Estimating Changes in the Supply of and Demand for Child Care in Philadelphia (2019)

Estimating Changes in the Supply of and Demand for Child Care in Philadelphia Prepared by REINVESTMENT FUNDPublished APRIL 2020RESEARCH CONDUCTED BY Policy Solutions at Reinvestment FundIra Goldstein, President, Policy Solutions Jacob L Rosch, Senior Policy Analyst This work was supported by a grant from The William Penn Foundation. The opinions expressed in this report are those of the authors and do not necessarily reflect the views of The William Penn Foundation. Page 1 Estimating Changes in the Supply of and Demand for Child Care in Philadelphia Introduction In 2014, with support from The William Penn Foundation, Reinvestment Fund conducted an initial analysis of the supply of and demand for child care in Philadelphia to identify areas of the city where targeted investments could help address shortages of high-quality child care. Now in its fifth update, Reinvestment Fund’s 2019 childcare analysis provides updated estimates to track the change over time in the supply of, demand for, and shortages in child care. Reinvestment Fund’s Childcare Map is an interactive online tool, www.childcaremap.org, that makes the results of this work accessible to the public at no cost. The tool identifies neighborhoods where high-quality child care is scarce in absolute and relative terms, while also providing actionable information for funders, practitioners, and childcare advocates. This report presents the results of descriptive and spatial analyses of the child care landscape in Philadelphia in 2019. It details both short- and long-term changes in the supply of, demand for, and gaps in care; the year-to-year changes from 2018 to 2019, as well as shifts since the first analyses conducted in 2014. It is important to note that various factors could contribute to the observed changes. For example, demographic shifts and economic changes (e.g., rises in the level of labor force participation) can affect demand, operation cost can affect supply, and new policy initiatives and investments can directly impact gaps. To this last point, this analysis also presents the location of strategic investments made in facilities in high-gap areas through the Fund for Quality (FFQ). To assess the impact of FFQ investments on gaps between supply and demand, we will conduct subsequent updates to the childcare analysis in the years ahead. 2019 Key Findings • The gap in unmet demand for childcare has declined to about 12% in 2019. With a total supply of 97,943 and a maximum potential demand of 110,656, Philadelphia registered an absolute shortage of childcare capacity of nearly 12,713 in 2019. Absolute shortage measures the raw difference between supply and maximum potential demand, not accounting for parents that choose in-home or informal care arrangements. • Total Supply declined slightly along with demand from 2018 to 2019. The estimated total supply of childcare inched downward by 0.1% between 2018 and 2019, while the maximum potential demand declined by 2.1%. • High-quality supply continued to grow. The number of high-quality seats has continued to rise. About 2,060 new high-quality seats were added since 2018. The number of high-quality seats has increased by 10,072 since 2014. As a result, high-quality seats met 29.7% of demand in 2019, compared to 21.2% in 2014. • The most severe shortages in high-quality supply persist in specific neighborhoods. In 2019, the most severe relative shortages in high-quality child care continued to be in many of the same areas: parts of Northwest Philadelphia (Roxborough, Germantown); Eastwick and Cobbs Creek; the River Wards (Kensington/Fishtown, Port Richmond); several neighborhoods in the Northeast (Bustleton and Holmesburg). Shortages narrowed in Northern Liberties/River Wards, South Philadelphia, Strawberry Mansion, Somerton and Chestnut Hill. Page 2 Estimating the Supply of Child Care Beginning in 2018, Pennsylvania’s Office of Child Development and Early Learning (OCDEL) altered the Keystone STARS rating system to change how programs are rated and to remove the “Not STAR Rated” designation. Going forward, all sites formerly classified “Not STAR Rated” will be reclassified as 1 STAR. Additionally, changes to how programs can achieve a high-quality rating have the potential to increase the number of high-quality rated sites in Philadelphia substantially. While the results of that change were not apparent in 2018, they began to be evident in 2019.1 Table 1 presents the changes over time in the number and share of seats in total, certified, and high-quality providers across the city. In 2019, there was an estimated supply of 97,943 childcare seats.2 Since 2018, the total supply of childcare declined by 130 or 0.1%. Between 2014 and 2019, the total supply of child care increased by 7,554 seats or 8% from 90,389 to 97,989. Table 1: Estimated Supply of Total Child Care3 2019 Childcare Analysis Change from 2018 Change from 2014 Total Seats Share of