Licensed Child Care Facilities in Southeast Missouri Boosting Region by $589 Million Annually

While your child is learning his ABCs and 1,2,3s at your local child care facility, he also is contributing in a big way to the economy in Southeast Missouri.

This is the conclusion of a recent study on the economic impact of licensed child care in southeast Missouri completed by two Southeast Missouri State University professors of economics and finance, and a group of Southeast students. Their findings indicate the existence of licensed child care centers in southeast Missouri have an overall economic impact of $589 million annually.

“By any measure . . . ,” the report states, “the child care industry plays a large and significant role in the economy of southeast Missouri.”

The study was conducted by Dr. Rebecca Summary, chair of the Southeast Department of Economics and Finance, and Dr. Bruce Domazlicky. Assisting were students Marcus Birk, a senior finance major from St. Peters, Mo.; Arjun Kapur, a senior integrated marketing major from Cape Girardeau; and Eric Wittenauer of Hecker, Ill., a fall 2003 graduate of Southeast.

The researchers say the child care industry in southeast Missouri is made up of over 3,250 employees and serves 24,169 children weekly in 540 state licensed child care centers. The researchers surveyed licensed child care centers in southeast Missouri with a set of seven questions covering all areas of expenditures and other required information. The survey gathered information on number of employees, number of hours the average employee works, number of children served by a particular facility, number of  child care hours provided  and average revenue earned per week.

The researchers received feedback from 120 facilities. Results were compiled for each field in the survey and then divided with the total number of responses to generate an average. The average was then used to estimate the total for all 540 licensed child care centers.

The data were imported into a computer program to measure multipliers, and the direct and indirect impact the industry has on the rest of the community. Multipliers are used to describe the total effect of dollars as they are circulated in the economy. An input-output model is designed to represent links between various sectors of the economy, so that when one sector expands, it has predictable effects on other sectors that may supply inputs to the expanding sector.

According to the study, the child care sector adds 3,884 workers to the labor force in southeast Missouri, which is 1.1 percent of the total employment in the 20-county region. Perhaps even more important, the researchers suggest, is that the existence of child care allows a family member to enter the labor force who might not otherwise be able to work. The study pegs that figure at 16,112 workers. This represents another 5 percent of the labor force in the region.

If the average salary of one of those workers is roughly $25,000 that would be lost if a parent was to stay home with a child, personal income in the region would drop $391 million, which is 2.3 percent of the region’s total personal income, according to the study.

Total personal income generated by the child care sector amounts to almost $52 million on an annual basis, according to the study. This figure includes the income earned by the employees in the sectors as well as the income generated by the spending of the employees and by the centers. If this figure is added to the lost personal income if some family members were unable to work in the absence of daycare, total personal income in the region is over $390 million higher due to the existence of child care centers in southeast Missouri.

According to the study, the revenue from the child care centers in southeast Missouri plus the overall effect, or output, generated by payroll and other spending total over $117 million annually. If these centers did not exist and a parent or single parent was required to stay home to tend to children, the region’s total output (personal income) would drop by almost $589 million, the study says.

“These conclusions show the obvious impact that the industry has on the greater community,” the study says. “It is an integral part to making the community survive and expand as the region experiences change and growth.”

The study also indicates there are about 3,250 employees in the child care industry in southeast Missouri. The spending by these employees generates another 380 jobs in the region and adds an additional $12.6 million to the region’s personal income. The overall output effect generated by the payroll spending of child care workers totals $41.7 million annually.