A report shows that interventions early in life have a higher rate of return.

A report shows that interventions early in life have a higher rate of return.

The Institute for a Competitive Workforce (ICW), a nonprofit affiliate of the U.S. Chamber of Commerce, has issued a new report called “Ready, Set, Go: How Business Should Support Early Childhood Education.” The report makes a compelling business case for why U.S. companies should invest in early childhood programs in their communities.

“Research shows that investments in high-quality early learning programs for children from birth to age five yield high returns, including increased earnings and decreased use of social services,” said Karen Elzey, vice president of ICW. “Achieving a world-class education system and creating a highly-skilled workforce begins with high-quality early learning opportunities.”

Interventions early in life have a higher rate of return than later interventions, the report says. It cites research showing gains among participants of early childhood programs so significant that “they have resulted in positive outcomes through adulthood.” Specifically, participants in early childhood education were less likely to be involved in criminal activity or be arrested; less likely to rely on social services, such as welfare; less likely to have children out of wedlock; and more likely than nonparticipants to earn more, own a home, or own a second car.

“Arthur J. Rolnick, then-senior vice president of the Federal Reserve Bank of Minneapolis, and Robert Grunewald, associate economist, calculated an annual, inflation-adjusted rate of return of 16 percent for high-quality [early childhood education programs] for disadvantaged three- and four-year-olds,” the reports says. “These returns are based on long-term educational, social, and economic benefits, including increased earnings and tax revenues and decreased use of welfare and other social services—resulting in lower expenses for states and communities.”

A wealth of brain research concludes that early childhood education programs have a profound impact on children’s cognitive, social, and emotional development. In fact, the first five years are the most critical in the development of a child’s brain, the ICW’s report states.

“Unfortunately, many children who do not participate in high-quality preK or early childhood programs are in general not fully prepared to begin school,” the report notes. As a result, achievement gaps develop well before children begin kindergarten—and research shows that students who begin school behind have a tendency to remain behind throughout their academic careers.

Giving young children a strong start early on can help counteract disadvantaged environments, the ICW argues, adding: “A high-quality early childhood education can help break the cycle of poverty.” And that, in turn, has enormous implications for future workforce development and the nation’s global competitiveness.

The ICW report shows how communities from several states, including California, Minnesota, North Carolina, Washington, and Virginia, have collaborated with state and local chambers of commerce and businesses to address early childhood education. It also encourages business leaders to take the following steps to support early childhood programs:

• Support a mixed provider delivery system that takes advantage of public, private, and nonprofit providers and their various settings.

• Encourage alignment between the early learning system and the K-12 system.

• Promote early learning policies as part of the community’s economic development agenda.

• Encourage the inclusion of early childhood data in statewide longitudinal data systems.

• Encourage states to adopt a Quality Rating Information System to distinguish between high-quality early childhood programs and those that need improvement.

• Encourage business organizations and networks to adopt a policy position in support of public investments for effective, high-quality early childhood programs.

“Early childhood education is not only a smart investment with positive returns, but it is the right thing to do. Our nation cannot afford the cost of inaction,” the report concludes.

“With current early childhood education resource levels, too many kindergarteners will continue to begin school ill-prepared, language skills and achievement scores in math and reading will likely remain at mediocre levels, costs for interventions during the K-12 years and after will continue to rise, high school graduation rates and postsecondary degree completion rates will likely remain unchanged, and businesses will lack the necessary workforce to fill the jobs of the future.”


Institute for a Competitive Workforce