Table 2. Employment in child day care services and related data

Employment | Population | Ratio of Working mothers | Working mothers Enrollment in
Year In child day unders | employed of children ot children paatgiment in

care industry years old ‘women under 6 under 6 thousands)

thousands) | .dhousondsy | Momen, @housands) (percent)
1455 20,570 410 - ~ 379
151.0 20,248 42.0 = - 379
172.0 19,937 426 _ - 353
198.9 19,667 42.0 4,851 33 349
214.6 19,251 43.2 4,957 35 349
245.2 18,898 44.5 4,887 36 333
284.8 18,891 46.4 5,297 39 391
303.1 19,155 47.5 5,594 at 388
298.9 19,631 4an7 5,886 42 376
289.8 20,022 48.0 6,227 44 387
282.4 20,502 477 6,414 43 396
283.8 20,843 48.0 6,489, 43 415
291.7 21,092 49.5 7,043 46 442
310.0 21,360 50.4 7,322 48 452
3219 21,531 51.4 7,602 48 452
333.4 21,662 52.5 8,137 51 447
366.3 21,822 53.4 8,104 51 448
378.4 (22,067 54.3 8,478 53 451
391.4 22,528 54.3 8,732 54 541
4172 22,897 53.7 8,758 53 583
450.8 23,224 53.8 8,662 53 621
473.4 23,479 544 8,764 53 714
501.8 23611 — _ — =

Note: Dash indicates data are not available or are not comparable.

who have increased their earnings and have been able to leave
the arpc program in the past year. Funds for these Family
Support Act programs nearly doubled from fiscal year 1992
to fiscal 1994, when $745 million was available.

In addition to Federal initiatives, State and local govern-
ments provide many child care programs. The level of spend-
ing per child varies greatly by State. In addition to pro-
grams for poor children and others, State governments fre-
quently fund onsite day care for the children of public em-
ployees by setting up a private, not-for-profit corporation that
operates the center rent-free.!”

As State governments receive more Federal funds, their
revenue may be made available for other purposes. Con-
versely, when Federal aid to States and localities is cut, the
State or local government may find it necessary to reallocate
funds from another area of spending. The curve on chart 2,
which represents the number of employees in the day care
industry, shows a decline in the early 1980's, when two re-
cessions occurred, even though two other recessions, one in
the mid-1970’s and another in the early 1990's, had no ap-
parent effect on day care employment, which continued to
grow vigorously,

Federal outlays for education, training, employment, and
social services, adjusted for inflation, represents the first re-

lated statistic examined so far that may explain why em-
ployment in the industry dropped in the early 1980’s but not
during the other recessions. As shown in chart 2, social
spending was cut deeply in Federal budgets in the early
1980's, while this broad category of Federal spending de-
clined less during the recession of the mid-1970’s and actu-
ally increased during the 1990-91 recession. As increases
in such Federal spending occurred from 1975 to 1979 and
again from 1987 to 1993, day care expanded at a pace greater
than the growth rate in the number of children or of jobs
held by their mothers.

Tax breaks. In addition to explicit Federal spending, several
USS. tax provisions help bring day care in reach of many
families. Perhaps the most important tax change was the
initiation and expansion of the Earned Income Credit, which
began in 1975 and was increased to a major extent in 1990
and again in 1993. Although a small amount of this credit
can be claimed by low-income taxpayers with no children, it
benefits primarily lower-income families with children. A
credit of up to about $2,500 goes to taxpayers with earnings
of $11,000 or less. The Earned Income Credit is different
among such credits because when the amount claimed by a
taxpayer exceeds the income tax liability, he or she is reim-

Monthly Labor Review August 1995 7



Employment in Day Care

Finance Review (October 1992), p. 46.
TM Casper, Hawkins, and O’Connell, Who's Minding the Kids? p. 14.

U.S. House Ways and Means Committee, Overview of Entitlement Pro-
grams (Washington, U.S. Government Printing Office, 1994), pp. 705-7.

» Employee Benefits in Medium and Large Private Establishments, 1993,
Bulletin 2456 (Bureau of Labor Statistics, November 1994), pp. 5-6.

2 The State of America’s Children 1992, pp. 23, 24; Child Care and De-
velopment Key Facts, pp. 17-19; and Barri Bronston, “Child Care is Part of
the Job,” The Times-Picayune (New Orleans, LA, June 14, 1993), p. Cl.

