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The child care industry includes infant/toddler care and education, preschool and out-of-school time care and education programs in for-profit, nonprofit and public settings that educate and nurture children’s development and enable their parents to work and update their skills. This report examines the economic impact of New Jersey’s child care industry and presents a complete picture of its gross receipts, number of employees and how the industry provides benefits for all. The child care industry is integral to family and economic life of New Jersey residents:

  1. Child care and education programs with quality learning environments support New Jersey’s future economic success by preparing the next generation. Children who attend high-quality child care programs have improved math and language ability, enhanced cognitive and social skills and fewer behavioral issues. The Federal Reserve Bank in Minneapolis analyzed rates of return from investing in a model preschool program for low-income children. They found a 16 percent rate of return on investment— considerably higher than the long-term return from U.S. stocks of seven percent. High- quality early childhood programs can also serve as an effective “early warning system” to address risky situations and incorporate child abuse prevention strategies.

  2. Child care enables parents to maintain employment and/or obtain education and training. Almost one in five workers in New Jersey has a child between birth and age 13 and lives in a household where all parents work. Together these working parents earn $20.2 billion every year. Child care enables many of them to develop their careers and advance their education to increase their earning potential.

  3. Child care and education programs enable employers to attract and retain employees and increase their productivity. New Jersey businesses have indicated that their workers need quality, affordable and accessible child care arrangements. Meeting this need results in increased employee retention and reduced absenteeism, enhances the recruitment of skilled workers and increases on-the-job productivity. Working parents are better able to focus on their jobs if they know their children are in safe settings that provide high-quality care and education. For example, employees with inadequate child care are more likely to be late for work, absent or distracted on the job than parents who are confident about their children's child care arrangements. Meeting child care needs benefits the bottom line of businesses.

  4. The child care industry (infant/toddler, preschool and out-of-school time care and education programs) generates $2.55 billion in gross receipts annually and provides more than 65,300 full-time equivalent jobs. This puts the child care industry on par with other significant New Jersey industries, including pharmaceutical manufacturing, insurance carriers, real estate, and scientific research and development.

While the child care industry and other stakeholders have already made great strides to improve quality, affordability and accessibility, the child care industry still faces a number of challenges in meeting the needs of families, children and employers in the state. If New Jersey addresses these challenges, it can increase bottom-line returns for New Jersey employers and public returns on government investments. These challenges include but are not limited to a shortage of high-quality child care facilities; a shortage of qualified program administrators, child care teachers and providers; and a shortage of high-quality infant and toddler care.

Furthermore, demographic and economic trends indicate that the reliance of New Jersey’s residents on the child care industry will only increase. New Jersey has one of the highest costs of living in the country, making it a difficult place to live and work for families with young children. Working parents need economic opportunities that lead to self-sufficiency and participation in the economic growth of the state. Growth in lower-wage jobs, work during nontraditional hours, and racial and ethnic diversity necessitate a child care system that is accessible to all New Jersey’s families, but particularly low- and moderate- income families. Lastly, growing diversity among the state’s population of children indicates a need for culturally and linguistically appropriate child care programs that can meet these explicit needs of children and their parents.

To meet the increasing demand for high-quality, affordable and accessible child care services and benefit the New Jersey economy, all child care industry stakeholders, including businesses, government and the child care industry itself, must work and plan together to strengthen the existing industry to maximize its economic benefits. This report makes key recommendations on how government, businesses and the child care industry (for-profit, nonprofit and public) can increase the quality and effectiveness of New Jersey’s child care industry. The existing champions in businesses, corporations, foundations, government and in the industry alike demonstrate this is possible. The examples in this study highlight companies that invest substantial amounts of resources to help their employees balance their work and home responsibilities.

The Introduction of this report presents a picture of the child care industry in New Jersey. Section Two demonstrates the long-term economic benefits of investing in high-quality child care. Section Three explores the links between child care, business and economic development. Section Four analyzes the overall economic effects of the child care industry as measured by industry earnings, employment and current levels of government investment. Section Five provides a demographic and economic profile of the state and the implications for the child care industry. Section Six addresses child care industry challenges and highlights some existing initiatives to overcome these barriers. Finally, Section Seven considers future implications for the state’s economy, provides conclusions and offers strategies on how to maximize the economic benefits of child care in New Jersey.

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The John S. Watson Institute for Public Policy of Thomas Edison State College

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