The difference between an expense and an investment is a critical one when it comes to public sector management. There are some costs that are intended exclusively to improve the quality of life of a state’s residents, but have no clear-cut economic benefit. The latter group – the investments – can have an even more potent return than putting money in the stock market.

One powerful example of the latter group is the potential benefit to North Carolinians for putting more cash into child care, according to The Empowering Work report and analysis, conducted by the North Carolina Department of Commerce’s Labor and Economic Analysis Division in partnership with NC Child.

As the report points out: “Thousands of parents of young children in North Carolina are on the sidelines of our workforce, limiting economic opportunity for their families and holding our economy back. . . Even after accounting for parents who prefer to stay out of the workforce to care for their children, this report indicates substantial possible economic impacts of adding working-age adults with young children to the labor force and illustrates how child-care policy can support sustained economic growth in North Carolina.”

Some of the key research findings from the report include the following:

• One in five North Carolina employers attribute hiring challenges to lack of access to child care 

• 100,000 fewer working-age parents with young children participated in North Carolina’s labor force in 2023 than in 2019 

• An estimated 14,498 to 31,067 working-age North Carolinians with young children could have potentially returned to the workforce in 2023 

• These new 2023 labor market entrants would have created: An additional $5.7 - $13.3 billion in annual economic output for North Carolina based on the potential of adding tens of thousands of new jobs.  

This report joins others in making similar points: In fact, another economic impact analysis done by the North Carolina Chamber Foundation, the US Chamber of Commerce Foundation, and NC Child in June 2024 “estimated that gaps in North Carolina’s child care system result in an annual loss of $5.65 billion to North Carolina’s economy due to child care-related employee turnover and absenteeism, as well as foregone state and local government tax revenue.”

The report delves into two scenarios for the potential of increased accessibility to child care. Though the high-end numbers may be overstating the case a bit, a more conservative analysis is still powerful. 

According to this calculation, “The number of prime-age caregivers returning to the labor force and finding employment (31,067) in 2023 is reduced to include only the proportion of not-working women who expressed a preference for working outside the home, 37%, as identified in the 2014-15 Gallup survey. This scenario results in 14,498 newly employed workers in North Carolina in 2023. Additionally, a lower-than-average compensation is assumed for the new jobs created, considering factors such as the gender wage gap, career stage, and income levels of parents with young children who may have been out of the workforce for an extended period.”

That’s not bad at all. But where is the boost in child care intended to come from. The report indicates that “Government, philanthropy, and employers” can grow access to child care through public investments including, the North Carolina Child Care Subsidy Program; tax credit expansions; program expansion to add to the state’s child care workforce; child care-tuition cost sharing and offering child care professionals free child care tuition.

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