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Can’t find child care? The problem sucks $4.3 billion out of Orange County’s economy

It’s not just working parents — or parents who would like to work — who suffer from the shortage of child care in Orange County.

Local businesses and public coffers are being squeezed too, every year missing out on a whopping $4.3 billion in lost productivity and wages, along with $372 million in tax revenues, according to the latest findings in a multi-part analysis of the child care landscape by First 5 Orange County, the area’s Children & Families Commission.

The study on child care’s impact to the local economy will be discussed on Wednesday, June 2, at a 9 a.m. virtual commission meeting. (Go to the Zoom meeting at Webinar ID is: 894 4161 4894. Passcode: 135863.)

The estimates are based on a model created by the U.S. Bureau of Economic Analysis that looks at the ripple effect of a lost job or reduced hours, tracking how the regional economy is hurt when those wages and economic opportunities are missing or squandered. The numbers were crunched by Wallace Walrod of TCCG LLC (Tech Coast Consulting Group), chief economic adviser for the Orange County Business Council.

Already, recognition of the crucial role that child care plays in creating a stable workforce is generating the kind of response that First 5 hopes will translate into public and private efforts to fill the gaps.

“Lack of adequate child care is taking working parents out of the workforce talent pool, and many employers recognize the importance of addressing this challenge,” the report says.

Such conclusions are drawn from the input of more than 50 employers with some 71,000 local workers.

Comments from those employers were illuminating, said Kim Goll, president and chief executive of First 5 Orange County. She was particularly encouraged to hear employers ask “How do we help these parents?”

“I don’t know that someone would have made that statement five years ago,” Goll said.

The difference from then and now?

“They see the translation to their bottom line.”

Orange County’s child care crisis — a severe shortage of available spots that are affordable and compatible with work hours — reflects a national problem that’s been particularly acute locally, particularly for parents of infants. The shortage of local child care was the focus of the first part of First 5 Orange County’s analysis, released in October.

Those issues were only getting worse before the economic disruption of the coronavirus pandemic that led to the closure of multiple child care businesses here and thousands of lost child care slots. Much of the research First 5 has done for its study pre-dates the pandemic.

But the economic ripple effect that flows from that child care shortage costs about 67,000 jobs, according to Walrod’s analysis. That figure includes voluntary or involuntary separations from work and employees who reduce their hours because of child care challenges. Other issues — including job turnover and absenteeism, and the time and cost of recruiting a replacement — also factored into the job loss equation.

On the flip side, the study noted that the child care sector contributes about 10,000 jobs to the local economy, with more than $336 million in earnings and more than $18.8 million in tax revenue. But the high cost of providing quality child care, from paying staff enough to prevent employee turnover to paying rent/mortgage on a space, typically offsets much profit for many child care providers.

“Child care providers are small businesses themselves, and are often struggling,” the report says.

Costs are driven higher for providers who care for infants and toddlers, because of a lower child-to-provider ratio and supplies specific to that age group, the report says.

It also makes the cost of child care too high for most parents, particularly those with young children. When those people stop working, that affects other businesses. First 5 surveyed more than 1,220 working parents and guardians for the new report, including both English and Spanish speakers. In-depth interviews were also done with 21 parents selected to represent a broad cross-section of the county.

What the parents reported on how child care challenges impacts their working lives is sobering:

  • 1 in 5 arrive late to work
  • 1 in 6 have to leave work early
  • 1 in 10 choose to resign or lose their jobs
  • 1 in 11 are forced to reduce working hours or can’t move to full-time positions

“It is not worth working just to pay for child care,” an unnamed parent is quoted in the study. “So our family chose for me to quit my job and care for our children myself.”

Said another: “Most of my income pays for child care. It doesn’t make much sense, but I am working so that when they are older and don’t need child care, I have a job.”

First 5’s report on the economic impact of child care lands in the midst of a political debate over whether child care should be considered infrastructure, and therefore be included and funded (along with bridges, roads and other more traditional public works) in the Biden administration’s proposed $2 trillion infrastructure package.

Goll wants to focus on how to work with employers, elected officials and other key decision makers in expanding access to quality child care for Orange County’s working parents.

“Any money that comes from the federal and state government will go directly to providers,” Goll said, adding that she means existing child care providers and not someone looking to join the field.

Such an infusion of cash will improve the child care landscape, she said, but not enough.

Goll also hopes employers will be open to cooperative solutions. She noted that what might work for a large employer — flexible work hours that allow an employee to start and finish a workday as best suited for them — might not work for a smaller company or one involved in certain types of manufacturing and the service industry.

First 5 is partnering with the Orange County Business Council, which has made child care part of its policy platform, to reach out to employers for brainstorming. It also hopes to engage school districts, county and city government representatives, and elected officials in figuring out workable solutions — such as providing unused land or building space to a child care business so they can expand — that might not require money.

And, Goll added, child care can’t just be considered a woman’s issue or a “family” issue.

“We’re trying to get community conversations about this.”

Source: Orange County Register

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