Child Care Increasingly Weighs on Labor Force Engagement

Excerpted from “Cost of Child Care Increasingly Weighs on Labor Force Engagement”
Source: The Federal Reserve Bank of Kansas City
Check out the full report here: https://www.kansascityfed.org/research/economic-bulletin/cost-of-child care-increasingly-weighs-on-labor-force-engagement/

In October 2024, the Federal Reserve Bank of Kansas City reported, "Problems attaining child care have weighed on workers’ engagement in the labor force for some time. A few years ago, pandemic disruptions were the primary culprit in the lower consumption of child care services. Now, the rising cost of child care may be to blame. As wage growth moderates, higher child care costs could place added pressure on households and cause some workers to at least partially disengage from the workforce.”

The Kansas City Federal Reserve goes on to examine how escalating child care costs are affecting workforce engagement. Here are their key findings:

• Rising Child Care Costs: Child care expenses have significantly increased, outpacing wage growth and becoming a major financial strain for families.
• Impact on Workforce Participation: High child care costs are discouraging parents, particularly mothers, from entering or remaining in the workforce. This can lead to reduced economic productivity and hinder overall labor force participation rates.
• Economic Implications: The rising child care costs are not just a family issue; they have broader implications for the economy, including workforce shortages and decreased consumer spending.
• Policy Recommendations: The article suggests that addressing child care affordability through policy measures, such as increased subsidies or support for child care providers, could help improve labor force engagement.
• Long-term Effects: The ongoing challenges with child care could have lasting effects on the economy, including disparities in employment and potential long-term impacts on child development.

These points highlight the critical link between child care costs and labor market dynamics, emphasizing the need for solutions to support families and the economy. Child care is often prohibitively costly for families. While expenses in Missouri differ based on the type of child care provider, location, and child's age, this burden frequently surpasses other household costs, compelling families to choose between child care and vital necessities like housing and food.

Child Care Aware® of Missouri – Data & Analysis Services

Our comprehensive data analytic services include child care, demographic, economic, and social data to help your business grow. We offer customized data reports, analysis, and geographic mapping to interpret and visualize data. Contact us today.

Director, Data & Analysis 314-881-4657

Explore our other Child Care Aware® of Missouri resources:

FREE Clock Hour Training
Scholarships for Educators
Child Care Health and Wellness
Family Child Care Network
Leadership Development Opportunities
Missouri Office of Childhood Updates
Show Me Child Care Resources
Support Child Care Aware® of Missouri
Community Data
Join Our Team
Resources to Build Your Business