Child Care Availability: A Key Driver of Economic Health
North Carolina doesn’t have enough available spaces for the number of families that need and want child care. Statewide data reveals that more than five families compete for each licensed child care space available.
Micere Keels & Peyton Upchurch | North Carolina Early Childhood Foundation | February 10, 2025
INTRODUCTION
North Carolina advocates–child and family-focused community nonprofits, parents, child care providers, and business owners–have been asking for statewide investment of $300 million to stabilize the child care system. This estimate is based on calculations of the number of families with young children who need child care and are missing opportunities to participate fully in the workforce.
When parents and caregivers are unable to access child care, their ability to participate in the workforce decreases, and cycles of poverty are reinforced. This doesn’t just impact individual families; it also also hinders broader economic growth and productivity. North Carolina can and should view investments in child care stabilization as investments in the future of our state. When child care is appropriately funded, families with young children are empowered, workforce participation is supported, and economic stability is reinforced.
At North Carolina’s current child care funding rates, child care subsidies serve approximately 51,000 children statewide, which is less than 15% of eligible children. This leaves far too many parents who want to work struggling to find safe and affordable care. This underinvestment is shortsighted because early childhood education has at least a 4X-9X return on each dollar invested.
The impact of child care availability and affordability on families is not a theoretical concern; it is a pressing issue with immediate consequences. The Census Bureau’s Household Pulse Survey, shows that in North Carolina, during April and May of 2024, 29% of respondents aged 25 to 39 reported that their child was unable to attend child care as a result of child care being closed, unavailable, unaffordable, or because they were concerned about their child’s safety in care.
PROBLEM: Limited Availability of Child Care Relative to Parent Demand
Despite broad awareness that investments in child care yield substantial returns for employers, families, and the broader society, the current context is one in which thousands of families are unable to secure child care, limiting their ability to work or continue their education to support their families.
The challenge of finding child care is statewide, with an average of 36% of children under age six with a parent working enrolled in a licensed child care center, but as you can explore in the interactive map below, it’s a challenge that is felt more intensely depending on one’s county of residence.
Photo by Senjuti Kundu on Unsplash
Photo by Senjuti Kundu on Unsplash
This scarcity of child care reflects an ongoing issue with staffing ratios. Child care programs are often forced to halt accepting more children because they lack the staff needed to maintain safe child-to-staff ratios. Child care providers are plagued by the difficulty of hiring and keeping staff who are willing to engage in challenging work for low pay. The repercussions are profound. Too many parents find themselves on multiple waitlists for many months and risk losing employment opportunities.
SOLUTION: State Investment to Increase the Availability of Child Care
During the pandemic, there was a collective realization that the child care system was in peril, which forced a critical look at how child care operates in the United States. The federal government responded by providing billions in child care stabilization funding. Now that those funds have run out, as shown in Figure 2 below, states like North Carolina that have not taken steps to stabilize their child care systems are seeing dramatic decreases in the availability of care.
Much can be learned from states that have invested in ensuring that their child care systems would experience minimal harm when pandemic stabilization funding ended.
- Michigan launched Tri-Share to split the cost of child care equally amongst parents, their employers, and the state. This program began with $2.5 million from the state and has grown steadily due to its popularity with employees and employers. Eighty-two percent of participating employees agreed they are more likely to stay in their current jobs because of Tri-Share, and 63% of employers agreed that Tri-Share helped their company retain current employees.
- North Dakota recently allocated $66 million to child care services. Of this measure, Governor Doug Burgam said: “Expanding access to affordable, quality child care will make it easier for parents and guardians to engage in work, provide for their families, and strengthen local businesses and their communities.”
- Colorado voters approved an increased nicotine and tobacco tax with proceeds funding 15 free hours of child care each week for every Colorado four-year-old. The state is also working towards a goal of universal pre-kindergarten. This November, voters will determine whether or not to increase funding for these initiatives.
