Continued high unemployment and early childhood programs, part II

As indicated in a previous post, the U.S. is likely to have continued high unemployment for many years. One way that early childhood programs may help in this situation is by helping to offset some of the negative effects of parents’ high unemployment on their children.  Another role for early childhood programs is in providing jobs in the short-term.

One interesting pattern in recent labor market reports of BLS is the weakness in government employment. For example, total government employment has been declining since October of 2010. This has offset some of the recent private sector job growth. The weakness in government is concentrated in local government, including the local government education sector.

Expanding early childhood programs immediately expands jobs. This job expansion is large enough that it offsets the negative effects of the increased taxes needed to pay for these programs.

A tax-financed expansion of early childhood programs will immediately provide additional jobs at a rate of approximately 1 additional job in the state economy for every $175,000 spent (see my 2006 report, p. 37).  This might be considered a high cost per job. However, we should take into account that these additional jobs provide useful services. In fact, we know that the present value of the increased earnings as adults of former child participants is 2 to 3 times the cost of these jobs. This short-term job creation, with a value that might be at least equal to the average compensation associated with these jobs, is an important bonus benefit of expanding early childhood programs, not their primary purpose.

A deficit financed expansion of early childhood programs would create considerably more jobs per dollar of public spending.  The Council of Economic Advisors estimates that deficit-financed direct public spending on services creates jobs at a cost of about $92,000 per job created.

The federal government might do even better in short-term job creation with incentives for public and private sector job creation. Such incentives might also include early childhood programs. I will come back to this subject in a future blog post.

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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