Early Childhood Education Market Size
In 2015, the most recent year for which data was available, the market size for early childhood education in the United States was estimated to be around $70 billion. While a definitive market size for 2017 could not be found, the total annual revenue of the early childhood learning centers industry in the United States was $12 billion, according to IBISWorld. Below you will find an overview of the industry, outlining some key players and industry trends.
IBISWorld reports an estimated 19,461 businesses involved directly in early childhood learning centers market, with over 230,000 separate early education facilities (including state-funded public education facilities) in the United States employing between 200,000-400,000 workers. The industry shows low market share concentration, with key players capturing most of the industry revenue. Three key players are: Bright Horizons Family Solutions, KinderCare Education, and Learning Care Group. The early childhood education market includes three main facility types: daycare centers, home care centers, and school-based programs.
In the last few decades, the early childhood education market has seen growth, due to the increased number of families where both parents work outside the home and increased understanding of the benefits of early childhood education. Research has shown that the early childhood education market is influenced by maternal labor force participation rate and per capita disposable income.
In recent years, the industry saw a slight dip in performance due to high unemployment in 2012 following the recession and low per capita income, with an annual growth rate from 2012-2017 at 2.9%. As the effects of the recession subside and unemployment decreases, the industry should see continued growth. Increased state funding should also lead to growth.
The IBISWorld report identified the following three factors as most important for success in the early childhood education market:
— Ability to attract local support/patronage
— Ability to take advantage of government subsidies and other grants
— Having a good reputation
Additionally, it has been found that approximately half of Americans (across the 22 states studies) live in "childcare deserts", where there is little access to quality childcare. This includes 61% of the state of New York, and 62% of the state of California. This signals opportunities for industry growth in these untapped markets.
A 2015 Washington Post poll found that "more than three-quarters of mothers and half of fathers had passed up work opportunities, switched jobs, or quit their job due to a lack of paid leave or child care." A 2016 study by NPR, Harvard, and the Robert Wood Johnson foundation also found that "roughly two-thirds of parents said they had 'only one' or 'just a few' realistic child care options."
A 2017 study from the Center for American Progress found that while affluent areas have seen an increase in childcare centers due to demand, "many neighborhoods, small towns, and rural communities across the country have inadequate child care options." Yet the divide around income is not all that great - 54% of below average income earners and 47% of above average income earners live in childcare deserts, according to the Center.
Minorities, including Hispanic/Latino and American Indian and Alaska Natives (AIAN) "are disproportionately represented in child care deserts, with roughly 60 percent of their combined populations living in areas with a low supply of child care. More than 75 percent of the rural AIAN population lives in a child care desert." The Center also found that "according to research published by the U.S. Census Bureau, one-third of children under age 5 are regularly in nonrelative care [and in underserved communities] there may be child care waiting lists, unlicensed child care arrangements, or effects on parents’ employment decisions."
In conclusion, the US market size for early childhood education was estimated to be $70 billion in 2015, but an IBISWorld report offers a much more conservative 2017 estimate of $12 billion. With roughly half the country living in childcare deserts, including 61% of New York and 62% of California, there appears to be a tremendous opportunity for growth in this industry.