COLUMBUS, Ohio – Ohio’s economy is losing nearly $5.5 billion a year in wages, business profits and taxes because of problems parents have accessing child care, according to a new U.S. Chamber of Commerce Foundation report.
The Cicero Group, a Salt Lake City-based business researcher, produced the report. The organization came up with the $5.5 billion figure after surveying Ohio parents about the effects of not having good child care, including missing work, quitting or changing jobs, reducing to part-time hours, put off school and declining promotions.
Of the $5.5 billion in the report, unveiled Tuesday morning at a child care policy summit at the Ohio Chamber of Commerce:
-$1.2 billion was the cost of absences to employers, due to them not being at work to generate profits
-$2.8 billion was the cost of employee turnover when there are times of fewer employees generating profits, plus training new employees
-$1.4 billion was the state tax loss from turnover when fewer employees are paying taxes
-$124 million was the state tax loss from absences from hourly employees not paying taxes on the days they don’t work.
Generally, rural parts of the state lacked enough child care, with some areas considered child care “deserts,” said Aaron Merchen, a senior director of early childhood education at the U.S. Chamber of Commerce Foundation.
Urban areas had more access, he said, but affordability was a problem.
There’s a disconnect between parents’ priorities with child care and their reality, he said.
“When looking at the main reasons why parents choose a child care arrangement, we saw that there was a big disconnect between what they deemed to be the most important factor, which is health and safety, and the reasons they chose their current child care arrangement, which is primarily cost,” he said.
Child care access and affordability is a nationwide problem that has existed for decades, but it accelerated during the pandemic. It didn’t bounce back after the pandemic as, for instance, the cruise ship industry and tourism, he said.
“The economic structure of child care is so different than any other business that you cannot apply traditional business models,” he said, noting that child care is funded by both public and private dollars. “You cannot apply traditional business solutions to child care and expect to get those same results.”
Solutions will vary across cities and states. Merchen said that a plastics manufacturer in rural Pennsylvania was able to ease its worker shortage by sending money to a chain of daycare centers, which allowed them to hire additional teachers. This resulted in more vacancies open for workers’ children.
A manufacturer in Alabama hired a child care resource and referral agency to help parents place their children in child care centers that they liked.
The Ohio Chamber of Commerce supports two bills in the legislature – House Bill 2 and Senate Bill 32 – similar though not identical bills that would create voluntary child care programs for employers to participate in, in which child care expenses would be covered in three equal parts by the state, the employer and the employee, said Rick Carfagna, senior vice president of government affairs at the Ohio Chamber.
Solutions have gotten new life in the Republican-dominated Ohio General Assembly as the chamber and other powerful business lobbies have urged lawmakers to fix child care problems. Those challenges make it harder to recruit employees to the state, business interests say.
Currently public child care subsidies in Ohio are available for families who earn up to 145% of the federal poverty level. For a family of four, that’s $45,240.
This is lower than neighbors Indiana, which is capped at 150%, and Michigan, capped at 200%, Carfagna said.
In recent years, Gov. Mike DeWine’s administration has provided child care vouchers to families with incomes that range from 145% to 200%. But those vouchers were paid with federal funds, and will soon be ending.
DeWine proposed lawmakers use state funds to increase eligibility for subsidies to 160%, or $49,920 for a family of four, and use state funds for the vouchers up to 200% of federal poverty.
Ohio’s two-year budget bill is being debated by lawmakers and expected to pass by the end of June, ahead of the new fiscal year on July 1.
Later Tuesday, Ohio House Finance Committee adopted the House’s version of the budget, which includes $10 million for a “tri-share” program, with employees paying 40% of the child’s daycare, the employer paying 40% and the state paying 20%.
The House’s version of the budget also establishes a child care recruitment and mentorship grant program with $3.2 million.
In ourcleveland.com cleveland.com and the Plain Dealer are examining the expense and difficulty of finding quality child care and proposing solutions to share families’ burdens — and help our economy.
Laura Hancock covers state government and politics for The Plain Dealer and cleveland.com.
