Lack of accessible and affordable child care limits parents’ labor supply in North Carolina

Several LEAD staff members recently presented at the Institute for Emerging Issues’ Talent First Economics Forum on labor force participation and outcomes among underrepresented groups of workers, including families with young children. The chart above succinctly captures the differential labor market experiences of workers with young children. As it shows, prime age workers with young kids have consistently lower labor force participation and suffered deeper disruption from COVID than prime age workers overall. In 2022, the annual average size of the labor force among workers with young children (employed people plus people looking for work) was about 88,000 people fewer than its 2019 level.

While data can show the level of labor force participation among workers with young kids, it does not indicate why workers are not participating in the labor force. The high cost of child care in North Carolina—averaging more than the cost of in-state tuition at many public universities—certainly contributes to lower labor force participation among workers with young children, particularly impacting women’s employment. Parents of young kids also have a tough time finding available services, even if they can afford it. Child care facilities have yet to recover employment lost during the COVID pandemic and face difficulties raising wages and competing for workers in a tight labor market environment. This has exacerbated imbalances between the level of services demanded by parents and the supply that facilities can provide.

All these factors and more make it difficult for parents to afford and/or access child care services in North Carolina, sometimes leaving them with only one choice: not working to take care of their children even though most want to work. Estimates suggest North Carolina’s child care crisis takes a considerable toll on the economy, with some advocates finding an annual cost of more than $3 billion. Finding policy solutions that help address the issues parents, child care providers, and care workers face is essential to ensuring that people with young children who are ready and willing to work can do so.