There is a consistent drumbeat to the outcome of these state-level investments: State investment in child care strengthens the economy and supports the wellbeing of families and children. The most recent evaluation of how states benefit from investing in expanding child care comes from Virginia’s SFY23 additional investment of $309 million in early care and education, compared to their SFY19 investments. The Prenatal-to-3 Policy Impact Center estimates that Virginia’s $309 million investment will generate a return of at least $364.3 million from increased family earnings and disposable income. At least $30.4 million of this new income will go directly back to the state in the form of new state tax revenue. Details about how several other states are expanding investments in child care can be seen in this article.
CHANGE AGENTS: Statewide Coalitions Advocating with A Collective Voice
North Carolina’s Early Education Coalition is NC’s only statewide advocacy coalition dedicated to promoting high-quality, accessible, and affordable child care. The coalition repeatedly reminds us that NC’s subsidy rates, which are set by the General Assembly, are many years out of date and don’t cover the current cost of care. The most recent child care market rate study conducted in 2023 found that for fewer than 50% of children receiving child care subsidy, does the amount of the subsidy cover their program’s private-pay rate.
The amount of reimbursement subsidy that child care providers can receive has a substantial effect on the availability of care.
“A new child care subsidy reimbursement rate structure would provide child care programs in every county with rates that incorporate the true cost of care and create greater equity in funding across the state for both child care centers and family child care homes, particularly in rural communities.” ~NC Early Ed Coalition
Philanthropic coalitions such as Invest Early NC, an early childhood funders collaborative, have stepped up the call for increased investment in child care by reminding us just how much it matters for children, families, and the state’s broader social and economic health.
“Investing in early childhood education isn’t a cost, it’s an investment — an investment in our children, our families, our workforce, and our future.” ~ Invest Early NC
Chambers of commerce across the state recognize the economic and business case for child care and are calling for greater statewide investment.
“We’re at a critical juncture. Without public investment in child care now, we face a potential critical loss of child care workers. Additional losses in child care availability would be devastating to our economy.” ~ Kit Cramer, President & CEO of the Asheville Area Chamber of Commerce
As noted above, this is not a future concern issue; the lack of available child care is creating hardships for families now. The NC Early Ed Coalition presents us with two sobering facts regarding the availability of care: 62% of parents of infants and toddlers are working, but only 19% of the infant-toddler population can be served in the existing supply of licensed infant-toddler programs.
Reports indicate that North Carolina is one of the top states where parents are too often forced to step back or step down from work because of problems with child care. Many parents, especially women, who need to work to financially provide for their families are reporting that the long waitlist for child care is forcing them to quit their jobs because maternity leave ended before a spot opened up. This is not because of a lack of planning; new mothers who registered for child care many months before their babies were born sometimes have to wait for over a year before they are able to access care.
Although child care availability is particularly challenging for working mothers, it isn’t a women’s problem; it is an economic and a societal problem. As stated by the U.S. Chamber of Commerce: “Not only does child care generate its own economic output, but since it ensures working parents can go to work, child care also supports every other industry.” The often desperate search for care threatens North Carolina’s standing as one of the top states for business.
ACTION: Taking a Stand for Early Care and Education
While this brief focuses on the issue of availability of care, there is much more to understand about creating a sustainable solution to this many-tentacled systemic problem. Join us for “Taking a Stand for Early Care and Education: North Carolina’s Fight for Access, Equity, and Fairness,” a ten-part series exploring a selected set of complex challenges plaguing North Carolina's child care and early education system.
Each month, we'll detail the interconnected threads that contribute to the persistence of the child care and early learning crisis. Through a detailed examination of data, expert insights, and advocacy perspectives, we will highlight systemic challenges and present actionable policy solutions to drive the transformation needed for a stable and equitable system. Join us as we delve into critical topics, laying the groundwork for a robust dialogue on achieving universal pre-K, enhancing economic health through child care availability, and much more.
JOIN OUR EMAIL LIST to ensure you receive the next installment in this critical series to fix our early care and learning system.
In the next brief, we will look at child care affordability.
Built with Shorthand