What are the costs of a full-scale commitment to early childhood education?

In my new book, From Preschool to Prosperity, I outline a specific proposal, backed by research, for a full-scale early childhood program. This program consists of three components: (1) universal full-day pre-K for all 4-year olds; (2) income-targeted full-time, full-year child care and pre-K from birth to age 5 for all disadvantaged children, similar to today’s Educare program; (3) income-targeted Nurse Family Partnership home-visiting/parenting services for all first-time disadvantaged mothers.

After allowing for pre-K and child care services we are already providing through the federal government and state governments, the net annual cost of each of these components would be: (1) universal pre-K, $25 billion per year; (2) targeted child-care, birth to age 5, $58 billion per year; (3) NFP, $4 billion per year. Although these numbers add up to $87 billion, there is some overlap if all three components were funded, for example the pre-K at age 4 for disadvantaged children is part of both component (1) and component (2). Adjusting for this overlap, the net cost of the entire package would be $79 billion.

$79 billion is obviously a lot of money. But the amount represents only 2 percent of total federal, state and local taxes. Alternatively, this amount represents about 13 percent of what is currently spent on public K-12 education. Therefore, this $79 billion in annual spending represents a considerable but not outlandish increase in our investment in education, at a tax cost that is a modest increase in the overall tax burden.

The costs of this $79 billion in annual investment would be considerably outweighed by the benefits. This proposal would annually provide pre-K to 3 million 4-year-olds, and child care services to an additional 3 million children ages 0-3, along with NFP services to about 1 million families. The future earnings benefits for former child participants would have a present value of between 2 and 3 times the costs of this investment, so the package would be worthwhile for these direct benefits alone. Earnings benefits for parents from the free child care and the home-visiting services would by itself have a present value of about one-and-a-half times this investment, so the package would even be worthwhile if there were no benefits for child participants. Finally, the evidence suggests that the spillover benefits of the greater skills of former child participants and their parents on the wages of other workers would more than double overall benefits, as argued in a previous blog post. Overall, the package’s benefits should exceed 10 times its annual costs, simply in terms of increased earnings for the economy. And this does not count any benefits from reduced crime, which would be quite likely to be large.

Early childhood education at full-scale is not cheap, but is affordable. Among policy alternatives for boosting the long-run growth of the economy, early childhood education has some of the best evidence of high benefit-cost ratios that more than justify full-scale investment.

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.
This entry was posted in Early childhood program design issues. Bookmark the permalink.