Continued high unemployment and early childhood programs, Part I

Last Friday’s monthly labor market report from the U.S. Bureau of Labor Statistics yielded disappointing news. The unemployment rate ticked up from 9.0% to 9.1%. Job growth was only 54,000 jobs. This is less than the approximately 125,000 job growth per month that is needed to keep up with population growth. The employment to population ratio stayed the same at 58.4%. The employment to population ratio is actually 0.3 percentage points lower than it was in May of 2010.

Based on these numbers, the Hamilton Project of the Brookings Institution projects that it will be many years before the U.S. labor market gets back to non-recessionary employment conditions.  If the economy consistently generates job growth per month equal to the best year of the 1990s, we will get back to pre-recession labor market conditions by 2016. If the economy consistently generates job growth per month equal to the best year since 2000, we will get back to pre-recession labor market conditions by 2023. My own guess is that a return to pre-recession labor market conditions is more likely to be closer to 2023 than to 2016.

What implications does continued high unemployment for perhaps the next 10 years have for early childhood programs? I think the implications are two-fold. First, early childhood programs are one effective way of minimizing some of the long-term consequences for children of prolonged labor market distress of parents. Second, early childhood programs are one of many effective ways of generating jobs now.  I will address the first of these implications in today’s post. I will deal with the second in later posts.

As Steve Barnett of the National Institute for Early Education Research has pointed out, we know that high unemployment for parents is reflected in their children having more labor market problems as adults. From research by Greg Duncan and his co-authors, we know that parental income during early childhood is more important in determining a child’s future labor market outcomes than parental income when the child is older.

High-quality early childhood programs are an effective way of improving adult labor market outcomes for former child participants. The rate of return to early childhood programs is likely to be particularly high if the child is more likely to otherwise have more serious adult labor market problems. Therefore, this prolonged recession is likely to mean that investing NOW in early childhood programs will have an even higher rate of return. This higher rate of return is because the programs are more needed to offset the negative effects on children’s future earnings of their parents’ high unemployment and other labor market problems.

About timbartik

Tim Bartik is a senior economist at the Upjohn Institute for Employment Research, a non-profit and non-partisan research organization in Kalamazoo, Michigan. His research specializes in state and local economic development policies and local labor markets.
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