Opinion | Early childhood programs are key to a stronger Michigan post-COVID

Michigan is about to get its shot at investing in early childhood programs that could pay dividends for children, parents, and families for years to come.

The federal stimulus package passed by Congress and signed by President Joe Biden will provide the state with over $1 billion that could be used for early childhood programs, including cash for families with young children, high-quality preschool and childcare assistance.

For the past 15 years, I’ve studied the effects of such programs on individuals, families, and communities. The outcomes are clear. These programs have high returns for our economy. Investing in early childhood in Michigan would not only pay off in higher earnings for children down the road, but also produce higher earnings for parents right now, as we attempt to recover from the pandemic-recession.

To give Michigan families a road toward recovery, policymakers can start with a simple solution: provide extra income to all families with young children.

Research shows that every $1 invested in cash for families with young children will increase the future earnings of those children by $2. Refundable tax credits or cash grants have recently been proposed by the Biden Administration, as well as by Senators Romney and Bennet. These proposals call for providing $3,600 or more per year for children under the age of 6. This would mean that parents expecting a child in 2021 would receive a total investment of $21,600 over the next six years. And that investment in return would increase lifetime earnings for their child by over $40,000.

Preschool programs have an even higher return. Placing a child in a high-quality preschool program, with small class sizes and skilled teachers, costs around $10,000 per year. But if we invest $20,000 now for Michigan children to attend preschool at ages 3 and 4, we’ll increase the future earnings of our children by around $100,000. That’s a 5-to-1 return.

High-quality childcare also increases a child’s future earnings. Each $1 of investment in high-quality early child care increases a child’s future earnings by $2. Given the high ratios of staff to children required at early ages, five years of high-quality childcare, from birth to age 5, might cost $80,000. (This $80,000 cost includes the cost of preschool at ages 3 and 4 as part of the childcare and preschool package of services.) But it would boost future career earnings by $160,000.

Early childhood programs also pay off for parents. High-quality childcare, for example, allows parents to keep working or go back to school. A parent who works builds on-the-job skills, while a parent in school may upgrade to a better job. Either option increases the parents’ future earnings by a dollar per dollar of childcare spending. Childcare spending has a double dividend: $1 of spending boosts a child’s future earnings by $2, and their parents by $1, for a total 3 to 1 return.

Even just two years of preschool boosts parents’ labor force participation. Washington, D.C., has moved to universal preschool for all 3- and 4-year olds. As a result, the labor force participation of mothers with children under age 5 has increased by 10 percentage points.

Michigan can pay for these needed investments with federal stimulus assistance. And we can start now. The federal stimulus package passed in December 2020 provided sufficient funds for Governor Whitmer to propose a $370 million increase for childcare assistance.  And the just-passed relief package provides Michigan with over  $1 billion for additional child care supports. This stimulus package will also provide considerable additional funding for K-12 schools and for general state purposes, some of which can also be used for early childhood investments.

The bottom line: we should think of early childhood programs not just as a social service program, but also as an economic investment. If Michigan children grow up in homes with stable incomes and parents have access to high-quality care and preschool, our children will enter kindergarten with better academic and social skills.

As a result, children do better in kindergarten, which then helps them do better in first grade, and so on. This process of cumulative effects of early childhood investments eventually results in large effects on a child’s economic future.  

A state economic policy that is future-oriented should invest in our children’s well-being—for their sake and for the future of our state economy.