One Big Reason for Workforce Shortage in Iowa? Lack of Child Care Options

Iowa has a well-documented problem with child care, particularly the availability of care and the cost of it—leading to impacts on Iowa’s workforce.

• In Iowa, 14% of children (13% nationally) had family who had job changes such as quitting, changing jobs or not taking a job because of child-care problems.
• In the US, more than half of parents with young children reported being late to work or having to leave early at least once in three months.
• Almost a quarter reported being fired for it.
• Women and people of color carried most of the impact.
• Problems with child care cost the US economy $122 billion a year in lost earnings, productivity, and taxes.

This is according to a new report released by the Annie E. Casey Foundation, which coordinates KIDS COUNT, an initiative gathering quality data on child and family well-being for legislators.

“A state like Iowa, on a lot of indicators of child well-being, we look better than average,” said Anne Discher, executive director of Common Good Iowa, which is part of the KIDS COUNT network. “But even states that look better than average still have incredible struggles with child care.”

Every year, the organization releases a data book that measures and ranks the well-being of American children based on economic well-being, education, health, and community and family. This year, the report also dug into the impacts of the lack of child care in the US, with data for every state.

Discher said there’s no easy way to tackle this issue without looking at both cost and availability—and it’s not a simple matter of supply and demand.

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Low wages, high turnover

For one thing, supply is largely dictated by the number of staff at child-care centers, and that’s what’s most expensive.

Costs for running child-care centers are relatively fixed because of staff-to-child ratios, which then impacts the number of spots a center can afford to have, which impacts supply.

“Labor costs can account for more than 80% of a child-care provider’s expenses, and caregiver-to-child ratios are mandated by law and implemented for safety, so there is little flexibility on price,” the report states.

And because staff isn’t paid very well—the median hourly wage is $10.99 in Iowa, which is lower than the $13.71 national median—there aren’t many people willing to work in the industry. Additionally, many of them are parents themselves and can’t afford to live as child-care workers.

Discher pointed out child care workers were paid worse than 98% of professions.

“You almost literally can’t find a lower-paying job than child care,” Discher said. “Child-care workers could literally walk out the door to any nearby employer and make more money.”

That means centers usually have high staff turnover and, in some cases, have to close which again impacts the availability of care.

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Child care already expensive, even in Iowa

While raising worker pay might attract more staff, child care is already expensive for parents, which impacts its accessibility.

For Iowa, the report found the annual cost of center-based child care for toddlers in 2022 was $10,437—or $6,823 for a year of home-based care. Infant care is even more expensive because infants require more attention.

It doesn’t help that parents of young children who need care also tend to be young and near the beginning of their careers, meaning they’re likely to be making less money.

Governor’s new law ties work requirements to increased access

Last month, Gov. Kim Reynolds signed a bill to expand access to child care. It increases both entrance eligibility and state reimbursement for child-care workers.

But the new Iowa law also has increased work requirements from 28 hours to 32 hours a week—which may not be feasible for some new parents.

“When you look at the nature of low-wage work, which is often part-time, weird hours, it might be hard for some families,” Discher said. “Even if they want to be working 32 hours a week, sometimes it’s hard to get 32 hours a week.”

But she said Common Good Iowa has always advocated for greater child-care assistance, even if it isn’t perfect.

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What about raising the wage?

Another imperfect solution would be to raise the minimum wage.

Iowa is set to the federal minimum of $7.25 per hour, which hasn’t been changed since 2008.

Raising it would put more money in the pockets of families, but it would also increase what child-care centers have to pay their employees.

Because of that, Discher said it likely wouldn’t lead to more openings.

Other possible solutions

Ultimately, Discher said it’s going to require more investment from governments and communities to strengthen the child-care infrastructure—things like keeping the expanded child tax credit and better family leave.

The KIDS COUNT report recommends state and local governments use their remaining American Rescue Plan funds toward child care, and Congress reauthorize a child-care block grant and increase funding for public pre-kindergarten and Head Start.

It also recommends policymakers support home-based child care by removing unnecessary barriers and helping develop a networks of providers.

The final recommendation is for governments to encourage higher education, and businesses to create on-site child care and learning sites.

“Not everything that costs too much for a family is necessarily a thing that requires intervention from the public sector,” Discher said. “The reason child care [does] is because it actually has so many benefits.”

Child care benefits families and early education has shown to dramatically benefit children’s development. But it’s also good for the wider economy, Discher said.

“It’s good for Iowa workers, and it’s good for Iowa employers to have a workforce that is able and ready to work, because they have a safe place for their children to be while they are working.”

Nikoel Hytrek
6/20/23

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