The Economic Impact of the Child Care Industry in Southeast Wisconsin

Lately, mention of child care is likely to evoke recollections of scandal and fraud. What sometimes gets ignored is that child care is an industry in its own right that makes a sizeable contribution to the regional economy.

The Public Policy Forum’s latest report from its three-year research project on early childhood care and education, “The Economic Impact of the Child Care Industry in Southeast Wisconsin” quantifies the size, impact and characteristics of the industry.

The aim is twofold: to provide policymakers and economic development officials with a sense of the economic magnitude of this industry, and to lay the groundwork for a follow-up report – to be released later this year – that will enumerate the costs and benefits of a potential high quality early childhood care and education system in southeastern Wisconsin. Taken together, these reports will provide insight for policymakers as to the scope of investments that would be required to achieve a high quality system, and the returns that might be generated should those investments materialize.

Key findings:

• Southeast Wisconsin’s child care industry employs roughly 12,400 people. It also creates and sustains approximately 7,000 other non-child care jobs in the region by generating additional employment in related industries.
• The region’s child care industry generates an estimated $661 million in gross receipts annually.
• Economic modeling using industry “multiplier” figures suggests that the child care industry’s purchases generate another $648 million in sales in other industries.
• Southeast Wisconsin’s child care industry frees up an estimated 15,914 parents of children under age 6 for work, who earn an estimated $742 million annually.

These findings indicate that the child care industry is a significant creator of jobs and economic activity in the region. Furthermore, they suggest that the industry functions as an element of economic infrastructure, meaning it might best be viewed similarly to roads, transit and electricity as a critical infrastructure component that enables people to participate in the workforce and the economy.

In light of this economic importance, policymakers who are considering regulatory changes and/or quality enhancements for the child care system must consider how such initiatives not only will affect providers and children, but also the larger economy that depends on this industry as a vital source of infrastructure and economic activity.

Click here to view the other research stemming from the Forum’s early childhood education project.