” From ces data.

® County Business Patterns, U.S. Government Printing Office,
Washington, annually.

% The Current Population Survey produces estimates of all civilian
employment and unemployment, and other demographic estimates, based
on a monthly survey of 60,000 households. Results of the survey appear in
Employment and Earnings. Results for periods after 1993 are not
comparable to earlier results because of changes in methodology and
population weights used.

% Figures from U.S. House Ways and Means Committee, Overview of
Entitlement Programs (Washington, U.S. Government Printing Office,
1994), p. 704.

Where are you publishing your research?

The Monthly Labor Review will consider for publication studies of the
labor force, labor-management relations, business conditions, industry
productivity, compensation, occupational safety and health, demographic
trends, and other economic developments. Papers should be factual and
analytical, not polemical in tone. Potential articles should be submitted to:
Editor-in-Chief, Monthly Labor Review, Bureau of Labor Statistics,

Washington, DC 20212-0001.

12 Monthly Labor Review August 1995.



day care centers that are located near several places of work.”
Cost effects

The average hourly pay in 1994 for production or
nonsupervisory employees was $11.12 for the private sector and
$6.83 in the day care industry. From 1972 to 1994, average
hourly pay of workers in the industry, excluding managers,
adjusted for inflation, declined by 10 percent.” The cost of
labor in day care centers is relatively inexpensive and has
become less expensive over the years.

Despite the drop in real earnings of day care workers, the
price of day care to consumers, as estimated in the consumer
price index, rose more rapidly than general inflation in the last
few years. An index of day care prices was first produced for a
complete year in 1990. From 1990 to 1994, day care prices
rose by 20 percent while overall consumer prices for all urban
consumers rose by only 13 percent. Tax breaks and govern-
ment and private day care programs, which deliver care at a
below-market price as in Project Head Start, reduce costs to
parents and partially account for the huge growth in day care
use despite the relatively rapid inflation in the industry. The
comparatively low cost of employing day care workers also
helps explain the rapid growth of jobs in the industry.

Other surveys

As previously mentioned, estimates of employment from the
monthly Bis survey of employers are used in this article as
the primary measure of growth in employment. One advan-
tage of this series of estimates is its relatively long history,
starting in 1972 and continuing into mid-1995. Estimates
from other relevant sources are available; in most cases, they
differ in their scope and trend.

The Bureau of the Census estimates employment by in-
dustry, based on various Census Bureau sources.” Day care
services were first estimated in this program in 1988, and
estimates for the industry have been produced up to reference
year 1992. Census Bureau estimates, like those from the BLS
survey of employers, are based on the definition of a day care
establishment quoted earlier and exclude Government estab-
lishments from the sector. Over the 4-year span, this series,
like the Bis survey of employers, shows growth, but not as
much growth, Over the 1988~92 period, the Census Bureau
program indicates a gain of 55,000 employees, or 15 per-
cent; the BLs series shows an increase of 27 percent.

The Current Population Survey (crs)* of households also
estimates employment in the child day care industry, beginning
in 1983, However, the cps (household survey) definition of
child day care is broader than that of the two employer
(establishment) surveys. The initial level of employment from
the household survey was 418,000 in 1983, while the BLs
establishment survey showed employment of 284,000.

The household survey apparently includes segments of the

day care industry in which employment has grown even faster
than in the segments included in the establishment surveys.
From 1983 to 1993, the household survey measure of day
care employment more than doubled, gaining 465,000 jobs,
or 110 percent; the sis establishment survey showed a gain
of 67 percent during the period.

The household survey estimates of employees in the day
care industry include government employees, self-employed
workers, and private-sector wage and salary workers. (The
two surveys of employers include only private-sector wage
and salary workers.) Including these additional workers par-
tially explains the differences in numbers of employees, but
the household survey’s estimates of private wage and salary
workers in the day care industry are larger and faster grow-
ing than those of the BLs establishment survey.

One reason for the differences in initial level and trend is
related to the surveys’ different methods of determining the
industry classification of workers. In the household survey,
the classification is based on individuals’ descriptions of their
workplaces. Many large employers in industries other than
day care provide onsite centers as a convenience to their em-
ployees. The household survey assigns the day care workers
at such onsite centers to the day care industry if the workers
themselves describe their workplace as a day care center. In
the establishment survey, if the day care workers are directly
on the payroll of the main establishment, rather than that of
a Separate organization, they are assigned to the main indus-
try classification of the entire establishment.

