Education & Workforce Development and Environment and Economic Development and Transportation, Distribution & Logistics

EYE ON THE PIE: Is our child care 'industry' up to snuff?

October 3, 2005

Recently, I have been part of a study for the Indiana Child Care Fund. It has been a learning experience.

The first thing I learned is that virtually nothing is known about child care. We do not really know how many child care facilities exist in Indiana. Data from the U.S. Bureau of the Census suggest there are more than 16,000. However, fewer than 5,800 are licensed or recognized by the state. In addition, there are informal child care arrangements in private homes offered by relatives, neighbors or friends, either for pay or as part of some barter arrangement.

No one seems to know how many children are served by each of these different types of facilities. The National Economic Development and Law Center estimated that 129,000 Hoosier children are served by licensed or registered child care facilities.

The Family and Social Services Administration tells us that, in fiscal 2004-2005, we spent $119.5 million to provide child care vouchers for 31,000 children. That is a small sum compared to food stamps and other social-assistance programs. In total, the Indiana child care "industry" received an estimated $633 million, or $4,900 per enrolled child.

What does $4,900 buy? I cannot speak to the skill enhancement of children who are in a good child care environment. Nor can I attest to the improved socialization of a child who learns to relate to others at an early age. I have no knowledge of the benefits for a child who spends part of each day with a professional, trained to attend to and nurture that child. Nor do I know the harm done by inferior or inconsistent child care. But I can speculate on the economic value of child care.

Parents are released from some of the daily responsibilities of child care by these specialized facilities. Our study conservatively estimated that such parents in Indiana earn $4 billion a year. This result makes child care a great bargain, returning more than eight times each dollar spent on child care.

As more parents have more education, offering them more higher-paying opportunities, the cost of staying home vs. working outside the home rises. Hence, the demand for quality child care rises as well. This makes quality child care an important aspect of the state's economicdevelopment package.

For many years, we showed site locators our transportation and sewerage systems. More recently, we have learned the importance of schools and parks, the arts and other amenities of modern life. Now we must add quality child care facilities to that list.

But do we have high-quality child care in our communities? What kind of inspections are conducted, how frequently? Are our licensing standards high enough? Are our unlicensed facilities a scandal or a tragedy waiting to erupt?

Families make their location decisions based on the resources a community or employer offers their children. Our efforts to attract well-paid workers and goodpaying industries may depend more on child care tomorrow than at any time in the past.



Marcus taught economics more than 30 years at Indiana University and is the former director of IU's Business Research Center. His column appears weekly. To comment on this column, go to IBJ Forum at www.ibj.comor send e-mail to mortonjmarcus@yahoo.com.
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