Vermont: The Link Between Labor Force Participation and Child Care Supply

In Vermont, with labor force participation on the decline, state legislators are keenly interested in ways  to increase workforce participation. A key strategy under consideration is to develop partnerships to ensure that families with young children have access to child care. On Feb. 28, the Vermont House Committee on Commerce and Economic Development held a hearing related to strategies for increasing the availability and affordability of child care for working families.

Cindy Cisneros, Vice Present of Education Programs at the Committee for Economic Development of The Conference Board (CED), testified on a panel that also included Dr. Caitlin McLean (University of California at Berkeley, Center for Child Care Employment), and Sarah Kinney and Trey Martin (Vermont Let’s Grow Kids).

Subcommittee Chair Michael Marcott and Vice Chair Jean O’Sullivan opened the hearing and invited comment related to the economic impact of child care, thoughts about increasing supply and expanding public-private partnerships, and related challenges such as better understanding problems faced by child care providers in operating child care programs (e.g. hiring and retaining staff, staff pay, and turnover within the field).

Cisneros testified about the economic impact of child care throughout the nation, and particularly in Vermont, based on CED’s 2019 report, Child Care in State Economies.  “As an industry, child care plays a significant role in economic growth,” said Cisneros. “The industry, which includes both center-based and home-based child care providers, had a total economic impact in 2016 of $99.3 billion.”

“In Vermont, child care providers have an economic impact of $222 million, which supports nearly 5,000 jobs statewide,” said Cisneros. “Without access to child care, parents reduce their hours or opt out of the workforce – and 94 percent of those are women.”

“Of concern in Vermont, particularly in rural areas, is the decline in home-based providers which our report estimates at more than 27 percent throughout the state over the past 10 years,” said Cisneros. She added that family child care homes are typically less expensive than center-based care, offering families a more affordable option. This can impact labor force participation if families have difficulty either affording child care or the supply doesn’t meet a community’s need.

Dr. McLean also testified that “the early childhood educator workforce is the workforce all others depend on. Without ensuring that early educators are adequately prepared, supported on the job, and compensated fairly for their work, it will be impossible to build the supply of services that children need.”

“Investing in early care and learning in Vermont yields strong returns,” said Kinney. “More than $1.9 billion invested in early care and learning programs over the next five years would be directly injected into the local economy via wages paid to working families and increased economic activity for local businesses, and increasing revenues and savings to the local government.”

Kinney added that the recommendations stem from Vermont’s Blue Ribbon Commission on Financing High-Quality, Affordable Child Care.

Committee members were interested in addressing the child care supply shortages impacting labor force participation. The discussion included better coordinating and integrating federal funding sources  to produce an integrated approach to tackling the supply and affordability of child care. There were also remarks about shared services, which can enable providers to receive supports they need and help strengthen the viability of business models through collective purchasing of frequently needed items at a discount (e.g. supplies, materials, and equipment).

Strategies to increase the wages earned by the child care workforce were also discussed to reduce challenges associated with hiring and retaining workers. Cisneros mentioned the work CED is supporting in several states to pursue a refundable tax credit approach that ties professional development to tiered tax credits that act as a wage supplement.

There was agreement that regional planners and development boards need to ensure that child care is considered as a core aspect of any community development strategy.

The Feb. 28 hearing was the second hearing that the Vermont Committee on Commerce and Economic Development has held this year related to child care.  From Friday’s discussion, addressing the supply and affordability of child care may require some joint meetings where committees can collaborate across jurisdictions to draft a multi-pronged approach. Both the CED economic impact study and the Blue Ribbon Committee’s recommendations are likely to be considered in developing the way forward.

The Vermont hearing followed Cisneros’ testimony on Capitol Hill before the House Committee on Small Business's Subcommittee on Rural Development, Agriculture, Trade, and Entrepreneurship on Feb. 6.

The testimony of Cindy Cisneros for Vermont is available here.

Let’s Grow Kids’ Presentation is here.

Building Vermont’s Future from the Child Up: 2018 Think Tank Recommendations is here.

Witness testimony is available here.

CED’s Child Care in State Economies report materials are here.

The Vermont Blue Ribbon Commission on Financing High Quality, Affordable Child Care report is here.