • Employers also have direct costs from these disruptions, nearly $1.8 billion annually.

“On average,” researchers noted, “Working parents with children under five are absent from work 13.3 days due to child care issues. This absenteeism leads employers to pay wages to absent employees (for salaried workers), pay overtime, pay temporary workers or have reductions in productivity. An additional 2.8 percent of working parents quit their jobs to address child care needs. When an employee quits an employer must spend time and resources to find, hire, and train a new worker.”

The issue is pronounced regardless of whether a county is mostly rural or urban. Businesses in these counties lose up to $12.1 million (rural counties) and $221.8 million (urban counties) in addition to thousands of potential employees lost from the labor force. Researchers were able to develop an estimate of just how many candidates are forgoing jobs to care for their kids.


How This Plays into the Labor Shortage

Companies from many different kinds of industries are all reporting the same things throughout the state: they’re having a hard time finding the types of qualified applicants they need to fill their open positions. There are numerous public and private initiatives taking place right now to help address the issue. Some employers are developing their own pipelines, some are investing in intense marketing campaigns to try and solicit new applicants, some are partnering with universities to build career pathways, and so on. The state itself is investing millions into the Next Level Jobs initiative, which is geared towards equipping Hoosiers with the types of skills they’ll need to be successful in 21st century jobs.

Investing into early child care and education programs would not only put over 31,000 parents back into the labor force, it would also help stem the tide of the billions of dollars Indiana’s economy and companies are losing every year.

Researchers noted this would be a very good investment for the state overall. For every $1 invested into an Indiana-funded early childhood education program, we could be receiving almost $4 in economic benefits back. A pretty sound ROI indeed.

The report also detailed quite a few potential funding sources the state could utilize in establishing a broader form of early child care and education. Many of the options listed are already utilized by other states, but the report’s authors narrowed down a few that could be good fits for Indiana, including the following:

  • Tax credits for businesses that support early care and education – In this model, corporations would receive tax credits for donations to organizations that provide scholarships (including pre-K) to families.
  • Social impact bonds – Private investors provide direct funding for programs. If the program meets a pre-established outcome, the investors receive their investment back, plus interest, from the government.
  • Shared services alliances – This model involves centralized infrastructure among smaller early child care and education organizations to ease management and logistics of operation. This is actually already a part of child care funding methods in northern counties of the state.

While these are just a few of the possibilities for how we can expand access to child care, they’re viable possibilities. There are also other ways we can achieve this, in addition. The main takeaway here is that we have a lot to gain by doing so; we’ll have more workers available for companies, we’ll be more productive, and we’ll stem some of the financial hemorrhaging in our economy. All of which is very much worth the investment.

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