The household survey also offers estimates of employment
by occupation, including child care workers outside of pri-
vate households and, separately, child care workers in the
child's home. (These categories do not include all workers
who supervise pre-school children; many employees of cen-
ters are pre-kindergarten teachers, a category not distinguish-
able in the survey from kindergarten teachers and therefore
not usable for our immediate purposes.) From 1972 to 1993,
individuals employed in the occupation of child care worker
not in the child’s residence increased from 358,000 to 1 mil-
lion, (The trends of child care workers employed in the
child’s home were discussed in an earlier section, in connec-
tion with changes in the family.)

All the surveys show substantial increases in the day care
center industry or portions of it. Rates of growth range from
4 percent a year, in the case of the Census Bureau data, to 8
percent a year in the case of the broad industry series from
the household survey. The nis establishment survey’s indus-
try estimates, which are the primary source of employment
data for purposes of this article, increased by 6 percent annu-
ally, on average, from 1972 to 1994.

Outlook
Recently, the population of children has not only increased

Monthly Labor Review August 1995 9



Employment in Day Care

bursed for the balance. The total amount claimed each year
under this credit has increased more than five-fold since
1975, even after inflation, partially because of numerous re-
visions in the applicable tax rules, particularly in 1987, 1990,
and 1993. (See chart 2.)

While the credit does not specifically provide for day care,
the credit is often cited in literature concerning the financing
of the care of young children. Low-income families use day
care facilities; among children in families below the poverty
line in which the mother works, 18 percent attended orga-
nized day care facilities in 1991."

The Dependent Care Tax Credit benefits primarily a more
middle-income group of families; in 1992, this credit was
claimed to the greatest extent by families with incomes be-
tween $20,000 and $50,000, The credit can be claimed for
expenses incurred for the care of dependents if the care is
necessary for the taxpayer to be employed. After adjustment
for inflation, the annual amount claimed by taxpayers about
tripled from 1976 to 1988. In 1988, tax law changes re-
moved credit for the care of children over 13 and reduced the
amount of expenses that could be claimed; the aggregate an-
nual amount claimed by taxpayers suddenly dropped and re-
mained at roughly the same level through 1994, according to
projections. But the amount claimed in 1994 was still 85

percent above the 1976 level after adjustment for inflation.!
(See chart 2.)

Since 1981, certain employer-provided dependent care has
been excluded from an employee's gross income for Federal
income tax purposes. Such dependent care may be provided
in the form of on-site or nearby child care facilities, reim-
bursement of employees for child care expenses, or reimburse-
ment accounts that are also usable for other nontaxable em-
ployee benefits. Many employers offer such benefits; in 1993,
40 percent of full-time employees of medium and large pri-
vate establishments were eligible for reimbursement accounts
that could be used for dependent care.”

Private initiatives. Corporate and nonprofit organizations
have made significant efforts to provide day care. The orga-
nizations represent a diverse group, including major corpo-
rations and religious and other nonprofit organizations,
Employers sometimes operate their own day care centers
for employees and in other cases contract with a for-profit or
nonprofit child care organization. In at least a few cases, the
service also is made available to nonemployee community
members. Other companies reimburse parents’ expenditures
on day care or arrange discounts. Consortiums of employ-
ers, in some cases also including labor unions, have started

—aervee
creat. Employment in day care industry far outpaces factors influencing demand for child care
Percent chang in employment in cy care industry and in selected factors affecting demand for child care, 1975-94.)
Percent of Percent of
1975 level 1975 level
250 0 -| 250
200 |- -| 200
Day care employees fe
150 All nonfarm women employees | 150
== Working mothers with children under 6 a
400 }- U.S. population of children under 6 | 100
ou ! 1 an 1 L L Boe H ly
1975 1977 1979 1981 1983 1985 1987 1989 1991 1994
NOTE: Shaded areas denote recession from peak to trough, as defined by the National Bureau of Economic Research Inc.
‘SOURCES: Current Employment Statistics program; Current Population Survey; and Bureau of the Census P-25 series of publications.

