The shortage of quality, affordable child care is ringing alarm bells for companies, regional economic developers and politicians who understand it’s no longer a problem that can be pushed off on families to resolve on their own – it’s a threat to growing businesses and economies. As workplaces try to find a new normal after the pandemic, it is clear many workers are still missing from the workforce – and as economists dig into the issue, they’ve discovered a lot of parents, particularly women, remain on the sidelines because they are lacking child care options. Ready Nation found the lack of affordable, quality child care is responsible for an estimated $122 billion annual in lost earnings, productivity and revenue in the United States.
The Center for American Progress reports over the past two years, 16,000 child care programs have closed, and some 90,000 child care workers have left the industry. Susan Cornish, a multi-unit franchise owner for Jovie (formerly College Nannies), saw the carnage first hand. “We lost an entire generation of people who, during COVID, decided they would retire,” said Cornish. Getting them back, and attracting new people to the field has been an uphill battle.
It’s not hard to figure out why. The Early Childhood Workforce Index of 2020 found 98% of occupations in the U.S. pay more than child care, which has had devastating consequences for child care workers, many of whom are also parents. A 2022 survey by the University of Oregon found 44% of child care center teachers reported experiencing hunger during the pandemic.
It’s no wonder, then, that child care centers are struggling to recruit and train workers. The National Association for the Education of Young Children found 80% of survey respondents from child care centers said they had staffing shortages, and most pointed to wages as their main challenge.
As an employer, Cornish believes people in the child care industry should be paid a living wage, but that comes with a hard reality. “What was $12 an hour has now gone to $15 at a bare minimum,” explained Cornish, who said depending on the market, child care centers might even be pushed to pay $18-$20 an hour to hire and retain staff, squeezing families more. “Somebody has to pay for that.”
Both Cornish and Business of Child Care founder Jeff Andrews have seen child care owners try to cover the cost themselves by eating into their own bottom line. “The field is subsidizing the true cost of child care by giving up on their own hopes and dreams,” said Andrews, who adds, that solution is simply not sustainable.
Educating child care providers about the true cost of child care, and understanding the decisions necessary to sustain their business is part of the work Business of Child Care has been doing throughout the country. Andrews says a common misconception among child care providers is they can’t raise their wages because that would lead to untenable increases in tuition for families. Andrews says every business will have its own calculations, and part of Business of Child Care’s work is to help business owners break down that math for their specific situation so they understand the true cost of the potential outcomes.
Business of Child Care begins by helping business owners identify the real challenges that relate to their staffing challenges. That includes understanding wages both inside and outside of the child care industry.
“Our biggest ‘aha’ moment was realizing how far behind we were,” said Noelle Hagen, board chair for The Children’s Center, a 50-year non-profit child care center in Albert Lea, Minnesota. Andrews connected with Hagen through his affiliation with Southern Minnesota Initiative Foundation, which supports programs for early education in the region. When Andrews looked into the local child care market and The Children’s Center’s financials, he discovered not only was the center charging far below the rates its competitors were charging families, it was charging below the government reimbursement rate for families that qualified. That meant the center was leaving government funding it should have been receiving on the table.
The center’s board determined it had to pay teachers more, and they needed to be transparent with families as to why. “We just wrote a really honest letter that explained this is the change we are making, and to do that we have to increase tuition,” Hagen said. “Teachers are our biggest expense, but without them, we wouldn’t be able to have good experiences for the children in the center.”
As it turns out, parents were understanding, and, as is often the case, increasing salaries for teachers does not compute into an equal increase in tuition for families. Andrews says he helped one program in Minnesota discover they could increase wages by 70%, while raising tuition much less, just 11%. That’s still a big bite for families, but the alternative might be the child care center goes out of business altogether, destroying livelihoods and leaving families high and dry. “Not doing something isn’t an alternative,” said Andrews.
Cornish acknowledges that just as business owners need to understand the math that will make their business sustainable, other stakeholders will need to step up to make that math work, or pay other costs associated with an economy hamstrung by a lack of adequate child care that would enable parents to work. “I do believe we will start to see more and more corporations adding a child care benefit to their offering in order to attract employees,” Cornish said.
Not only are some employers coming to that conclusion on their own, some are taking matters into their own hands, creating new child care options, perhaps by building their own child care centers. Cornish says that was something she would see in medical or high tech industries, but is now happening in manufacturing, which runs operations around the clock. Cornish has noticed more manufacturers can’t find employees to cover a three-shift operation because would-be workers can’t find child care for those non-traditional hours. Not only do parents need more child care options, they need flexible options that accommodate a world that is no longer just 9 to 5.
Andrews and Business of Child Care are currently working with stakeholders in Crawford County, Illinois – a community home to three Fortune 500 companies and two large employers that operate 24/7. “It has been tremendously challenging for those employers, the very kind communities want to attract, to fill non-traditional shifts because of child care,” said Andrews. “Both employers are now part of the wider community coalition, working to create more capacity and quality child care options.”
Child care workers, typically women, have long been underpaid, as child care was not seen as a true career, or that it was a job people should do for their love of children, rather than for a paycheck. But as a labor shortage looms for all sectors, decision-makers from both the public and private sectors will need to find new ways to support existing child care options and grow new capacity so parents will have safe and affordable options. At the same time, child care business owners will have to be realistic about the necessary business calculations they have to make to keep from shuttering their child care business altogether. Step one is learning more about what their challenges are.
A true solution often means a community approach – support for child care business owners to understand and address challenges, including wages and other benefits to attract and retain workers, an intentional community plan to grow new child care capacity, and increased funding help families who need it most.
