(The Center Square) – Michigan is one of the most-expensive states in the nation for child care, leading some to label it a “crisis” for parents, who are increasingly choosing to opt out of it.
A new report from the Committee for Economic Development found there are 23% fewer children in paid child care throughout the state, decreasing from 400,807 in 2019 to 306,595 in 2022. It is unlikely that just one factor is contributing to those decreases.
“It is unclear whether families with children not using paid care prefer other arrangements, cannot afford child care amidst other household expenses, or the supply of child care in their community falls short of meeting the need,” the report said.
On top of that, the number of child care centers in Michigan has significantly decreased in the aftermath of the COVID-19 pandemic.
One alternative that parents might be choosing is turning to other family members for child care.
A recent survey from the University of Michigan found that grandparents are actually the most common providers of child care, with “25% of older Black Michiganders saying they provide daily or near-daily care to a grandchild or grandchildren.”
That is about 5% higher than the national average of all grandparents.
Yet, it’s not all bad news for the workforce in the state. Even though there are fewer children in child care facilities, labor force participation of mothers has actually increased from 2020 to 2022.
This comes despite the increasing costs for child care. According to the Economic Policy Institute, infant care for one child would take up 19% of a median family’s income in Michigan. The average annual cost of infant care is $10,861, or $905 per month.
That makes Michigan one of the top 20 most-expensive states in the nation for child care costs.
This means the child care industry remains an important part of the state’s economy.
“The data presents a compelling case for viewing child care as critical economic infrastructure,” said Cindy Cisneros, vice president of CED. “States with better child care access show higher workforce participation, higher household incomes, and lower poverty rates—demonstrating that investments in child care yield significant returns for both families and the broader economy.”
In Michigan, the child care industry generated a record $1.7 billion in revenue in 2022 while directly employing 34,000 workers.
Downstream from the industry, its economic activity triggered an additional $2.1 billion in other spillover industries.
Yet, the industry did see a significant decline in centers throughout the state following the pandemic.
Between 2019 and 2022, the number of child care centers decreased by 150, while the number of home-based child care businesses decreased by 1,613. As of 2022, that left 16,527 child care businesses open in Michigan.
Even with this decline in centers and families participating, revenue, employment and wages have all increased in the industry.
It is likely that those increases are partly due to an influx of pandemic funding from the federal government.
Between March 2020 and March 2021, Congress provided $1.5 billion in supplemental child care funding to Michigan to “enable programs to remain open with a reduction in child enrollment.”
It’s unclear what will happen to the industry now that the money is gone, which happened in September.
“At this time, it is not possible to know if these industry gains will remain after the supplemental federal child care funding has been spent,” CED reported.
