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Child care shortages cost Arizona $4.7 billion every year

Woman wearing a red tshirt is in a classroom working with small chlidren gathered around a table with shapes. Child care shortages in Arizona.

A newly released report provides updated information that says Arizona loses $4.7 billion each year because of the lack of availability of child care for children from birth to age 5. 

ReadyNation, part of the Council for a Strong America, a bipartisan nonprofit focused on education and child care policy, released a study this week that “found that the lack of adequate child care imposes substantial and long-lasting economic consequences in Arizona. Effects are felt by parents, businesses and the state’s taxpayers, with an annual economic cost of $4.7 billion in lost earnings, productivity and revenue.

“The child care crisis has a magnitude of impact on two generations,” said Jenny Holsman-Tretreault, vice present and general counsel for TPI Composites, Inc., a global wind blades manufacturing company, which is headquartered in Scottsdale. “Child care allows parents to work, supporting their family’s financial future. But research shows that early childhood education also has lasting benefits to children throughout their academic career and into adulthood.”

The ReadyNation Arizona study was funded by the Helios Education Foundation. The study commissioned a survey of working parents of children birth to age 5 in Arizona. The survey yielded a representative sample of 306 parents, both mothers and fathers with children birth to age 5. 

Colin Diaz, president and CEO of the Tempe Chamber of Commerce, said that the COVID-19 pandemic changed the way employers and employees look at the workplace.  

“You talk to employers now and they have a huge challenge in trying to get employees to come back and one of the key factors has to do with accessing child care and having affordable child care,” Diaz said. “And it’s becoming a buying decision where parents are starting to see if it costs as much to send their child to (child care) as they may make working then they’re opting not to go back to work.” 

The lack of available, accessible, affordable child care wreaks havoc on parents’ work lives, with 70% of Arizona parents surveyed reporting that access to child care presented a challenge, the report states. Child care problems decreased parents’ effort and productivity at work, undermining their job stability. More than half of parents reported being late for work, leaving work early or being distracted at work due to child care problems. Nearly two-thirds reported missing a full day of work, while 28% of parents reported quitting a job due to child care problems.

“Families are losing on average $6,320 (annually) for working parents in regards to loss wages if there’s not adequate child care around,” Diaz said. “I’ve seen it time and time and again with staff that we have and also some of our members who are working with a skeleton crew because they’ve got child care issues that pop up.” 

From the business owner’s point of view, on average businesses lose $2,020 per working parent annually through reduced revenue and in extra hiring costs. As a whole, the annual burden on Arizona businesses is $958 million. Arizona taxpayers, over the course of a year, lose out on $725 million in lower income tax and sales tax revenue. Add to it the $3 billion per year that Arizona families lose in forgone earnings and job search expenses, it totals $4.7 billion.

“This is huge when you think of it as from an economic impact,” Diaz said. In terms “of people not coming back to the workforce or ultimately choosing to leave the workforce.”

ReadyNation Arizona called on local elected state and federal policymakers to continue to prioritize child care and access for others. Since 2006, ReadyNation members have made the case for effective, bipartisan investments in children as the future workforce that will drive success in the global marketplace. 

“With wise investments, policymakers can improve life outcomes for thousands of Arizona children today and strengthen our state’s workforce and economy both now and in the years to come,” the report said. 

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