Child care is one of the top-10 fastest growing industries in the nation and contributes $1.062 billion to the Colorado economy. The industry pays $12.3 million in state taxes and provides $31.8 million in wages to Colorado workers.
And, it’s an industry that 63 percent of Colorado parents depend on.
Miles Light, a professor in the Business Research Division of the Leeds School of Business at the University of Colorado, conducted a study that shows the economic importance of the industry should not be underestimated.
“The most important economic issue, for me, is that you can save a huge amount of money with just a small subsidy for child care,” he said. “If child care is subsidized … it makes more parents able to work, and they won’t go on welfare.”
“The Economic Impact of Child Care” examined the direct economic benefit of child care on the state, as well as the indirect advantages.
“We estimate that government-subsidized child care enables poor families to earn $111 million per year,” the study said. “The child care service allows parents to continue working during early childhood. While the utilization of child care services is a choice for middle-class families, it is a necessity for the working poor.”
The study claims that the government return on each dollar spent on early child care produces a return of $7.50 during the first 20 years of the child’s life.
“Human capital investment is a central component to growth in a knowledge economy,” according to the study. “And early care is crucial for cognitive development, especially to at-risk children.”
Child care is a concern for Colorado Springs’ large businesses, said Kara Roberts, vice president of business retention for the Colorado Springs Economic Development Corp.
“Whenever we ask businesses what they want to be able to offer employees, child care always comes up,” she said. “Quality child care can help recruit and retain quality employees. It’s an important part of the landscape. Employers want to know how they can offer child care at work, in a more affordable way.”
Light said there are several ways that employers can offer child care assistance.
“Some businesses get together and form co-ops for child care,” he said. “Others offer a slight subsidy for child care, paying part of the expense. And when you look at it, offering some sort of child care benefit is a huge payoff for employers, particularly those with low wages and high turnover. We found that employee retention rises 40 percent when child care is a benefit. That’s a lot for something that can be relatively inexpensive.”
Offering child care to low-income workers can benefit the state in the long-run, Light said. He cites a Rand Institute study that followed children in at-risk programs through their teenage years. The children enrolled in a child care program “earned more money, broke fewer laws and were generally better adjusted than a control group who wasn’t provided with any special care.”
The study found that the total savings to taxpayers was about $18,000 per child, including savings from an increased tax base, reduced incarceration and higher worker productivity.
The Colorado Preschool program estimates that 1,300 at-risk children have been able to avoid special education programs because they received early childhood intervention. School districts experienced a savings of $22.8 million over five years because of the early child care experience, according to the study.
Child care has an immediate economic impact as well. Direct child care spending equaled $570 million in 2001, and indirect child care spending was $492 million. The industry provided 18,919 jobs.
“Usually, it is an industry that is not only locally owned, but minority-owned as well,” Light said. “So, dollar for dollar, more of that money is staying in the area. It’s a much better way to support the local economy than buying a car from a local dealer.”
And the industry is growing. Analysts predicted that child care centers are expected to grow by 26 percent between 1998 and 2008.
Colorado has experienced a shift in the kinds of child care provided, said Leslie Bulicz, child care program coordinator for the state’s licensing bureau.
“There’s been a curve over the past five years,” she said. “We’ve seen an increase in school-age licensed facilities, but a decrease in family owned child care. We recently estimated that the need will increase by 32 percent over the next five years.”
As of December 2004, about 184,885 Colorado children were enrolled in some kind of child care – after school care, center-based care, pre-school or family child care, Bulicz said.