UM Study on Child Care Costs Focuses on Lost Possibilities
The University of Montana’s Bureau of Business and Economic Research recently completed a study sponsored by the Federal Reserve Bank of Minneapolis on how Montana’s working parents are affected by the lack to reliable child care.
BBER’as Director of Economic Research, Robert Sonora provided details of the economic impacts of the lack of quality child care to Montanans.
“The average household loss in Montana is about $5,700,” said Sonora. “When you aggregate that up to all households with their two to five children, that's about $145 million per year. And then if you look at the cost to businesses in terms of lost productivity, because working parents have to leave work early, or maybe miss a day of work here and there, and so the loss to business is about $2,150 per household. That's about $54.5 million dollars per year in terms of income tax that are lost by the federal and state government. So to combine that, that turns out to be about 1200 bucks per household. And when you aggregate that, again, it's about $32 million per year, with about two thirds of that going to the federal government.”
Sonora said the United States stands alone among most of the advanced countries of the world in its lack of support for child care.
“Think of the Organization of Economic Cooperation Development, the OECD countries, which is roughly the largest 40 economies in the world,” he said. “We're the only economy in the world which has zero childcare benefits required by law. We have zero weeks of maternal paid maternal leave. And if you compare that to some other countries where they might I think the OECD average is about 15 weeks.”
Sonora said the increased federal taxes needed to provide nationwide child care would be leveraged by the increased income for those who would be able to work knowing their children were well cared for.
“If I have a child who's three, then I want that child to go to the best place I can with the best help and the best teachers or caretakers,” he said. “But if you look at what the average wage of a childcare worker is, I'll say maybe $25,000 to $30,000 per year. So we can't even attract people to into that type of work because the wages are so low. When we surveyed actual households, we're finding that on average, if you're making from zero to say $100,000 a year about 10% of your income is spent on childcare.”
The report also made the following statement: ‘Without adequate child care we all lose vital economic resources. Not only are the fiscal losses high for Montana’s economy, but the personal impacts to everyone in Montana are considerable.’
The Missoula Chamber of Commerce produced a similar study in April, 2019.