Child Care and the Economy

It is generally accepted that a strong economy is based on high levels of employment with rising wages that can support positive trends in consumer spending.  This is where we were last January.  Going forward, it is important to remember that the U.S. economy is highly dependent on consumer spending.  Historically, fluctuations in consumer spending were primarily driven by the outlook for employment.  Today, even though the outlook for jobs and wages is relatively positive, many workers are unable to go to work.  This is a problem for the individual, the employer and the economy.  If you can’t go to work because schools are closed for in-person classes and day-care is more expensive and harder to find, you won’t be getting a paycheck and your employer will be scrambling to maintain schedules.

Employers are working to develop strategies that will help employees to come to work.  Some have been experimenting with on-site child care and/or helping employees to find and afford other child care arrangements.  Taking the issue of parenting, child care and education further, Toyota, at its Georgetown, KY car plant, has contracted with Bright Horizons Family Solutions, Inc. to conduct a virtual-learning center where the children use laptops to do schoolwork while in-person teachers monitor their progress.

Investors should recognize that corporate America has a long history of innovative solutions and those that do it best, are likely to benefit the most.  It should be noted that all of this is going to be much more difficult for smaller companies.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA