WORKFORCE OF TODAY, WORKFORCE OF TOMORROW: The Business Case for High-Quality Childcare WORKFORCE OF TODAY, WORKFORCE OF TOMORROW: The Business Case for High-Quality Childcare Page 2 WORKFORCE OF TODAY, WORKFORCE OF T OMORROW: The Business Case for High-Quality Childcare Katharine B. Stevens June 2017 Page i WORKFORCE OF TODAY, WORKFORCE OF TOMORROW: The Business Case for High-Quality Childcare Page ii Contents Executive Summary .......................................................................................................................................1 Introduction ....................................................................................................................................................2 World-Class Education Is the Key to a World-Class Workforce ................................................................3 Gaps Emerge Early .................................................................................................................................4 The Lifelong Importance of Children’s First Years ................................................................................4 Childcare: America’s Most Important Early Education Program ...............................................................5 How Childcare Strengthens Today’s Workforce ..........................................................................................7 How Childcare Strengthens Tomorrow’s Workforce ...................................................................................9 The Growing Importance of “Soft” Skills ............................................................................................10 The Economics of Human Potential ....................................................................................................11 The Childcare Industry ................................................................................................................................13 Industry Overview .................................................................................................................................14 The Role of Childcare in State Economies .........................................................................................15 A Weak Market ............................................................................................................................................17 High-Quality Childcare Matters ...........................................................................................................17 A Weak Childcare Market .....................................................................................................................19 How to Build a Strong Market .............................................................................................................22 The Key Role of Business Leadership ........................................................................................................23 Opportunities for Business Engagement ..................................................................................................25 Acknowledgements .....................................................................................................................................27 Page iii WORKFORCE OF TODAY, WORKFORCE OF TOMORROW: The Business Case for High-Quality Childcare Page iv Extraordinary development occurs from birth to Executive Summary age 5, forming the bedrock for lifelong health, American business depends on a strong workforce, intellectual ability, emotional well-being, and now and in the future, to compete and succeed social functioning. A broad set of socially and globally. But America is facing an unprecedented economically valuable skills start developing workforce crisis: a large and growing shortage of in children’s very first months, build over time, skilled workers. From Wall Street to Main Street, the and are critical determinants of academic and world of work is changing—and our strategies for economic success. Although a sturdy base of early developing tomorrow’s workforce must change skill and ability is not alone sufficient for children’s with it. long-term success, without it, the effectiveness of later investments in education and training are Business leaders have long understood the substantially reduced. importance of a well-educated workforce to support a strong economy, keep America By laying the crucial groundwork for tomorrow’s competitive globally, and ensure a vibrant workforce and promoting a strong workforce democracy. And they have long played a leadership today, high-quality childcare provides a powerful role in strengthening the education pipeline so two-generation approach to building the human crucial to our economic growth and prosperity. Yet capital that a prosperous and sustainable America our nation’s K–12 system is falling short in preparing requires. It supports parents: increasing completion new generations for the ever-changing demands of of postsecondary education, raising labor force the 21st century workplace. participation, increasing workforce productivity, and helping business attract and retain talent. And it One root of this problem is that we’ve ensures that children have the chance to develop underestimated the importance of the earliest well and begin kindergarten ready to thrive in years of life. For most of history, the essential school, work, and life. early foundation for all subsequent learning and development was laid largely in the home. But For American business, advancing high-quality today, an unprecedented number of American childcare is a winning proposition. It’s a wise mothers are in the workforce, and millions of young investment in America’s future—strengthening children are in paid childcare for a substantial business today while building the workforce we’ll portion of their early years. And while childcare depend on tomorrow and for decades to come. is a necessary support for working parents, it also has a critical impact on children during the most consequential phase of human development. Research shows that starting at birth, young children are continuously and rapidly learning— wherever they are and from whomever they’re with. Indeed, the commonly made distinction between “care” and “education” in early childhood is a false one. Childcare is early education, regardless of the building it occurs in or what we call it. The question is only whether it’s advancing or impeding children’s learning. Page 1 WORKFORCE OF TODAY, WORKFORCE OF TOMORROW: The Business Case for High-Quality Childcare Figure 1. Employment Status of Civilian, Introduction Noninstitutionalized Adults American business depends on a strong workforce, now and in the future, to compete and succeed globally. But America is facing an unprecedented workforce crisis: a large and growing shortage of skilled workers. 7 According to a 2016 survey by the Aberdeen Not in the labor force 57 Group, four out of five employers believe that Employed today’s labor pool lacks skills and abilities essential to business success.1 More than two-thirds of U.S. employers who are hiring full-time employees 1 Marginally currently have open positions for which they cannot attached find qualified candidates, and nearly 60% have job 2 openings that stay vacant for 12 weeks or longer. Involuntary “The gap between the number of jobs posted each Part-time 3% month and the number of people hired is growing Unemployed larger as employers struggle to find candidates 7 Source: Bureau of Labor Statistics, May 2017. to fill positions,” said CareerBuilder CEO Matt Ferguson. “There’s a significant supply and demand Recent strategies to address the skills gap have imbalance in the marketplace.”2 largely targeted its most immediate consequences. While this is critical for business success today, The impact on employee recruitment and the we also need strategies that will build the human business bottom line is increasing. Extended capital of tomorrow—to revitalize our workforce for vacancies now cost companies an average of more generations to come. than $800,000 annually. In a 2014 Adecco Staffing survey, half of senior executives said that U.S. From the banks on Wall Street to the shops on companies are missing out on growth opportunities Main Street, the world of work is changing—and due to a lack of skilled labor.3 our strategies for developing tomorrow’s strong, skilled workforce must change with it. High-quality At the same time, 6.9 million Americans are childcare, which enables adults to work while laying unemployed, millions more are working part-time a foundation for children’s success in school and because they can’t find full-time positions, and beyond, is an under-recognized and promising almost 95 million working-age adults are out of the strategy for addressing America’s growing labor force altogether (see Figure 1).4 Less than half workforce crisis. Done right, childcare provides a of America’s adult population has a Gallup-defined powerful two-generation approach to building the “good job,” working at least 30 hours per week skilled workforce on which our country’s continued for an employer that provides a regular paycheck.5 prosperity depends. Thomas J. Donohue, president and CEO of the U.S. Chamber of Commerce, summarized the problem: “America today is a nation of people without jobs and jobs without people.”6 Page 2 65 OECD’s 2015 Program for International Students World-Class Education Is Assessment exam, with only 10% of U.S. students the Key to a World-Class scoring