OLMIS

by Jessica Nelson
Published Feb-7-2012

Introduction The Industry Is the Supply of Child Care Adequate? Child Care as an Employee Benefit Summary More Information for Employers at Work/Life Oregon

Social and economic trends over the past 60 years have made child care a workforce issue, and turned child care into an industry. The steady rise of women's participation in the labor force, and the increase in the share of women with children under age 18 working and looking for work (from 38 percent in 1970 to more than 70 percent in 2010) have fueled the demand for paid child care.

In households headed by women, child care is a critical part of being able to go to work. Single mothers on welfare joined the labor force in droves after the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 - also known as welfare reform - mandated their participation. Labor force participation by female-headed households jumped nearly 22 percent between 1995 and 1998. These trends translate into a lot of children needing child care.

So, how big is the child care industry in Oregon, and has it kept pace with the demand for paid care? And what is the relationship between child care and Oregon employers?

There were 1,060 child care businesses with 9,567 employees in Oregon in 2010. Nearly half of them had four or fewer employees (Graph 1). One out of every 10 child care businesses employs 20 or more workers.

Wages are low in the industry, an issue that is often linked with quality of care. Total payroll of child care businesses with employees in 2010 was just about $178 million - this averages out to an annual industry wage of $18,654, less than half the all-industry average of $41,669. One reason for a low average wage could be the low wages of the occupations that dominate the industry. For example, the median wage of a pre-school teacher in Oregon was $11.09 an hour, and the median wage for child care worker was $9.50 in 2011. These two occupations account for more than half of the employment in the day care industry (Graph 2).

Employment in day care businesses with employees grew 27 percent from 2001 to 2010 - matching the growth rate in the larger industry sector of health care and social assistance. Day care industry employment is now more than five times the 1976 level, while all-industry employment has almost doubled.

The child care industry has high employee turnover, according to the BLS Occupational Handbook. The industry is also characterized by low profitability, according to a 2005 Child Care Division study (The Economic Impact of Oregon's Child Care Industry). Licensing requirements mandate a high ratio of staff to children, and often costly investments in training and equipment are required.

The number of women of childbearing age in the labor force and the number of children under age 5 are both expected to rise over the next 10 years. The share of children being cared for by parents or other relatives is likely to decline. These trends will increase the demand for paid child care. Growth in demand will be moderated somewhat by an increasing number of states investing in early childhood education programs.

There is evidence of a current shortage of day care. The Child Care Division study noted that in 2005 the supply of child care spots was 17 per 100 children. In order to meet demand, 25 spots per hundred children were needed. This shortage was particularly acute for children with special needs, infants and toddlers, and evening care for children of parents who work late shifts.

One of the study's conclusions was that "... if all parents who need paid child care could afford or access it, an estimated 23,700 additional Oregonians could participate in the labor force." This is important to Oregon businesses facing a tight labor supply in many occupations and industries. Offering child care as an employee benefit could be another way to attract and retain a skilled workforce.

Some businesses already offer child care benefits, and report bottom line savings, according to the Child Care Division study. These include reduced turnover and absenteeism, increased productivity, increased ability to attract good job applicants, and an overall enhanced business image.

A statewide survey of employee benefits offered by employers reported a wide array of benefits offered, including child care, all designed to promote balance between work and life (Table 1).

The child care industry has grown in response to the increasing numbers of families in which both parents work, and to the increasing number of households headed by women. Supply of day care currently is not meeting potential demand. Employers offering day care as an employee benefit may see more productivity from current employees and may be more successful recruiting quality job applicants.

Oregon employers can access all the information they need in order to decide how to offer family-friendly benefits, including child care. This information is located at www.worklifeoregon.org. Employers will find out how to assist their employees in accessing Oregon's free statewide referral service that provides lists of current day care providers by area. An add-on service, available for a small fee, more directly connects employees needing day care for their children to current openings at day care centers. State and federal tax credits for dependent care benefits are also explained, as well as how to use flex-time and more family-friendly leave policies to enhance a business's productivity by making employees more productive.