8 Monthly Labor Review August 1995



but also accelerated in growth. Although future trends of
most of the forces that have driven employment in the indus-
try cannot be predicted with confidence, extensive popula-
tion projections are available from the Bureau of the Census.
These projections show a pattern of deceleration followed by
decline in the population of young children:

Time period Percent change in population
310 5 years old Under 6 years old
1983-88 .. 6.2 47
11 16
4B J
1998-2003.... ~29 -2.1

As can be seen, the recent relatively strong gains in the
most relevant age groups are forecast to decelerate by 1998;
these populations will fail by 2003.

While final Federal budget figures for fiscal year 1996
and later are not yet available, increases in Federal child-
care spending from 1994 to 1995 is expected to slow. Fed-
eral child-care spending on certain major programs jumped
by 84 percent in 1991 after expansion of the Joss Child Care,
Transitional Child Care, and Head Start programs, and cre-
ation of the “At-Risk” programs and the Child Care and De-
velopment Block Grants. Since then, the combined funding
of these programs and Project Head Start has been increas-
ing by about 20 percent annually. But in 1995, their com-
bined funding is to grow by only 3 percent.

Footnotes

Amounts claimed under the Federal Earned Income Credit
are projected to grow vastly, by 89 percent, from 1993 to 1996.
But even this growth represents a slight deceleration, as the
amount claimed increased by 91 percent from 1990 to 1993.75

These developments suggest deceleration in day care em-
ployment. The eventual decrease in the population of young
children suggests a greater deceleration or decline in em-
ployment in the industry. Although the percentage of work-
ing mothers of young children has leveled off in the last few
years, projections do not exist.

In sum, the number of workers in the private day care indus-
try has more than doubled since its employment was first
estimated in 1972, increasing by nearly 400,000 jobs. The
industry has been influenced by the increasing population of
children; the dramatically climbing percentage of job hold-
ers among mothers of young children, and among other
women; Federal, State, and local government spending on
child care; increased Federal tax breaks for families with
children; and many private initiatives to provide needed day
care, But at least two of these factors will not continue to
increase so rapidly, Federal spending on certain major child-
care programs is to decelerate from fiscal 1994 to fiscal 1995,
although it may possibly later accelerate. Growth in the U.S.
population of young children will decelerate in the next 5
years, and this population will start to decline by 2003. Asa
result, the industry is unlikely to sustain the rapid growth it
has experienced since 1972. oO

’ See Howard V. Hayghe, “Are women leaving the labor force?” Monthly
Labor Review, July 1994, pp. 37-39.

? Ellen Eliason Kisker, Sandra L. Hofferth, DeborahA. Phillips, and Eliza-
beth Farquhar, A Profile of Child Care Settings: Early Education and Care in
1990 (Princeton, ss, Mathematica Policy Research, Inc., 1991), vol. I, p. 212.

> Comparable estimates of total enrollees in day care for considerably
separated points in time will soon be available. The National Center for
Education Statistics of the U.S. Department of Education is conducting the
1995 National Household Education Survey, which, like the 1991 and 1993
surveys of that name, will generate an estimate of national enrollment in day
case, and many other statistics relevant to early learning.

* Kisker, Hofferth, Phillips, and Farquhar, A Profile of Child Care Set-
tings, vol. I, p. 208.

* Sandra L. Hofferth, April Brayfield, Sharon Deich, and Pamela
Holcomb, National Child Care Survey, 1990 (Washington, The Urban Insti-
tute Press, 1991), p. 31.

© Population figures in this article are from the Bureau of the Census P-25
series of publications and PPL-21.

National Child Care Survey, 1990, p.29.

* Statistics on working mothers in this article are from the Current Popu-
lation Survey. Results for time periods after 1993 are not comparable to

earlier results because of changes in methodology and population weights
used.

° Data from the Current Population Survey.

*© Donald J. Hernandez and David E. Myers, “Family Composition, Par-
ents’ Work, and the Need for Child Care among Preschool Children: 1940—
1987,” Paper presented at annual meeting of the Population Ass
America, New Orleans, 1987, p. 5.

" Data from the Current Population Survey. Data after 1993 are not
comparable to earlier data because of changes in methodology and popula-
tion weights.

® Lynne M. Casper, Mary Hawkins, and Martin O°Connell, Who's Mind-
ing the Kids? Child Care Arrangements, Fall 1991 (Washington, U.S. De-
partment of Commerce, Bureau of the Census, 1994), pp. 6, 7.

From Current Population Survey data.

"4 For further information, see Hayghe, “Are women leaving the labor
force?” pp. 37-39.

