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Finkenauer Explores Impact of Childcare on Small Business and Local Economies

Washington, February 7, 2020

Washington, D.C.— Yesterday, Rep. Abby Finkenauer (D-IA), Chairwoman of the House Small Business Subcommittee on Rural Development, Agriculture, Trade, and Entrepreneurship gathered small business owners and an education expert to examine the impact that childcare has on small business and regional economies. 

“When parents can’t access affordable childcare, the effects are felt across our economy,” said Chairwoman Finkenauer. “In Iowa, more than a third of rural residents are living in areas considered childcare deserts—places where demand for childcare exceeds supply by more than three to one. For our rural businesses that already struggle to attract talented employees, access to childcare is another challenge they have to overcome when it comes to recruitment and retention.”

Overall, disruptions to employment due to issues with childcare arrangements cost the U.S. economy over $57 billion in lost revenues, wages, and productivity annually. Studies show that every year small businesses lose over $4 billion related to issues with childcare arrangements, while small business employees lose $8 billion in wages from the same cause. A lack of affordable and accessible childcare can also create workforce issues for small businesses, as they often struggle to attract and retain workers due to competition with larger employers that can offer childcare benefits. 

The hearing also examined the state of small businesses in the childcare industry. A typical childcare provider employs an average of about 12 people. From the years 2010 to 2016, there was a 20% decline in the number of home-based childcare providers, most of which are considered small businesses. This decline can be attributed to a variety of factors, including increased cost of providing care, lack of subsidy growth, and low-net earnings of running a home-based childcare business.

During the hearing, members explored the current environment for small businesses impacted by and operating in the childcare industry and what Congress can do to ensure access to affordable childcare.

“The reality today is that over 15 million children under age six have working parents,” said Cindy Cisneros,Vice President of Education Programs at the Committee for Economic Development of the Conference Board. “Whether families have access to child care impacts their ability to participate in work and to be productive in the workplace, as well as impacts the healthy development of their children while they are at work a lack of access to affordable childcare can stifle economic development in communities further inhibiting the growth of small business.”

“Adequate, affordable child care allows parents to feel confident their child is being nurtured in a safe environment and enables them to be more productive at work and absent less,” said Dan Levi, President of Levi Architecture and Co-Chair of the Black Hawk County Child Care Coalition in Cedar Falls, IA. “Child care is an economic driver. When a community has child care available it is able to recruit and retain businesses, employees, and families.”

“Small businesses like mine operate on thin margins and just can’t match the more generous childcare benefits offered by larger employers – resulting in a hiring disadvantage,” said Sarah Piepenburg Owner of Vinaigrette in Minneapolis, MN. “In this current tight labor market, a strong benefits package is even more critical. A more robust childcare infrastructure would level the playing field between small and large businesses.”

“We must continue to look at ways to meet the growing demand for childcare by supporting providers, helping communities invest in childcare solutions, and making it easier for our businesses to be part of the solution,” said Chairwoman Finkenauer. “I strongly believe that this is an area where we can find bipartisan agreement.”

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