Association for Public Policy Analysis & Management

Childcare is a fundamental economic support for parents in the workforce, and it also provides enrolled children with rich early experiences important for their development (Phillips et al., 2017). Many working families in the United States, particularly those with very young children and those just shy of state-defined income thresholds, rely on financial assistance programs (e.g., subsidies and tax credits) to access childcare.

Given these programs often have work- or income-based requirements, an important question is what happens to the childcare market when employment opportunities become unstable. For example, some parents may experience reduced wages while others may lose their job altogether. These parents would seek new or additional employment to secure household income, yet their ability to pursue these opportunities is constrained by the availability of adequate childcare. These constraints may be especially heightened for families who cannot take advantage of public-funded care, which typically serve only the lowest-income families. Furthermore, given childcare providers operate under low profit margins and restrictive staff-child ratios, shifts in enrollment likely affect how—or even if—providers can operate. This instability of childcare has negative implications for working families whose children would otherwise have remained enrolled but now require new arrangements.

Whether and how employment instability influences childcare enrollment and supply has been seldom studied. Attention to which kinds of providers remain accessible over time is especially important for job-seeking parents who may have uniquely binding childcare needs, such as overnight and infant/toddler care, that are less likely to be supplied by public-operated providers.

I examine two research questions. First, I explore associations between employment instability (operationalized by county-level unemployment rates) and programs’ enrollment patterns, and I examine variation by provider type. Second, I examine whether employment instability predicts changes in local childcare supply (e.g., cumulative capacity, market composition by provider type).

I construct panel data using monthly enrollment reports from all early education providers operating in North Carolina from 2005 to 2015 (unique n=17,694). This window allows me to leverage cross-county variation in unemployment rates (from the Bureau of Labor Statistics) induced by the Great Recession, wherein some counties experienced employment instability more intensely than others (Thiede & Monnat, 2016).

Preliminary results from fixed-effects regressions suggest heterogeneity across provider type. For private home-based care, higher unemployment was modestly associated with decreased infant/toddler enrollment, but increased 3-5-year-old enrollment; for private center-based care, enrollment for all age groups decreased. Higher unemployment was not associated with Head Start enrollment, but was positively associated with 3-5-year-old enrollment in school-based childcare. Furthermore, Cox Proportional-Hazards models revealed private centers in counties with higher employment instability were most likely to close down relative to their counterparts in more stable counties.

In periods of high employment instability, working parents are doubly impacted as they seek out both employment and childcare. Policy implications will discuss considerations for supporting the workforce and ensuring continuity of care, particularly during bad macroeconomic times when financial strain and employment instability are already likely to negatively affect both families and children (Johnson & Padilla, 2018).