25 Jonathan R. Veum and Philip M. Gleason, “Child care: arrangements
and costs,” Monthly Labor Review, October 1991, p. 14.

"Information on Federal and other government programs from The State
of America’s Children Yearbook (Washington, Children’s Defense Fund, 1994),
pp. 29-32, The State of America’s Children 1992 (Children’s Defense Fund,
1992), pp. 15-22, and Child Care and Development Key Facts (Children's
Defense Fund, 1994), pp. 13-17.

*" Barbara Adolph, “Work and family benefits come of age.” Government

Monthly Labor Review August 1995 W



Employment in Day Care

ics, Bureau of
Statistics.

Boom in day care industry
the result of many social changes

The number of employees in the
day care industry has increased

at a much faster rate than working mothers;

five major factors are responsible

United States has changed dramatically

in the last 20 years. Because mothers of
young children are far more likely to work than
at any other time in the past, mother and child
now spend much less time at home.' Further-
more, far more relatives—particularly women—
also are employed, and have less time to spend
with nephews, nieces, young cousins, and grand-
children. For these and other reasons, young chil-
dren are more likely to attend day care centers.
During the 2 decades, employment in private-sec-
tor day care centers increased by more than 250
percent, gaining nearly 400,000 jobs and continu-
ing to grow during two of the four recessions in
the period. No single factor influencing the day
care industry and examined here has increased
as has employment in the industry. Instead, a
combination of at least five major factors drives
demand for the services of child-care centers.

William Goodman T he daily life of preschool children in the

Trends in day care jobs

Employment growth in the day care industry since
1972 has been much more rapid than the growth
of most industries: overall, the number of day care
jobs has grown by approximately 250 percent, or
375,000 jobs. Growth occurred almost through-
out the 22-year period, except for the early 1980’s,

during which two back-to-back recessions oc-
curred. From early 1979 to summer of 1982,
30,000 jobs were Jost in day care. Renewed
growth from fall 1982 to mid-1985 expanded the
number of jobs to above the preceding peak, and
strong growth has since continued. Unlike most
industries, child day care continued to expand vig-
orously during the recessions of 1973-75 and
1990-91. Explanations for these movements, in-
cluding the seemingly inconsistent behavior in the
various recessions, are discussed below.

Causes of growth

One way to begin an analysis of employment
growth in day care is to distinguish between
growth attributable to greater enrollment and the
effects of changes in the ratio of enrolled children
to staff. Fewer children per staff member generally
improve the quality of care. Consistent, regularly
timed estimates of the ratio of children to staff are
not available. But one publication calculates that
the average ratio of children to caregivers and
teachers in full-time centers (7 hours a day or
more) increased considerably, from 6.8 to 8.5
children per worker, between 1976 and 1990.?
Because a staff member supervised more children
in 1990, the change in the ratio pushed down
employment. If the ratio had remained unchanged,
employment in 1990 would have been greater by

Monthly Labor Review August 1995 3



Employment in Day Care

——_— —
cnt 2 Employment in day care industry far outpaces factors influencing demand for child care.
(Percent change in employment in day care industry and in selected factors affecting demand for child care, 1975-94)

Percent of Percent of
1972 level With increasing funding for Head Start comes rising employment in child care. 1972 tevel
375 375
300, {300
Day care employees
225 Y {225
180[ Head Start funding 150
75 75

ol
1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994

NOTE: Head Start funding amounts are deflated by the 1982-84-based CPI-U.

SOURCES: BLS Current Employment Statistics program and U.S. Department of Health and Human Services.

. . De
Real dollars The number of day care employees rises with Govemment spending employees
{in billions) for job-related services. {in thousands)
_—" z ] 600
4of =| 500
30 | 7] 400
20, } 300
r >} 200
10 |- J
L | 100
Store 1974 «1976 ~=«1978~—«1980 «1982 ~=«1984 +1986 ~«t988 +~«1900+~«1902~«tgon
NOTE: Shaded areas denote recessions from peak to trough, as defined by the National Bureau of Economic Research Inc.
SOURCES: U.S. Office of Management and Budget and BLS Current Employment Statistics program.

