Key Facts on the Economic Impact of Child Care in Arkansas

It is important for Eighth Federal Reserve District communities to have easy access to key facts about child care and the role it plays in the economy. To that end, we, along with colleagues Charles Gascon and Ngân Trân, created child care fact sheets for Eighth District states: Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.

While today we will focus on the economics of child care in Arkansas, each Eighth District state has a similar story that can be told through five main points:

• Child care is a key support for the workforce.
• Young parenthood boosts men’s labor force participation but depresses women’s labor force participation.
• Access to child care is especially critical for Black mothers.
• High child care costs challenge families with young children.
• The child care industry is struggling with a decrease in its workforce.

Child Care Facts in Arkansas

We presented our child care fact sheet for Arkansas at a September roundtable that brought together community and business leaders from across the state. Its goal was to continue building momentum around quality early childhood education and its connection to economic development as part of our shared economic prosperity.

“Ensuring community leaders, businesses and economic developers have access to reliable data, presented in a digestible manner, is vital in assisting us in improving social mobility and addressing wealth, health, education and gender inequities in our region,” said Charity Hallman, senior vice president of community and economic development for Hope Enterprise Corp. and a 2022 LISC community fellow.

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Child care is a critical support for much of the workforce. Mothers and fathers rely on others to care for their children while they are at work. For Arkansas, we found that over half (53%) of working adults ages 25-54 were parents. Of those parents, 37% had children under 6. This means that in 2021, a sizable chunk of the workforce needed child care during work hours. For some, this might mean a nonworking parent or other family member. However, in most married households with children, both parents work. For these parents and for single parents, affordable child care is necessary for their participation in the workforce.

However, if a parent does step out of the labor force when their child is young, it is much more likely to be the mother than the father. In Arkansas, 67% of mothers with young children are employed or actively looking for work, compared with 72% of women without children. For men, the pattern flips. Almost all fathers with young children (94%) are employed or looking for work, while a smaller majority (81%) of childless men participate in the labor force.

Single Mothers Struggle with Child Care Costs

One participant in the roundtable commented: “When I had my first child, I was working part time and didn’t have access to benefits. My employer was gracious enough to allow me to work remotely, so I didn’t have to worry about child care. However, after having my second child and moving to a full-time position, child care was a challenge.”

Having two children under 3 and paying $1,400 a month for child care was especially challenging for her because she is a single mother and considered asset-limited, income-constrained and employed. It was not until after she moved her oldest child into a publicly funded preschool program that she achieved some financial stability; she was able to afford the out-of-pocket costs associated with participating in a down payment assistance program and bought her first home.

The U.S. Department of Health and Human Services defines affordable child care as no more than 7% of household income. In Arkansas, the average cost per child per year is about $6,100. That’s 12% of median household income, so largely unaffordable for most households.

Single mothers especially struggle with child care costs. They have slim financial cushions, and the vast majority (97% in 2019) find the average cost of child care unaffordable. Yet, they need to work to provide for their families. Child care access and affordability also have equity implications; Black mothers with children under 6 are more likely to be single parents than are white mothers with children in that age group. In Arkansas, 59% of Black mothers with young children are single parents, compared with 33% of Latina mothers with young children and 22% of white mothers with young children.

Child Care’s Importance for Businesses

Garrett Dolan, Tyson Foods’ senior manager of corporate social responsibility, who served as a roundtable panelist, talked about the importance of child care from a business perspective and how his organization is working to pilot an on-site child care and learning facility in 2023.

“In the manufacturing sector, we see a high employee turnover rate,” he said. “One of the leading reasons is the lack of affordable child care. It is especially difficult for single-income families and females. We are also a shift-based company that works nontraditional hours, so we often have to create custom solutions.”

Dolan recognized the importance of available and affordable child care for many of Tyson Foods’ workers. Research has shown that offering benefits like helping employees pay for child care helps the company as well. Workers are more productive, are more likely to show up to work, are happier and are more likely to stay with the company. Partners like government and nonprofits can help share the cost of building up child care infrastructure to better serve parents and workers.

Having Fewer Child Care Workers Is a Challenge, but Opportunities Remain

While availability and affordability challenges in the child care industry are not new, the COVID-19 pandemic exacerbated these issues. The child care workforce has decreased since the start of the pandemic, making the availability of child care slots a bigger problem than it already was. In Arkansas, the child care workforce decreased by 500 workers, or 4%, between February 2020 and December 2021. Other Eighth District states faced drops in the child care workforce of 8%-14%. This makes it difficult for child care centers to hire staff and for parents to find openings for their children. Jill Wilson, executive director of Open Arms Learning Center and Noah’s Ark Preschool in rural Arkansas, said staffing is the biggest challenge she faces as an operator.

“Despite demand being high, staffing is hard,” she said. “We have staff with varying levels of education and experience. It takes time to train somebody, even [someone] who has an education degree. These actions have an impact on the children and families.”

Wilson also talked about the importance of state and federal funding in allowing her center to be more competitive in the job market: “We have been able to utilize funding to provide job-based benefits, including participating in a retirement savings plan with immediate match.”

Community leaders and employers can work together to expand child care. Benefits include fostering worker productivity and economic growth, and also educating the next generation of the workforce. Understanding what critical investments are needed and available while improving child care access is important to this effort. In Arkansas, participants at the roundtable walked away with a greater understanding of how combinations of employer- and government-funded solutions and community resources can help build a robust child care system and get parents back in the workforce.