How did the pandemic affect child care? The industry continues to face a nationwide shortage of child care workers and other employers increasing their wages.
Charles Gascon, senior economist at the St. Louis Fed, describes the child care sector since the pandemic: It hasn’t bounced back as so many other sectors have, and costs are higher. Families are faced with new decisions about balancing child care and their careers, which could have long-term effects on their lifetime earnings and overall growth in the economy. The views expressed in this video do not necessarily reflect those of the St. Louis Fed or the Federal Reserve System.
Learn more on the state of the U.S. child care industry:
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00:00 - How the pandemic affected child care
00:20 - How many workers quit?
01:10 - How much did wages rise?
01:50 - current state of the child care industry
02:20 - Effects on families, earnings and the economy
03:30 - Future economic impact
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Transcript:
My name is Charles Gascon. I'm a senior economist at the St. Louis Fed.
When the pandemic hit the economy, the child care sector was significantly impacted. It became less available in some cases. It became less reliable to families in others. And on top of that, it became much more expensive.
On the availability side of things, about 30% of child care workers left the industry, either due to fears of COVID or just the on-the-job stress that had to relate to working in that space at that point in time. Some centers had to close and they were forced to close due to the pandemic and they were never able to reopen.
It became much less reliable in many instances either because classrooms had to close due to COVID cases, centers had to change working hours in order to accommodate the work staff that they had so they weren't open the same hours as they were before. And then they also had to limit some of the services that they typically would have provided, such as playgrounds not necessarily being open to the same degree that they were, food service being cut, services like that.
And then last but not least, it had become much more expensive. As we saw firsthand during the pandemic, many of these frontline workers saw pretty significant increases in their wages as an incentive for them to show up to work. Child care was not an exception to this. Child care worker wages went up 20%. And because this is such a labor-intensive industry, many of those costs were passed on to households, and overall child care costs increased about 15%.
So why is it a problem that the child care sector lost capacity during the pandemic? As child care became less reliable, more expensive, and in some cases just less available overall, it forced households to make much more difficult decisions between how they spend their time at home and how they choose to work. In some cases, not necessarily even taking the job that's a best match for their skills and their time allocation. And that has long-run costs to the overall economy.
So where are we today? Overall, the U.S. economy has recovered quite significantly from the pandemic. Overall employment is back up above pre-pandemic levels. The unemployment rates at some record lows, which suggests that the economy is quite vibrant and in many ways, workers have been able to get back into the labor force and find jobs. However, we've seen that the child care sector struggled to reach its pre-pandemic capacity.
Overall employment is down about 5% from pre-pandemic levels. And that suggests in many ways that this is a constraint that's still impacting workers. So how do we break this down? Well, what might be happening are things where workers are taking jobs that are more flexible, possibly at lower pay in order to accommodate the child care needs that they have and the child care that is available. They may take a job working different hours or working fewer hours. More balance within a household is another thing that we're seeing taking place in order to meet the needs that families have.
However, earnings profiles and earnings growth is pretty significant when people stay in the labor force. So when people choose to drop out of the labor force to take care of their children, they'll see a lifetime decline in their earnings that's hard to make up once they re-enter the labor force.
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26 июн 2024
