Lack of childcare access limits Michigan’s labor force

The United States is facing a severe lack of childcare. In fact, over half of Americans live in what are referred to as “childcare deserts,” locations where three or more children are competing for a single licensed provider. These shortages are a reality in Michigan as well.

It is no secret that childcare can be expensive. However, that might not even be a factor for families when there are no available licensed providers within a reasonable proximity. The implications extend beyond the financial for families, extending to businesses and even the state’s economy. But to what degree does this lack of access affect workforce participation rates and economic output for Michigan?

Researchers from Michigan State University set out to answer that question with funding from the Michigan Department of Lifelong Education, Advancement, and Potential.

Their study, published in the journal Social Sciences, sought to understand the extent to which the distance miles away from a licensed provider prevents labor force participation. Notably, researchers found that over 5,000 more women would join the workforce if childcare was available within five miles of their home.

“Driven by MSU’s land-grant mission to translate knowledge for the public good, our research team has been focused on using data to help inform policy decision-making,” said Jamie Wu, an assistant professor in MSU’s Department of Human Development and Family Studies and associate director of Community Evaluation Programs at University Outreach and Engagement. “Reliable, affordable and nurturing childcare is essential for every family. When such care is unavailable outside the family, parents of young children face constant challenges balancing work, caregiving and financial stability. Our work seeks to illuminate these barriers and provide evidence-based insights to guide effective childcare policies and community support systems.”

"At MiLEAP, we know that expanding access to licensed child care is an investment in Michigan's economic strength and in the well-being of every child and family," said Lisa Brewer-Walraven, director of Child Development and Care at MiLEAP. "When families can find and afford quality child care close to home, parents can fully participate in the workforce, employers can retain their employees, and our communities and economy thrive."

Problem background

Prior to 2020, 44% of Michigan residents were estimated to reside in a childcare desert. This directly reduces labor participation, as childcare disruption in Michigan negatively impacts one-third of parental employment.

The economic impacts resulting from a lack of reliable childcare are severe. Absenteeism and turnover due to childcare disruptions cost the Michigan economy an estimated $2.88 billion annually, with employers losing out on $2.3 billion, while the remaining $576 million is lost in state income tax.

Neighborhood location also impacts access, and studies do not always recognize the demographic inequalities. Suburban neighborhoods are less likely to be in a desert (44%) compared to rural (58%) and urban counterparts (55%). White and Black families are least likely to live in a neighborhood childcare desert, whereas American Indian, Alaska Native and Hispanic families are the most likely to be without a licensed provider.

Study overview

There are a variety of factors that may impact childcare, such as quality or price. Proximity to a home is a major factor; therefore, researchers set out to explore the influence of childcare access on local economic development through effects on the size of the labor market.

Specifically, they sought to understand the association between access to licensed childcare providers and workforce participation of households. The research team specifically examined labor force participation for women, single-parent households and two-parent households.

Data was drawn from the state’s childcare licensing records to identify all licensed early childhood facilities in Michigan and were combined with census population and labor force participation data to examine the relationship between families’ proximity to licensed childcare and the extent to which access is linked to labor force participation.

Study findings

The researchers found that a one-mile increase in distance to the nearest provider is associated with a decrease in 2.7% female labor participation rate; a 2.2% decrease for two working parents; and a 1.7% decrease for single parents in the labor force.

Comparisons also found that high school completion is associated with higher rates of labor force participation and an association with shift work.

“This study matters because we helped further document a correlation between childcare access and labor force participation, a relationship that could inspire policymakers to push for change,” said John Reaves, a graduate student at the Department of Economics who’s on the research team. “We did this by using data that is largely publicly available through the census and methods that are hopefully straightforward enough for other states to make use of. It would be great if this paper could inspire similar studies in other places, or act as a push to bring childcare nearer to families in places like the Upper Peninsula.”

Just under a percent (0.9%) of Michigan’s population lives more than eight miles away from licensed childcare, but almost 3% (2.9%) live further than five miles, suggesting that 5,643 more women would join the labor force if care was available within that distance.

While the research should not be used for specific forecasts, it does elicit several policy recommendations.

Policy implications

The research framework can be applied to specific communities or other regions, as well as be used for interventions. There are several key policy recommendations from the research, including:

• Investing in childcare infrastructure: Expand licensed care in rural and low-income areas.
• Reducing five-mile childcare deserts: Eliminate barriers in terms of the physical distance.
• Considering childcare policies: Adopt policies and tax incentives in policy and planning.
• Promoting employer solutions: Encourage businesses to provide options, leverage incentives and stabilize their workforce.

When the labor force increases through the elimination of barriers, there are community benefits such as a more sophisticated workforce, an increased tax base, crime prevention and more social services. Additionally, these childcare facilities can become central hubs for interactions, facilitating information and places for social support and trust in the community.

This research also matters for the future generation of workforce participants, by providing for educational and employment opportunities, as well as advancing career development for women non-working parents.