Dollars, in millions, Amounts claimed for Federal Eamed Income tax credits Dollars, in millions,
acs for Infaon and Dependent Care tax credits, 1976-94. sclsiog fr imation
12 12
10) Eamed Income Tax Credit 10
8 8
6 6
4 44
2 Dependent Care Tax Credit 2

t)
1976 1978 1980 1982 1984 1986 1988 1990 1992 7304"

NOTES: Amounts for the Eamed Income Credit are projected in 1992-96 and are preliminary in 1991. The Dependent Care Tax
Credit amounts for 1991 and 1992 are preliminary, and amounts for 1993 and 1994 are projected.
Dollars are deflated by the CPI-U, base period 1982-84.

SOURCE: Joint Congressional Committee on Taxation.
— — —

10 Monthly Labor Review August 1995



Employment in Day Care

household workers may be less desired by families than in
the past. Or, with much larger proportions of women enter-
ing occupations in the executive, administrative, managerial,
and professional specialty categories,” a smaller proportion
of women may be available for lower paying jobs, so house-
hold help may be harder to find.

Factors relating to cost and convenience

After 13 years of fairly steady and strong growth, the number
of working mothers with children under age 6, and those of
children from 3 to 5, seems to have about leveled off in the
1990’s.'* But the number of day care workers continued to
increase about as steeply as ever. (See chart 1.) Contrasting
trends also occurred in an earlier period: from 1979 to 1982,
as the number of working mothers increased sharply, the
number of day care workers declined. These contrasts indi-
cate that other factors have important effects on the number
of day care workers.

Certain developments have, in effect, lowered the price of
day care, making it more practical for some mothers of young
children to work outside the home. As a result, more young
mothers may have started working." In addition, among
working mothers and those who remain at home, these de-
velopments also may have increased the popularity of day
care centers relative to other available child care arrange-
ments.

Government funding. Several large Federal programs pay
billions of dollars for the care and education of young chil-
dren outside the home, and in some large programs, the funds
have increased greatly in recent years. The four largest Fed-
eral programs in this area totaled more than $5 billion in
fiscal year 1994.

Project Head Start is the most heavily funded of these pro-

grams, with 1994 appropriations of $3.3 billion. Local em-
ployment in Head Start is largely in the private sector be-
cause the program funds local private organizations and lo-
cal government agencies that perform the work. Head Start
is intended to provide comprehensive care for poor or dis-
abled children. Although the project began in 1965, the Con-
gress increased funding substantially in 1990 and continued
to increase it greatly in each subsequent year through 1994,
(See table 2.) Chart 2 compares the program’s appropria-
tions with growth in private-sector child care jobs.

In addition to Head Start, Federal spending was increased
significantly for young children in 1990 when, for the first
time, comprehensive legislation regarding child care was
passed. As in Project Head Start, Federal funds in other major
programs are ultimately used to a great extent to pay for the
services of private child-care organizations. The Child Care
and Development Block Grant, which began in 1990, pro-
vides funds to the States for care of the children of poor fami-
lies and to improve the quality of care. Approximately $2.5
billion was appropriated for the first 3 years, and, in 1993,
the fiscal-year funding rose from $825 million to $893 mil-
lion. Funding remained at that level in 1994.

The “At-Risk” Child Care Program also was created in
1990. It is designed to provide care for children of families
“at-risk” of becoming welfare recipients. States must pro-
vide matching funds to receive Federal money, which so far
has been available at $300 million annually.

The Family Support Act Child Care Programs started
slightly earlier, in 1988. The Federal government distributes
money to the States to provide child care for the children of
parents receiving Aid to Families With Dependent Children
benefits and working, looking for work, or in approved edu-
cation or training programs, as provided in the Job Opportu-
nities and Basic Skills (obs) program. The Family Support
Act also provides funds for care of the children of parents

IlSIAR Selected factors affecting demand for day care, by age group
(In percent)
Use of
Resident Mothers
day care Age group's
us. Percent ‘centers envlimentas.a who were employed!
Age group Ponanon. growth in 8 primary percentage of
dhousands)! popucnon. ‘arrangement, total day care
19902 enrolment, 19903 1975 1993
_ (percent)
41,705 17.2 12.0 22 28.3 49.0
11,906 15.8 291 52 539.6 558.3
23,611 16.5 206 74 33.2 62.3
14,975 3.0 ot a - =
38,586 82 159 96 - -

Data are trom the U.S. Bureau of the Census PPL-21 document.
Calculated from percentages in National Child Care Survey, 1990, p. 31,
‘and up-to-date population weights.
Calculated from percentages in preceding column and up-to-date popula-
tion weights.

