Investing in child care in underserved neighborhoods goes beyond helping families—it’s critical for economic growth and stabilizing an essential workforce
Across the country, the shortage of child care slots is well documented. Working parents face impossible trade‐offs: reduce hours, find work that aligns with child care needs, or quit altogether. For rural areas, low-income neighborhoods, and places with higher concentrations of young children, the gap between the supply of child care slots versus the potential need for care is particularly acute.
When parents cannot reliably work, the ripple effects are wide: businesses struggle to recruit, household income stagnates, local spending falls, and tax and revenue bases shrink.
Meanwhile, the federal Opportunity Zones initiative was designed to channel investment into places that have been underserved, under-invested, and ready for renewal. What if we could align these two realities? What if building child care capacity in Opportunity Zones became a strategic lever for workforce development and local economic revival?
What are Opportunity Zones?
Opportunity Zones were first created in Tax Cuts & Jobs Act of 2017 and made permanent in the 2025 Budget Reconciliation Act. There are 8,764 designated Opportunity Zones, which are nominated by governors and certified by the U.S. Department of Treasury based on census tracts with high poverty or median family income that does not exceed 70% of the area median.
Most Opportunity Zone investments have gone into real estate, including affordable housing; mixed-use developments combining residential, retail, and office spaces; and hospitality and commercial businesses. While real estate dominates, the program’s intent is to encourage a broader range of investments that drive long-term economic growth.
Opportunity Zones: A financing tool
The Opportunity Zones program offers tax benefits to encourage long-term investment in census tracts designated as “Opportunity Zones.” Specifically, private investors who invest in a Qualified Opportunity Fund that in turn invests in Opportunity Zones can defer or partially exclude capital gains from their taxes. These zones are often neighborhoods with under‐resourced infrastructure, limited business expansion, and workforce challenges.
Child care infrastructure seldom features prominently in conversations about Opportunity Zone investment, even though it intersects directly with workforce, business, and community needs.
Why child care is a good fit for the Opportunity Zone framework
Here’s how a child care investment in an Opportunity Zone can deliver on multiple fronts:
- Workforce participation: When high‐quality, affordable child care is available, parents can increase work hours or re‐enter the workforce more easily, boosting labor supply and helping employers fill jobs.
- Community economic vitality: Child care centers attract working families and businesses, which in turn increases neighborhood stability.
- Long-term economic returns: Access to early learning opportunities is linked to better educational outcomes, higher lifetime earnings, and reduced reliance on public support. Investing in child care today helps build a stronger future workforce.
- Infrastructure lifting: Many neighborhoods designated as Opportunity Zones have physical or structural constraints, such as aging buildings, underutilized real estate, or limited services. Retrofitting a building for a child care center, creating shared‐service provider hubs, or establishing employer‐child-care partnerships are tangible, place-based interventions aligned with the intent of Opportunity Zones.
What this looks like
Imagine a census tract where a former commercial building sits underutilized. With Opportunity Zone financing support, a child care provider expands into the space, offering infant and toddler slots aligned with local employers’ shift schedules. Parents who left the workforce to care for young children can now return to work full-time. Local businesses fill job vacancies. The neighborhood sees increased foot traffic and stability. Over time, children enrolled in the center gain access to early learning supports that boost school readiness.
Call to Action: Align funding, policy and stakeholders
To make this vision a reality, several pieces must align:
- Policy makers should make child care projects more competitive under Opportunity Zones criteria. Currently, projects are only eligible for tax credits if they make a profit, but child care is a business model that runs on tight margins and doesn’t often turn a profit. Congress should consider adding an additional tax incentive or accelerated exclusion percentage for either the renovation of existing properties or new child care facilities.
- Community leaders and providers must identify underserved neighborhoods within their state's Opportunity Zones and build partnerships with developers, employers, and local governments to plan viable child care projects.
- Employers and workforce boards should engage early childhood stakeholders to understand how child care availability impacts recruitment and retention in their region.
- Investors and fund managers looking at Opportunity Zone allocations should consider blending social impact and financial return. Child care centers offer stable revenue streams and broad community benefit.
Child care as essential infrastructure
For too long, child care has been treated as a “nice‐to‐have” or an add‐on rather than a foundational component necessary to ensure a thriving economy. Positioning child care as an essential piece of infrastructure unlocks possibilities.
The Opportunity Zone framework gives us a chance to channel investment into places that need it most—places where child care gaps are widest, where workforce participation is weakest, and where economic renewal is essential. Children, families, businesses, and neighborhoods all benefit.
For the Buffett Early Childhood Institute at the University of Nebraska and for states and communities across the country, the message is clear: Invest in child care. Invest in place. Invest in people. The return is more than social; it makes good economic sense.
Linda Smith is the director of policy at the Buffett Institute, with a specific focus on military, rural, and tribal child care, early childhood financing, and engaging the business community in child care initiatives nationwide.