Democracy Alliance Blog / September 7, 2016

Building an Inclusive Economy: The Case for Early Care and Education

For decades, there has been a strong economic case to be made for early care and education. Based on longitudinal research of high-quality programs dating back to the 1960s, researchers have found that investments in high-quality care for children ages 0-5 is yields an incredible return on investment, producing up to $8 in savings for every $1 spent. More than a decade ago, the Minneapolis Federal Reserve Bank conducted its own research of the existing early childhood literature, estimating a 12 percent public return on investment – a rate the bank argued far exceeded returns on traditional economic development projects, including tax increment financing and other subsidies for corporations and professional sports stadiums and arenas.

And yet, despite years of investment in model program development and advocacy for high-quality public programs, the needle has not moved far enough. To be sure, there have been notable victories, including 41 states and a number of municipalities, including New York City, that now provide public pre-K to four-year old children. The scale of those investments, however, remains low, with only three states providing truly universal pre-K to all eligible children. Moreover, publicly financed care for children 0-3 – which yields the greatest benefits but is also the most costly – remains vastly inadequate, and the majority of children of all ages are still not receiving the quality of care they need and deserve. As the New York Times Editorial Board recently stated, “In 2006, a federal study gave a ‘high quality’ rating to only 10 percent of the nation’s child care programs, and the proportion today is almost certainly smaller, since government financing for child care has declined in the past decade.”

The lack of investment in early care and education is not accidental, nor a public policy oversight. Indeed, it is the result of the marginalization of policies traditionally viewed as “women’s” or “family” issues from the economic domain, including until far too recently, many progressive economic circles. They have also faced stiff opposition from the Right, intent on driving a cultural agenda that privileges the two-parent nuclear family, despite ample evidence that such a family form was a historical aberration of a post-World War II economy, not a longstanding cultural norm, and fewer than half of all children (46 percent) are now growing up in so-called traditional families.

The DA’s Inclusive Economy Fund was designed to invest in campaigns that challenge head-on the failed theory of trickle-down economics and seek to build a 21st century economy that views growth as a product of the virtuous cycle of innovation and demand. Increasing early care and education quality, which would necessitate raising wages for a child care labor force disproportionately comprised of women of color, and reducing costs of early care and education for families across the economic spectrum (which now costs an average of $18,000 a year – approximately 30 percent of median family income) are both important components of economic demand. But the economic value of early care and education extends well beyond that – from the estimated $500 billion in additional annual economic growth that could be realized if women, in particular, had better supports and didn’t need to interrupt participation in the paid labor force when they had a child, to the annual $70 billion in future productivity gains that could realized by closing the socioeconomic achievement gap, a well-established benefit of high-quality early care and education. In short, we can no longer afford for this issue to remain at the margins of our economic debate. The time has come to integrate family economic issues – including early care and education, paid family leave, and the persistent gender pay gap – into the economic mainstream and make these necessary public investments a reality.

So what will get us there? The Inclusive Economy Fund is betting that additional support for coalitions that are organizing parents, early care and education workers, and center owners – the people that have the most at stake in building an affordable, high-quality early care and education industry – will help build the public will for greater public investment. Consequently, we have invested in campaigns led by Center for Community Change and Center for Popular Democracy affiliates in eight municipalities where there are real opportunities to expand public support for early care and education. Thanks to aligned investment from several of our labor Partners like AFT and SEIU, as well as foundation allies, like the Open Society Foundations, these campaigns are being coordinated through a national “hub,” which is also driving a national narrative around the importance of public investments. In 2017, we hope to expand this work and support additional organizations and are actively seeking an additional $500,000 in new funding.

These investments could not happen at a more opportune political moment. The Clinton campaign has called for a wide array of new public investments in early care and education, including tax credits and subsidies that would limit child care expenses to no more than 10 percent of families’ annual income. In 2017, we could have an unprecedented opportunity to transform our nation’s early care and education systems. Consequently, the time to invest in organized critical constituencies – and build momentum to federal action through innovative local and state approaches – is now.