California Weighs Massive Investment in Universal Child Care

New SIEPR policy brief outlines economic benefits and costs of a statewide program for infants and toddlers

Jan. 30, 2026 at 6:15am

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A new policy brief from the Stanford Institute for Economic Policy Research (SIEPR) examines the economic impact of California's child care crisis and models the costs of a potential universal child care program for children ages 0-3. The authors estimate such a program could cost between $4 billion to $21 billion annually, but would likely generate substantial economic returns by allowing more mothers to join the workforce and boosting the state's GDP by up to $23 billion.

Why it matters

California's high child care costs, which can consume up to 25% of household budgets, are forcing many parents to leave the workforce or rely on informal care arrangements. This is taking a major toll on the state's economy, with an estimated $23 billion in annual lost economic output. Investing in universal child care could help address this crisis and unlock significant economic benefits.

The details

The SIEPR policy brief, authored by a team of researchers, unpacks the economic impact of California's broken child care market. Families in the state are spending up to a quarter of their household income on infant care, forcing many mothers to leave the workforce. The authors estimate this amounts to a $23 billion annual loss in economic output. To address this, the researchers model the costs of a universal child care program for 0-3 year olds, projecting a range of $4 billion to $21 billion per year depending on income eligibility and take-up rates. They argue that every dollar invested would return three dollars or more through increased parental labor supply, improved child outcomes, more productive businesses, and economic growth.

  • The SIEPR policy brief was released on January 30, 2026.

The players

Chloe Gibbs

A policy fellow at the Stanford Institute for Economic Policy Research (SIEPR) and the lead author of the policy brief.

Stanford Institute for Economic Policy Research (SIEPR)

A research institute at Stanford University that produced the policy brief on the economic impacts of California's child care crisis and the potential costs of a universal child care program.

University of California, Irvine

Researchers from UC Irvine collaborated with SIEPR on a sibling policy brief that delves into ways California can deliver universal child care for 0-3 year olds.

University of California, Berkeley

Researchers from UC Berkeley also collaborated with SIEPR on the sibling policy brief on universal child care in California.

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What they’re saying

“Our examination of the child care market makes the investment case. Every dollar invested in quality early childhood care and education (ECE) returns three dollars or more through increased parental labor supply, improved child outcomes, more productive businesses, and the resulting economic growth.”

— Chloe Gibbs, Policy Fellow, Stanford Institute for Economic Policy Research

What’s next

Policymakers across California and the U.S. are grappling with the issue of affordability and access in child care, with major cities like New York and San Francisco driving toward universal child care programs. The question is whether California, the world's 4th largest economy, can keep up and implement a statewide universal child care system for infants and toddlers.

The takeaway

Investing in a robust, universal child care program in California could unlock significant economic benefits for the state, allowing more than 100,000 mothers to join the workforce and contributing up to $23 billion to the state's GDP. However, the costs of such a program, ranging from $4 billion to $21 billion annually, represent a major policy challenge that state leaders will have to grapple with.