U.S. Census Bureau

State Estimates of Child Care Establishments: 1977 - 1997

By Grace O'Neill and Martin O'Connell

Population Division
U. S. Bureau of the Census
Washington, D.C. 20233

August 2001

Working Paper Series No. 55

DISCLAIMER:

This paper reports the results of research and analysis undertaken by Census Bureau Staff. It has undergone a more limited review than official Census Bureau publications. This report is released to inform interested parties of research and to encourage discussion.


Table of Contents

Population Division Working Papers


Abstract

The demand for information on the availability of child care centers and providers has become increasingly more important in the past few decades due to the steady increase of women with young children entering the labor force in the United States. It has also become vital to understand such transitions in child care on the state level since both policy and funding issues are most clearly defined and financed at the subnational level.

Most Census Bureau surveys provide little state-wide information for two reasons: the sample sizes are not robust enough to provide state level information and Census surveys such as the Survey of Income and Program Participation are household-based population surveys which provide information about people using child care but not about the characteristics of child care centers as business establishments--for example, if they are incorporated, payroll information and the numbers of establishments per children in each state.

This poster session utilizes newly released information from the 1997 Census of Service Industries, which presents data on all state child care establishments that have filed Federal Income tax forms. These data are for three main types of establishments including: (1) nonemployer business (e.g., individual proprietorship); (2) establishments with an employee payroll that pay income taxes (e.g., a for profit child care center); and (3) establishments with an employee payroll that are tax-exempt (e.g., a non-profit based center). Nonemployer statistics were first collected in the 1987 round of censuses. Note, the primary focus of these establishments is on care of children under the age of five where medical or delinquency correction is not a major component. They do not include baby sitting services provided in the child's home by housekeepers or Head Start programs.


HISTORICAL TRENDS

In order to place the current data in proper perspective, the poster session first traces the growth of the three types of child care of establishments since 1987. An important finding of this study is that of the 550,000 child care establishments that filed Federal Income taxes in 1997, the vast majority (89 percent) are not large scale centers with payrolls but rather businesses without any employees. This shows the importance of small child care establishment as a component of child care supply that millions of families have come to depend upon. In addition, it is important to note this component in any study of formal child care arrangements or center-based establishments. Nonemployer business establishments were also the largest component in the two prior censuses. The largest growth period in nonemployer establishments occurred between 1987 and 1992, with significant leveling by 1997.

From a longer perspective for which data are available, employees in child care establishments have fared very poorly over the past 20 years. The average payroll dollars per employee in 1997 was $11,076, which is $548 less than in 1977 (in 1997 dollars). The overall increase in income for all female wage earners during this period was from $12,681 to $16,849 (these data are from the March Current Population Survey). Between 1982 and 1997, wages for all female workers increased by 79% (from $13,366 to $16,849) compared with only an 11% increase (from $9,690 to $11,076) for child care employees. Although the majority of workers suffered during the high inflation period of the late 1970's, employees in the child care industry never fully recovered.


CORRELATES OF CHILD CARE

We next examine how state child care center levels vary by potential competitive sources of child care providers, including other adult relatives living in the household, local teenagers neither in school nor in the labor force, and the number of private household workers, all of which may affect the supply and demand for different child care arrangements. Other general characteristics such as the level of female labor force participation, the availability of foreign-born workers as potential low-cost child care providers, and the proportion of children living in poverty may also be related to changes in child care arrangements. The potential alternative suppliers of child care assistance may lessen the need for more formal child care centers and providers. These statistical indicators, obtained from the 1990 Census of Population and Housing, were correlated with establishment ratios per 1,000 children under 5 years of age derived from the 1992 Census of Service Industries only because of their close proximity in observational time.

Not unexpectedly, it was found that states which have relatively high female labor force participation rates are also those with high ratios of child care establishments per 1,000 children. It was found that lower establishment per child ratios were found in states which have higher proportions of these alternative sources: (1) foreign born workers; (2) women employed as private household workers; (3) teenagers neither employed nor in school; and (4) households with related adult members. States with relatively high proportions of children in poverty, whose families may not be able to pay for child care centers, also had relatively lower establishment per child ratios.


STATE VARIATIONS IN CHILD CARE ESTABLISHMENTS

Data from the Census of Service Industries indicate that the highest ratios of child care establishments per 1,000 children under 5 years of age are in the Midwest and Central states with North Dakota having the highest establishment ratio for all three Census years, 1987, 1992, and 1997. In general, child care centers seem less available to families in the South, but also in some Northern states, especially New York and New Jersey where factors such as the ability of families to pay for child care and the availability of in-home workers can account for regional variations in the supply of child care centers.

Most of the variation in establishment ratios is due to differences in the nonemployer business component of the index. Payroll based centers varied little among the states by less than 10 per 1,000. However, nonemployer ratios varied between 10 per 1,000 and 80 per 1,000 children in 1997. For the prior censuses, nonemployer businesses also had the dominant role in overall state variation.


CHANGES IN CHILD CARE ESTABLISHMENTS, 1987-1997

Overall, the ratio of child care establishments per 1,000 children under five years doubled from 15 per 1,000 in 1987 to 29 per 1,000 in 1997. Most of this increase occurred among nonemployer businesses, which rose from 12 per 1,000 in 1987 to 26 per 1,000 in 1997. While all states experienced net increases per 1,000 for 1987-1992, only 58 percent of states continued experiencing net increase over 1,000 between 1992-1997. Midwestern States, again, seemed to have experienced the greatest growth in establishment ratios.

There are other considerations which have not been measured in this study which could influence the overall growth in child care establishments, especially those initiated by single owner businesses with little capital or staffing. These would include local regulations regarding training, housing, and insurance requirements for child care centers. Geographical issues such are closeness and trust in neighborhood care providers. Also included would be financial assistance provided both to small businesses and to families in order for them to pay for center-based care, whether they are large child care centers for family day-care providers. While the data in this study does tough upon other important issues such as the quality of the care being provided, it does point to significant imbalance in types of center-based arrangements available to families in different areas of the country.

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Source: U.S. Census Bureau, Population Division,
Fertility & Family Statistics Branch

Authors: Grace O'Neill and Martin O'Connell
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Created: August 2001
Last Revised: October 31, 2011 at 10:03:10 PM
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