Data are trom the Current Population Survey.
These mothers had no children under the age of 3.

Note: Dash indicates data are not available.

6 Monthly Labor Review August 1995



percent of actual growth. Clearly, changes in these popula-
tions are only a minor factor in the expansion of the industry.
Evidently, additional factors strongly affect demand.

Changes in the family. Children of working mothers are en-
rolled in centers as a primary arrangement for care nearly
twice as frequently as children of mothers without jobs. As
of 1990, if school is excluded as a child care arrangement, 17
percent of children younger than 13 with employed mothers
were enrolled in a center as their primary arrangement;
among children under 13 with mothers who did not hold
jobs, 9 percent were enrolled in centers as a primary arrange-
ment.’ The number and proportion of women at work have
increased greatly in the last 20 years, rising from 41 percent
in 1972 to 54 percent in 1993. (See table 2 and chart 1.)
The proportion of working mothers of children under 6 rose
by an even greater percentage: from 33 percent in 1975 to 53
percent in 1993. Mothers of children under 3 also greatly
increased their participation in employment, from 28 per-
cent in 1975 to 49 percent in 1993. (See table 1.)

In 1975, 16 percent of mothers with children under 6 did

not have a spouse in the household; in 1993, that proportion
increased to 26 percent.? One might expect that the absence
of a working husband from the household would be a major
explanation of why more mothers of young children are at
work, but mothers with a husband in the household increased
their jobholding far more. Between mothers of young chil-
dren who had husbands with them and those who did not,
the percentages at work were fairly close in the mid-1970’s;
but women with spouses present increased considerably in
percentage employed, while those without spouses present
increased only slightly in percent employed, Exact percent-
ages, derived from Current Population Survey data, are shown
in the following tabulation:

1975 1993
Mothers of children under age 6:
With spouse in household . 32 56
Without spouse in household . 42 44
Mothers of children aged 3 to 5:
With spouse in household . 37 60
Without spouse in household 49 55

Changes in needs and preferences that caused more of these
mothers to go to work affected the group with a husband in
the household far more than those without a husband. The
group with a spouse present also is much larger. Women
who live with their husbands, therefore, made the far heavier
contribution to the increased employment of mothers of young
children.

The number of working women in general also is impor-
tant as a factor in the demand for child care: not only moth-
ers but also other relatives who might be available to watch

children'® become unavailable as a greater percentage of the
population becomes employed. From 1972 to 1993, the over-
all employment-to-population ratio increased from 57.0 per-
cent to 61.6 percent. Although the employment-to-popula-
tion ratio of men decreased by 5 percent, the ratio among
women increased by 13 percentage points to 54:1 percent.
At the start of the latest post-recession period, from early
1991 to the end of 1993, job growth among women was great-
est among 45-to-54-year-olds. Seventy-two percent of women
in that age range were employed at the end of the period'! —
implying that a great many grandmothers and older aunts
are not available as they once were to watch children during
the day.

While comprehensive, clear statistics are not available to
show a shift from care by relatives to care in centers among
all children, the Census Bureau has estimated use of various
child-care arrangements by families with working mothers
and children under 5 in various years. The results indicate
that from 1977 to 1991, use of child care centers increased by
10 percentage points, from 13 percent of such families to 23
percent. Care by relatives other than parents dropped the
most, from 31 percent to 24 percent.

In addition, 1991 results appear to have been influenced
by the recession and the continued post-recession decline in
employment. An abnormally large number of laid-off rela-
tives may have been temporarily available to care for chil-
dren in 1991. Results from 1990, when employment was not
so abnormally depressed, may better typify the 1990's. In-
deed, 1990 shows more care in centers and less care by rela-
tives than in 1991. From 1977 to 1990, care in centers more
than doubled, increasing from 13 percent to 28 percent, as
opposed to 23 percent in 1991. The following tabulation
shows the primary child care arrangement in families with
children under age 5 and a working mother in selected years
(in percent):!?

