What are the barriers that working parents run into while searching for affordable and reliable childcare? How can communities and providers increase the supply of childcare? And why is childcare—so crucial to employers and workers alike—recovering more slowly post-pandemic than other industries?
In a recent Fed Listens event—titled Exploring Challenges Facing the Childcare Industry, Working Parents, and Employers—researchers, sector leaders, and providers from the Federal Reserve Bank of Chicago’s five-state region gathered to discuss such issues and some potential solutions. This conversation, held during the Chicago Fed’s 2024 Spotlight on Childcare and the Labor Market effort, highlighted that having accessible childcare contributes to a healthy labor market—and that finding care remains a challenge for employers and for parents who must confront high costs and often juggle multiple sources of care during any given week.
“The reliability of the childcare system is what allows parents to make that choice to work,” said event panelist Rob Grunewald, a Wisconsin-based economist and policy consultant whose work centers on issues related to families and children.
And being able to make that choice is contingent on having “more people across sectors who value childcare and understand how important the workforce is and how important it is for economic development,” said panelist Joan Blough, senior director for the Childcare Innovation Fund at the Early Childhood Investment Corporation in Michigan.
After welcoming remarks from Federal Reserve Bank of Chicago President Austan Goolsbee and Federal Reserve Governor Michelle Bowman, Chicago Fed economist Kelli Marquardt shared research detailing childcare costs across different settings throughout the upper Midwest, as well as analysis that revealed low wages in the childcare sector and high levels of workers transitioning out of the sector. Marquardt demonstrated that childcare workers’ wages have not kept pace with the increases seen since the pandemic by other lower-wage occupations, including waitstaff and cashiers. She also noted that about 95% of childcare workers are female.
Chicago Fed Economist Dan Hartley shared the geolocation data used in his research to further illustrate how new data sources can help explain the factors associated with access to childcare—his work looked at the distance traveled to childcare centers—and potentially shed light on important industry dynamics.
Panelists who work in communities said that the many recent innovations in creating new childcare programs or expanding the number of seats available have been spurred by local business leaders who have recognized that a lack of childcare was impeding their ability to hire the necessary workforce. “Never have I seen the business community this involved,” said Mary Janssen, regional director of Child Care Resource & Referral of Northeast Iowa.
Bela Moté, president and CEO of Chicago’s Carole Robertson Center for Learning, said that post Covid her childcare and education center experienced more partnerships between nonprofits, government organizations, and private businesses, as they all had trouble retaining workers because of limited access to childcare. Moté also stressed the importance of supporting the “workforce behind the workforce”—childcare workers, including center leaders and administrators—and she noted that childcare centers “are employers too.”
Shannon Garrett, senior program advisor for the Michigan Tri-Share program, leads work at the intersection of employers, employees, and state government to ensure childcare costs are shared across interested parties. She said that her program recently shifted from being a pilot to permanent and that “the pandemic got us to this moment.”
Amandula Anderson, who leads the childcare facility financing efforts in Indiana and Kentucky of IFF, a community development financial institution (CDFI) working with nonprofits and other partners across the Midwest, stressed the importance of engaging providers and families in the creation of new childcare facilities. She said, however, that facilities alone won’t solve the supply problem “if they don’t have enough employees.”
Getting data—specifically, better and more accessible data—was cited as being important for crafting solutions. “The numbers have lots of stories behind them,” said Moté, “and the data can provide a path forward.”
During the event’s closing discussion, on persistent challenges and new opportunities for childcare, panelists shared insights from a broader systems and policy perspective. Blough cautioned that rebuilding the childcare sector to pre-pandemic levels would still “fall far short of the childcare we need today.” Meeting the needs of parents and employers will require people “across sectors to value childcare,” she said.
And achieving that goal also requires intentionally supporting the childcare sector through building “organizational capacity, peer learning, facility planning, and trying to develop the local ecosystems to help those providers survive,” said Seung Kim, senior vice president of national programs at Local Initiatives Support Corporation, a CDFI that supports initiatives in underserved communities nationwide. Kim added that it is essential to interact with communities and families to best understand their pain points and to inform solutions.
Grunewald echoed how important it is to invest in childcare. “The next dollar spent on economic development would achieve the highest return if we spent that on the development of young children,” he said. Approaching the same point from a different angle, Blough said, “Tell me how much economic development you want, and that will tell you how much childcare you need in your community.”
In closing, panelists were asked to define success. Grunewald hoped that a “well-functioning childcare market” will take the place of the current one, often described as broken. And Kim wondered if that shift doesn’t start with “conversations such as these … that weren’t happening three or four years ago.”
Fed Listens is a Federal Reserve System initiative that began in 2019 as a way to hear about how monetary policy affects peoples’ daily lives and livelihoods. Since 2021, these sessions have focused on listening to diverse perspectives on how communities were impacted by and are recovering from the Covid pandemic.
To learn more
Read about the speakers and watch a replay of the event here.
