By Sarah F. Small and Debra Lancaster



Failing childcare markets have been detrimental to the US economy in recent years.[1] We have examined the childcare crisis in New Jersey from both the supply side and the demand side. Our studies have found that needs for market childcare have grown across the state, but at the same time, childcare markets have been slow to recover from COVID-19 and have yet to reach their pre-pandemic capacity.

In our newest brief, we walk through some of the data analyses involved in calculating childcare market supply and demand models and provide rough county-level supply and demand estimates for center-based childcare in New Jersey. We discuss data limitations and use this brief as an opportunity to identify key components of data collection that the state should be focused on if they are serious about understanding childcare markets. The brief concludes with tailored recommendations for each county as they look ahead to the future of their childcare markets.

Demand-side calculations. We begin by establishing estimates of licensed, center-based childcare demand by families in New Jersey counties. To examine county-level childcare demand, we offer a number of estimates. First, as an upper-bound estimate, we use American Community Surveys (ACS) data to calculate the number of children under age six in each county who have all available parents in the labor force. We then adjust this number by parent commuting trends in order to account for parents who prefer their children be cared for near their work, but work out of their county of residence.

These figures provide a simple upper bound of childcare demand estimates based on county residency. However, parents’ labor force decisions are often made endogenously with decisions about childcare: a parent may choose to leave the labor force should childcare be inaccessible or unaffordable. Therefore, this figure could be improved with primary data collection on parents’ preferences given the availability of childcare. Namely, would parents prefer to stay home with their children or would they prefer to send their children to paid care if an affordable, high-quality option were available? Additionally, there may be many parents who prefer their childcare be closer to their homes rather than their places of work. For this reason, local data collection on parents’ preference of childcare location is also important.

We then whittle down these upper-bound estimates using research on the types of families that have a preference for center-based childcare as opposed to in-home care or other unlicensed forms of care like family, friend, or neighbor care. Overall, previous research using nationally representative National Survey of Early Childhood Education data suggests that 80% of parents of children under age six reported a center-based care provider as one of the two most seriously-considered care providers in their search.[2] We therefore shave our initial commuter-adjusted county-level childcare demand estimates by 20%. This serves as another, more precise estimate of center-based care. We further rely on estimates suggesting that households in low-income communities were less likely to indicate that they considered care centers seriously in their hunt for childcare: just 73% of households in communities with high levels of poverty identified center-based care as a serious contender compared to 80% and 83% in moderate and low-poverty density communities, respectively.[3] Given the financial challenges of paying for center-based care on a limited budget, it is not surprising that low-income families seek other childcare solutions. Primary data collection from parents in communities with high levels of poverty would help develop a clearer understanding about the additional reasons that center-based care is considered less often, whether it be regarding the misalignment between center hours and work schedules, concerns about quality, preference for family or neighbor care, or other reasons. We therefore adjust our estimates based on poverty rates by county. These estimates account for parents who considered using center-based care, or latent demand. Actual use of center-based care implies different demand estimates.

For example, we know that families requiring nontraditional care hours (due to work schedules) are less likely to use center-based care than parents with more traditional work schedules. Among parents with traditional schedules, 56% of young children in nonparent care are in centers, while just 37% of children whose parents work nontraditional schedules are in center-based care.[4] Using estimates of nontraditional workers by county, we shave our demand estimates by these rates.

In future data collection, this is another aspect which needs to be understood: which New Jersey parents prefer center-based care over other forms of childcare, and why is this the case? Why do low-income parents and parents working non-traditional hours prefer to use another type of care instead of center-based care? These differences could have to do with concerns about cost, scheduling, or simple differences in preferences for care. For more precise analyses, we need to better understand why low-income parents and parents working nontraditional hours use other types of childcare.

Finally, we conclude our work on demand-side estimates by applying New Jersey Department of Labor and Workforce Development population projections to these aforementioned initial estimates. We offer center-based childcare demand estimates projected out to 2034.

Supply-side calculations. After developing these county-level center-based childcare demand estimates and projections, we turn to supply-side estimates. Supply-side estimates of childcare provisions are also notoriously challenging to pin down: state and local governments often have access to data on licensed childcare capacity but are left in the dark about the quantity and quality of unlicensed care (including babysitters, nannies, family, friend, and neighbor care). Additionally, where licensed childcare capacity data are available, data are often coarse and do not capture capacity by age nor actual enrollment.

In our model, supply estimates are informed by licensed capacity data from New Jersey Department of Children and Families (NJDCF). Assuming an equal distribution of care slots by age, we provide estimates for center-based care supply by county. Then, using historic trends of capacity data by county, we project childcare capacity estimates into 2034.

Gaps in Supply and Demand. Comparing current county-level supply-side and demand-side estimates suggests that nearly every county in New Jersey is facing a childcare deficit. However, those best positioned are Warren, Sussex, Passaic, and Hunterdon counties. Looking ahead, unmet demand for center-based childcare is projected to expand, especially in Burlington, Camden, Essex, Hunterdon, Mercer, Middlesex, Monmouth, Ocean, Somerset, Sussex, and Warren counties.

In our report, we provide specific details on the aspects of our model which explain gaps in childcare by each county. For example, we discuss how in Atlantic County, their especially high number of workers in jobs which require them to work nontraditional hours means that more parents are relying on childcare outside of centers. In light of such trends, we suggest Atlantic County should focus on better understanding the needs of low-income parents and workers in jobs with non-traditional hours to better estimate the county’s childcare demand. We offer data collection suggestions for each county as they turn to the future of their childcare markets.



[1] Dingel, J. I., Patterson, C., & Vavra, J. (2020). Childcare obligations will constrain many workers when reopening the US economy. University of Chicago, Becker Friedman Institute for Economics Working Paper, (2020-46).

[2] National Survey of Early Care and Education Project Team. (2014). Household search for and perceptions of early care and education: Initial findings from the National Survey of Early Care and Education (NSECE). OPRE Report No. 2014-55a.

[3] Ibid

[4] Lou, C., Schilder, D., & Wagner, L. (2022). What Types of Child Care Do Families Use During Nontraditional Hours?. Urban Institute.