Economics of Early Education

A recent economic impact study by the Butler Institute for Families at the University of Denver Graduate School of Social Work (GSSW) found that Colorado’s early childhood education (ECE) industry serves more than 100,000 children, generates $1.4 billion in annual sales and services, creates over 32,000 jobs and results in more than $619 million in related statewide earnings annually. Yet, ECE programs and their employees struggle to survive financially.

The findings are detailed in a report, Bearing the Cost of Early Care and Education in Colorado, commissioned by Early Milestones Colorado. A Butler Institute team — Director of Research and Evaluation Meg Franko, Research Associate Ann Wacker and Research Assistant Miriam Estrada — conducted the background research and secondary data collection, while Brodsky Research and Consulting did the economic modeling.

“We wanted to better understand how the economics of the industry impact the workforce,” Franko says. “Although I’ve been working in the field of early childhood for a long time and understand many of the limitations and pressures, I was shocked at how financially infeasible it is to serve infants and toddlers in the way we do. I was surprised by how much of the cost is being borne by the workforce.”

The numbers are startling. The average salary for child care workers in Colorado is $25,065 — just 51 percent of the average salary of $48,795 for kindergarten teachers — placing child care workers at the poverty level for a family of four. Many ECE employees receive some public subsidy, and the industry’s turnover rates are high. The result is a shortage of high-quality programs, especially for infant–toddler care, where demand has outstripped supply.

Ultimately, the report concludes, it is children who pay the price: When quality care is too expensive for families and businesses cannot afford to provide quality early care and education, “children spend their earliest, formative years in environments that do not adequately prepare them for school and life.”

Among the report’s recommendations are increasing early care and education staff salary subsidies and providing tax credits for early care and education professionals.

“We subsidize industries like energy and agriculture because we know it’s for the public good. Why won’t we do the same thing for early care and education when we know the societal benefit? It’s an investment that pays off in so many ways,” Franko says.

The Butler Institute creates tools, resources and systems that strengthen communities, programs and families. The institute’s work includes research, program assessment, evaluation, planning and implementation, as well as training and coaching for human services workers and supervisors. Economic impact research is a new role for Butler, Franko says, but it aligns well with GSSW’s community engagement priorities. The ECE study is part of a public-private partnership between Early Milestones Colorado, the Colorado Department of Education and the Colorado Department of Human Services to advance the early childhood workforce in Colorado.

It is going to take even more community collaboration to move the needle on the economics of ECE in Colorado. “I would love to see the business community engage in this more and identify what their role might be, in addition to elected officials who have some power to do something about this,” Franko notes. “Those are the key levers that will help to make a difference.”

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