States Need Better Child Care Data to Plan Their Workforce

Workforce strategies need to account for child care

Almost every state has launched a workforce summit, a task force, or a strategic plan, and most focus on strategies like training programs, employer partnerships, and apprenticeships. Those efforts help people prepare for jobs and connect with employers. But they don’t address an important barrier to workforce participation.

For parents and caregivers, access to reliable, quality child care can determine whether they’re able to accept a job, work consistent hours, or remain employed. When care falls through, employers face unexpected absences, scheduling disruptions, and the risk of losing experienced workers.

A 2023 report from ReadyNation estimated that inadequate infant and toddler care costs the U.S. economy $122 billion annually in lost earnings, productivity, and tax revenue.

States developing workforce strategies need to account for child care availability. Employment rates, available jobs, and outcomes from training programs show what’s happening in the labor market but don’t reveal whether a lack of child care prevents people from working.

Even when states consider child care supply, they usually use a number that reflects maximum potential rather than care available to families today.

Licensed capacity doesn’t tell states how much care is available

States often use licensing records to estimate child care supply. Licensed capacity is the maximum number of children a provider is authorized to serve. It’s useful information, but it doesn’t establish how many children the provider can accommodate right now.

A center might be licensed to serve 100 children but have enough staff to serve only 70. That’s operational capacity, and in this case, it leaves 30 percent of licensed capacity unavailable.

Operational capacity still overstates what’s available to families today. If all 70 operational slots are occupied, the center has no openings. Even when openings exist, they may not accommodate a child’s age and needs or a parent’s work schedule.

For workforce planning, licensed capacity isn’t the right number. States need to understand how many children providers can serve today and how many openings are available for families. Otherwise, they risk developing workforce strategies around child care resources that exist in licensing records but aren’t available to the people they’re trying to support in the workforce.

Iowa found a 40,000-slot gap in its child care data

Iowa recognized the connection between child care and workforce participation when Governor Kim Reynolds established the Governor’s Child Care Task Force in 2021. An earlier U.S. Chamber of Commerce study had estimated that child care shortages cost the state approximately $935 million annually through worker absences, turnover, and lost tax revenue.

The state knew it lacked the comprehensive data needed to understand the full scope of the problem. Child care providers maintained information about enrollment and availability in their own management systems, while the state kept separate information about licensing, subsidies, and funding. These systems couldn’t easily exchange information, leaving decision-makers without a complete, up-to-date picture of child care supply and demand.

Resultant partnered with the Iowa Department of Health and Human Services and Iowa State University to develop the data infrastructure behind Iowa Child Care Connect. The solution connects providers’ child care management software with state systems through an operational data store so the state can integrate and analyze data from multiple, disparate sources.

The data revealed a significant gap: Iowa needed roughly 162,000 child care slots to meet demand, about 40,000 more than its providers could serve at that time.

With more accurate provider data, Iowa could see actual vacancies, compare supply with demand, and identify geographic areas where child care services didn’t align with community needs.

Data from the engagement helped inform efforts that mobilized more than $710,000 through a local solutions fund. Some centers that had been operating at approximately two-thirds of their licensed capacity subsequently reached full licensed capacity.

Build workforce plans on operational capacity and real availability

Workforce leaders can identify where employers need workers, what skills those workers need, and where labor force participation falls short. But without accurate and timely child care availability data, they can miss why a workforce program doesn’t improve outcomes.

Before making workforce investments, states should scrutinize the child care supply figures informing their plans. Licensed capacity can substantially overstate the child care truly available to families. A workforce strategy built on an inaccurate picture of child care availability risks overlooking one of the barriers it’s intended to address.