An image representing early child care and education.
An image representing early child care and education. Credit: Element5 Digital / Unsplash Credit: Element5 Digital / Unsplash

Economists have long recognized the many economic benefits arising from accessible, quality child care. Past research has proven that child care supports economic performance in several ways.

First, there is a direct boost to economic activity and employment from the operation of child care services. This includes direct jobs in child care centres, but also the many spin-off jobs created by these investments: including ‘upstream’ in the supply chain that feeds into child care operations (everything from construction to utilities to equipment and toys to business services), and ‘downstream’ (through consumer industries stimulated by new spending power of child care workers).

Then there is the economic dividend that comes from increased female labour supply, as women are supported to better balance paid work with caring duties at home. This is experienced via improved labour force participation by women, and also a greater opportunity to take on full-time (rather than part-time) work.

In the long run, there are huge economic benefits from improvements in life achievement for children who receive high-quality education early in life. Documented effects include superior outcomes for child care graduates in further education, employability, earnings, and health.

Now we have a chance to test those theories in real-time, as Canada’s new national early learning and child care (ELCC) program comes into effect. Happily, hard statistical evidence shows that child care does indeed boost the economy, in all those ways.

Canada’s new $10-per-day national early learning and child care (ELCC) program began rolling out in 2022. It has increased the number of regulated child care spaces in Canada, and significantly reduced (by over 50 per cent in most provinces) the fees paid by parents.

While it is still early in the new program’s history, it is clear that major economic benefits are already being harvested. Here are some of the key outcomes visible in the economic data:

Job-creation: Employment in ELCC services has grown by over 40,000 positions since 2019. Child care has been the sixth largest source of new work in Canada since 2019 – producing far more new work than other sectors (like resources or manufacturing) that are typically assumed to be the main ‘drivers’ of the economy.

Earnings: Increased funding under the national program, combined with federal-provincial agreements on wage grids, training, and workforce retention, are supporting increased wages for ELCC workers. Average weekly earnings have increased 28 per cent in the last five years.

Hours of work: Another sign of improving job quality in the ELCC sector is the growing prevalence of full-time work for child care workers. Average hours grew by 6% (or almost 2 hours per week) between 2019 and 2024.

Aggregate earnings: Thanks to more jobs, higher wages, and longer hours, ELCC workers will take home over $8 billion in wages and salaries in 2024 (up almost two-thirds from under $5 billion in 2019). That in turn supports stronger consumer spending in many thousands of households.

Female labour force supply: Female labour force participation has grown notably, supported by the expansion of ELCC services. Through both higher labour force participation and a greater incidence of full-time work for women, female labour supply in the core parenting age cohort (25 to 54) has grown by 175,000 positions since 2019.

Economic growth: Direct GDP in the ELCC sector will exceed $11 billion in 2024, a strong increase from 2019. Further GDP gains are produced by supply chain purchases by ELCC centres (including construction and renovation of facilities), downstream consumer spending by newly-hired ELCC workers, and production from increased female labour supply. All told, some $32 billion in additional GDP was generated in 2024 from the combination of increased direct ELCC production, indirect (upstream and downstream) spin-off jobs, and increased female labour supply. 

Avoiding recession: In fact, the strong growth of ELCC services (and its indirect effects, such as improved female labour supply) likely prevented Canada from experiencing a ‘technical recession’ in the second half of 2023. Without the stimulus from expanded child care, Canada’s GDP would have shrunk for two consecutive quarters in 2023, meeting the traditional threshold for a recession.

Fiscal benefits: Federal and provincial governments collect a significant share of new GDP through existing tax channels (including income, sales, and corporate taxes). So the $32 billion boost to national output arising directly and indirectly from expanded ELCC is contributing several billion dollars to annual government revenues – likely more than the national program is costing.

Inflation: The average cost of child care services to Canadian consumers fell 28% between 2021 and 2024 – in contrast to the 13 per cent increase in overall consumer prices experienced in the same time. As the biggest ELCC cost reductions were being introduced in 2022 and 2023, ELCC price cuts measurably reduced national inflation – likely hastening the Bank of Canada’s interest rate cuts.

Thanks to these varied economic and fiscal benefits, universal ELCC is a public program that quite literally pays for itself. It is important to highlight these concrete economic benefits, because the national program is still a target for right-wing opponents. They would like to roll back or eliminate the program (in the event of a future change in government at the federal level), both to reduce federal spending, and to foster more private child care (which provides both inferior care and inferior jobs).

Providing high-quality, accessible ELCC is essential for the well-being of kids, women, families, and the national economy. Hopefully this evidence will help prevent Conservatives, both provincially and federally, from going backward on this essential service.For more information on the economic benefits of $10-per-day child care, please see the new report, Powering Growth: Economic Benefits from Canada’s $10-per-day Early Learning and Child Care Program, jointly released by the Centre for Future Work and the Child Care Now coalition.

Jim Stanford

Jim Stanford is economist and director of the Centre for Future Work, and divides his time between Vancouver and Sydney. He has a PhD in economics from the New School for Social Research in New York,...