No child wants to hear that they will receive a smaller share of pie. Yet, over the next decade, the share of government funding for children’s programs and tax credits will shrink by about a quarter, from 10.2 percent to 7.8 percent, according to a recent report by the Urban Institute. Cutting back on investments during a child’s youngest years can have serious long-term ripple effects well into adulthood; research finds that children’s early language development, understanding of math concepts, and social-emotional stability at age five not only predict how well they will do in school but also largely determine their adult earnings.

One study, for example, finds that children’s test scores in early elementary school largely explain the variation in their adult wages. Specifically, children who scored in the bottom 25 percent in these tests earned 20 percent less at age thirty-three than their counterparts who scored in the top 25 percent. The upshot is that on the day children arrive at kindergarten, one can already reasonably predict how much each will earn as an adult.

These findings have real implications for the investments we need to make to sustain a strong economy and to support today’s youngest Americans—Generation Z, or those born in the twenty-first century. (This cohort is smaller than the Millennial generation but still growing, and it is even more racially and ethnically diverse.) Human capital—the level of education, skills, and talent in our workforce—is a main driver of economic growth, so in order to ensure that we have a healthy, productive workforce and a thriving economy in the decades to come, we must begin by developing human capital during early childhood through education and other enrichment activities.

Yet we already know that the older members of Generation Z in the United States are falling behind their teenage peers in other developed economies. The most recent data findings from the new Programme for International Student Assessment, the most-cited international educational ranking, finds that out of thirty-four developed countries, U.S. teenagers rank seventeenth in reading, twenty-first in science, and twenty-sixth in math.

Nothing is more important to the future of our nation than preparing our youngest generation to meet the unpredictable economic challenges of the 2020s and 2030s. Yet rising economic inequality and unstable economic growth define our society today, and this inequality and instability start from the very day a child is born. Many low- and middle-income families face extraordinary challenges to providing the care and education their children need to thrive in school and in the twenty-first-century workplace.

How can we better prepare our nation’s youngest generation for success? Investments in K-12 schooling, college, and graduate education are important, but lasting investments need to be made earlier in a child’s life. According to University of Chicago economist James J. Heckman, educational and enrichment investments during early childhood yield the highest return in human capital compared to other investments over time. Why? Because as the brain forms, children learn cognitive skills such as language and early math concepts, but also “soft” skills such as curiosity, self-control, and grit. These are critical for later academic success as well as valued traits in workers. By the time a child enters kindergarten, the difference in school readiness is already well established, and the gap widens by less than 10 percent between kindergarten and high school.

Early learning is enhanced by what happens in preschool, but the two factors that most explain the gaps in school readiness are parenting styles and home learning environments. Yet many parents are unaware of the importance of early brain development and of the tremendous impact they can have on their very young children’s learning through simple actions such as talking, reading, and singing to and with them. Even if parents are aware of the importance of these activities, they may have difficulty carving out time at home with their children as they juggle jobs and the family’s other physical and emotional needs. Today, more children than ever are raised in single-parent families or in homes where both parents work. Parents today are constantly balancing work and family care, often without access to family-friendly workplace policies to support them.

If parents are unable to provide enriching home experiences, children can gain valuable developmental and learning support in quality child care and preschool settings. Unfortunately, about half of U.S. children receive no early childhood education, many because their parents simply cannot afford it. In 2011, the average cost for a four-year-old in full-time professional child care ranged from about $4,000 to $15,000 a year. This can put a major strain on the budgets of low- and middle-income families. Low-income families pay around $2,300 a year per child for care for children under age six—about 14 percent of their income. Families in the middle average $3,500 a year—6 percent to 9 percent of their income. Professional families pay about $4,800 a year—3 percent to 7 percent of their income.

Low-income families who are able to pay for child care often find that the care they can afford is merely a safe place for their child while they are at work, but offers poor or mediocre support to help their child in the critical stages of early childhood development. The limited spots in high-quality programs often go to more-affluent children, whose families can afford expensive care.

As a result, children have different enrichment experiences and are not starting from the same point early on in life. One famous study—often referred to as the “thirty million word gap” study, by professors Betty Hart and Todd R. Risley—found that children living in poverty hear thirty million fewer words by age four than higher-income children. Hearing words directly translates into learning words. On average, a child from a low-income family knows 500 words by the age of three, compared with 700 words for a child from a working-class family and 1,100 for a child from a professional family. In recent years, not only has this study been replicated, but researchers have found that already by age two, there is a six-month gap in language proficiency between lower-income and higher-income children.

In order to have a productive workforce and thriving economy tomorrow, we need to invest in our children today. There are viable policy solutions that could expand early childhood education and enrichment opportunities to all children, rather than just a select few at the top. First, voluntary home visits by child development professionals could increase awareness among working-class parents of how they can foster their children’s development at home, such as talking, reading, and singing to their children before bedtime. Home visiting programs are taking off under the Maternal, Infant and Early Childhood Home Visiting Program, established in 2010, and evaluations examining their effectiveness on parent and child outcomes are showing promising results.

Second, it is important to expand access to high-quality affordable early childhood education programs, which better prepare children for school, putting children more than a year ahead in mathematics and other subjects. Low-income families would greatly benefit from expanded access to quality child care, Early Head Start, and high-quality preschool programs.

Lastly, parents can only be better first teachers of their children if they have the time to be with them. Policies such as workplace flexibility, paid family and medical leave, and paid sick days could help all working parents better manage work and family obligations and spend more time with their children. Today, professional workers are the most likely to have access to these policies, often considered additional employee “perks” by employers.

The importance of investing in early childhood matters for our economic competitiveness. The United States should be making smart economic investments in early childhood to ensure that all children have an equitable start before their first day of school. All Americans need our youngest ones to succeed as adults, no matter their family background and income level, for the American Dream to continue in the twenty-first century and beyond.

Return to “American Life: An Investor’s Guide.”

Ann O'Leary

Ann O'Leary directs the Children and Families Program at Next Generation, a nonpartisan advocacy group, and is a senior fellow at the Center for American Progress.