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This issue costs Texas billions in lost revenue. A report highlights the reasons why.

·7 min read

Lack of access to affordable child care is keeping parents out of the workforce, costing an estimated $9.39 billion a year, according to a new report from the U.S. Chamber of Commerce Foundation.

The child care industry, historically dogged by lack of access and affordability, now faces staffing shortages peaking in recent months amid the pandemic, just as enrollment surges back as parents look to return to work.

Fort Worth is no exception.

I think it does validate what we’re seeing already,” said Brandom Gengelbach, the CEO and president of the Fort Worth Chamber of Commerce. “The positive from a workforce perspective is that we’ve been prioritizing child care and prioritizing best place for working parents for over two years now.”

But, as the report points out, the pandemic has exacerbated the existing issues.

“Before the COVID-19 public health crisis, access to affordable, quality child care was hard to come by for working parents trying to enter, re-enter, or stay in the workforce,” researchers say in the report. “The pandemic exacerbated the existing issues in America’s child care system and created an impossible situation for parents, employers, and child care providers.”

Employee absenteeism and turnover along with lost tax revenue contributed to the massive price tag — the largest of the five states analyzed as part of the foundation’s “untapped potential” series.

Researchers found that lack of access to child care disproportionately impacts women and low-income families, with potential financial losses associated with leaving the workforce lasting far beyond their time out of a job—compounding over a lifetime.

The report comes as leaders in Congress, the state and locally in North Texas are exploring massive investments in child care infrastructure, as fluctuating enrollment and staffing shortages continue to diminish options for working parents.

Businesses need child care fix

Gengelbach, the CEO of the Fort Worth Chamber of Commerce, said the startling price tag in the report reflected the reality he has seen in Fort Worth over the last 18 months, adding that the issue could put an end to the growth that sustains the North Texas economy.

“The fact of the matter is, if we don’t address child care in a meaningful way, and we don’t put child care in front of businesses as being a solution for talent, attraction and retention, that population growth could very well cease,” Gengelbach told the Star-Telegram. “And you could have movement of people to communities that are going to be more open, welcoming, and more aggressive on helping … with our working parents.”

Katie Ferrier, the vice president for Education and Workforce Development at the San Antonio Chamber of Commerce, who worked with the foundation on the report, said the findings laid bare the importance of investing in child care.

“These numbers show that public policymakers really need to pay attention, and they need to help increase investments in early childhood education and child care,” she said. “But there is a role for the private sector also.”

Luckily, Gengelbach said, North Texas has been centering discussions around strengthening child care support and resources for years, and effort that has been furthered by the formation of a Blue Ribbon Committee that plans to explore long-term investments in child care.

“While it’s a challenge, and while everyone is grappling with it, and the numbers are very concerning, we definitely have discussed this for well over two years now and are on our way to developing solutions, and are in a much better position than other communities who may be looking at this and taking it seriously for the first time,” he said.

Local Solution

In the conclusion of the Chamber of Commerce Foundation report, a Tarrant County public-private partnership called Best Place for Kids, which started seven years ago, is touted as the type of solution needed to reach full economic potential.

One major initiative that works with the Tarrant County program is the Best Place for Working Parents program, which recognizes and designates companies in several major Texas cities as “Best Places for Working Parents” based on family-friendly policies.

Employers can support employees in a variety of ways, ranging from providing assistance to employees with finding high-quality child care all the way to paying for all or some of employee’s child care as a benefit.

Sara Redington, the director of Strategy and Communication for the Miles Foundation, said the Best Place for Kids and Best Place for Working Parents initiatives have been modeled across the state, and starting next year will be used in Maine, Iowa, Washington and Oregon.

“We actually see businesses as a key lever for solving this child care crisis,” she said. “And we know that, particularly post-COVID, the solution has to include business leaders at the forefront.”

Employee Turnover

A large chunk of lost economic potential, according to the report, comes from parents missing work to take care of kids, or arriving late and leaving early.

According to the report, 74% of workers surveyed, representing various geographic areas, income levels and racial and ethnic backgrounds, said they missed work at least once in the last three months. Those that missed work did so for an estimated average of 15 days over the last year.

The parent in these scenarios lost wages for time missed, and the employer experiences a loss in productivity as well as the financial cost of paying overtime to other workers or even hiring and paying temporary workers to make up for the missed work. Researchers say that makes up an estimated $4.72 billion in lost economic potential in Texas per year.

In more extreme cases, parents have to leave their jobs all together in order to take care of their children full time.

“As employees leave the workforce, employers face significant costs to replace them,” the report says, adding that replacing an employee can cost as much as one-fifth of an employee’s yearly salary to replace, leading researchers to estimate that the turnover cost to employers in Texas is $2.87 billion annually.

With people working less and leaving employment, they also tend to spend less money, according to the report, leading to a total decrease in sales and excise taxes of $1.8 billion annually due to employee turnover and absenteeism.

More than a Bandaid

Advocates point to massive public investments that could soon be possible through legislation currently making its way through Congress as a boon for the industry.

“As long as centers keep closing and child care is more expensive than tuition to the University of Texas, a lot of Texans are either going to be locked out of the workforce or they’ll go broke paying for child care,” said David Feigen, Early Childhood Policy Associate for Texans Care for Children. “Fortunately, the early learning plan moving through Congress is an opportunity to slash child care costs for parents, empower more Texans to go to work, and strengthen child care in ways that help kids, teachers, and the providers trying to keep their doors open.”

But as child care continues to hold a national spotlight with slower than expected economic growth, and record numbers of women still staying out of the workforce, government assistance is not a silver bullet, Fort Worth leaders say.

“You’re not going to solve this with government subsidy,” Fort Worth Mayor Mattie Parker, who announced the formation of the Blue Ribbon Committee last month, told the Star-Telegram. “And I think if we can get this right, it’s a huge economic driver for Fort Worth, as well as better preparing our next generation of leaders and students for top level education.”

Michael Wood, the director of Education and Workforce for the Dallas Regional Chamber of Commerce which presented the Best Place for Working Parents Program, said that the structural issues with the child care workforce will need a number of approaches before the state can reach full economic potential .

“I think the resources that have come from the federal government and that TWC has passed down to Texas providers help,” he said. “But a lot of that is just a bandaid for the past two years ... of which, just like every industry have really been a system shock for child care providers.”

A significant number of child care providers closed their doors in recent years, adding to the scarcity that already posed a problem across DFW.

“That’s a permanent loss of child care capacity in our region,” Wood said. “So I think the resources are a great start, and to the extent that we can leverage data like this from the U.S. Chamber to articulate that it can’t be a temporary infusion and needs to be a permanent area of focus for our policymakers, I think that’s a good start.”

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