1977 1985 1990 199]

Child cared for by—
Father.
Relative other than parent
Nonrelative in child’s home .
Nonrelative in another home
Organized facility
Mother at work

14 16 17) 20
31 24 «23024

7 6 5 §
22 22 20 «18
13, 23° 28-23
il 8 6 9

The drop in care by nonrelatives in the child’s home is
confirmed by the household survey’s estimate of child care
workers in children’s homes. This estimate shows a 37-per-
cent drop, representing a reduction of 200,000 workers from
1972 to 1993. The reduced use of child care workers in the
parents’ home is related to increasing demand for the ser-
vices of centers, but the relationship between the two trends
is not clear. The greater availability of child care centers
may decrease the need for household workers. Alternately,

Monthly Labor Review August 1995 5



Employment in Day Care

This article primarily relies on estimates of employment
in day care establishments from the Bureau of Labor Sta-
tistics monthly survey of employers. These statistics are
from the Current Employment Statistics program of BLs.
‘The ces program produces estimates of employees on all
nonfarm payrolls except in private households, based on a
monthly survey of about 390,000 work sites.

Data from the survey appear in the monthly BLs peri-
odical Employment and Earnings. ces data in this article
are seasonally adjusted unless otherwise indicated.

For purposes of the survey, this article uses the Federal
Office of Management and Budget’s Standard Industrial
Classification Manual’s definition of the child day care
industry, which includes private-sector “establishments
primarily engaged in the care of infants or children, or in
providing pre-kindergarten education, where medical care
or delinquency correction is not a major element.”

Including the education of the very young is appropriate,
because a definite line between care and education cannot
be drawn; many day care centers include education in their
programs, and in earliest childhood, play and learning
cannot be distinguished clearly.

This definition of the day care industry includes large
and small companies doing business for profit or for other
purposes, such as social good. Secular and religious non-
profit organizations and for-profit companies are included.

However, a few significant exclusions apply. Govern-
ment day care—for example, day care centers within pub-
lic school systems, or those provided by government agen-
cies for employees—is not included in the child day care

Scope of study

industry data presented in this article, unless a separate,
private organization performs the work of the center. In
addition, if day care is provided onsite directly by an em-
ployer for its own employees’ children, without the use of
a contractor but as a company-owned operation, the day
care personnel are not included. When care of children is
offered by an individual at their own residence, without
the use of any employees, the provider is not counted, as
the survey measures only employment on payrolls rather
than self-employed workers. Nannies and, in fact, all do-
mestic workers also are excluded from the survey.

Because of the various exclusions, the estimates being
studied do not represent all child care workers in the coun-
try. Trends in Government day care, child care provided
by employers for their employees’ children, care by do-
mestic workers in the child’s home, and care by entrepre-
neurs working in their own homes may not be exactly the
same as the trends of private-sector day care centers. But
an abundance of anecdotal evidence suggests that day care
provided directly by employers for their own employees’
children is growing fast.

Employment in the day care industry as estimated from
the survey includes not only employees directly caring for
children but all employees of day care companies. Ac-
cording to the sts Occupational Employment Survey, 8
percent of the child care industry’s employees are manag-
ers or administrators, 15 percent are clerical workers, 33
percent are teachers, and 25 percent are child care work-
ers. The remaining 19 percent are widely scattered among
a variety of other occupations.

110,000 in full-time centers alone.

Because fewer staff members now handle the same num-
ber of children, enrollment increases must account for the
employment of larger numbers of teachers and child care
workers in the industry. Consistent measures of total enroll-
ment of children in day care, at regularly timed intervals,
also are not available? However, an abundance of indirect
evidence indicates tremendous growth in enrollment. In ad-
dition, one source concludes that enrollment in full-time early
education and care increased from 900,000 children in the
mid-1970's to 3.8 million in 1990.4

Why enroliment grew

Several factors caused the growth in enrollment. Although
an increase in the population of children is the most obvious
cause, growth in the proportion of children who are in day-

4 Monthly Labor Review August 1995

care programs has had much more influence. The increas-
ing percentage of children in day care reflects large gains in
the number of their mothers who have jobs.

U.S. population of youngsters. In 1990, children 3 to 5
years old accounted for 52 percent of day care enrollment;
children under 6 accounted for 74 percent.’ (See table 1.)
While the growth in the populations of these age groups has
been gradual, at 1 to 3 percent annually, the aggregate growth
of children younger than 6 from 1972 to 1994 has been 3
million. (See table 2 and chart 1.) The number of 3-to-5-
year-olds increased by 1.6 million.®

If the ratio of day care center employees to all children
under 6 is held constant at the 1972 rate, the increase in the
population of youngsters under 6 implies relatively slight
growth in employment: 22,000 day care employees, or just 6