The economics of childcare don’t work for parents or for providers, a U.S. Treasury Department reported this week.
Parents of children younger than five years old often pay more than they can comfortably afford. Child care costs are highest in the five years after the birth of the family’s first child, when family savings are at their lowest.
Pay for childcare workers is low and leads to high turnover. For-profit childcare businesses operate on “razor-thin profit margins,” the study said, quoting a Federal Reserve Bank of Minneapolis analysis from 2011. For-profit centers count on maintaining full enrollment to make money.
A wage study of North Carolina childcare centers by the Child Care Services Association found that the median wage in 2019 was $10 an hour for starting assistant teachers and $14.52 an hour for assistant directors. Workers can make more working in fast food or retail, Marsha Basloe and Amy Cubbage wrote in a blog post last month. Basloe is president of the Child Care Services Association and Cubbage is president of the North Carolina Partnership for Children.
The Treasury report comes as the Biden administration seeks support for elements of its economic plan such as universal pre-kindergarten and expansion of the Child and Dependent Care Tax Credit.
In a separate survey results released in July, more than one in five North Carolina childcare providers who responded said pandemic enrollment declines put them at risk of closing permanently within six months.
The Zogby Analytics survey for the NC Child Care Resource & Referral Council found that majorities of family care homes and childcare centers of all sizes lost money the pandemic. For-profit and non-profit childcare centers and NC Pre-K programs fared the worst, according to the report, while the impacts were less severe for faith-based centers and family childcare homes.
“Health and safety of children, families, and staff; keeping enrollment high enough to break even; maintaining staff during and beyond the pandemic; recruiting staff; and paying staff or paying themselves as a solo provider are providers’ biggest concerns regarding sustainability of their programs,” the report said.
Zogby contacted 4,810 licensed programs with accurate email addresses for the online survey, and 1,825 answered the questions.
Fourteen percent of businesses applied for and received federal Economic Injury Disaster loans. Fifty-two percent applied for loans through the Paycheck Protection Program, and 42% who applied received them, according to the survey report.
When the pandemic hit in early 2020, the state Department of Health and Human Services gave bonuses to centers serving children of first responders. This year, DHHS offered childcare providers operational grants using federal COVID-19 economic relief money.
The Treasury Department study said many parents don’t have childcare options convenient to their work sites and, quoting a Center for American Progress report, said that half of Americans live in “child care deserts” with low-income families and those in rural areas the most likely to be underserved.
Families pay for childcare on their own or with the help of government subsidies.
Only a fraction of the children nationwide who are eligible for subsidized care get it. The U.S. Government Accountability Office reported this year that 1.9 million children, or 14% who are eligible under federal rules, receive Federal Child Care and Development Fund Subsidies, based on 2017 information.
Finding reliable childcare is critical to some parents’ getting jobs. In the Census Bureau Household Pulse Survey from Aug. 18-30, more than 300,000 North Carolinians said they were not working because they were caring for children not in school or daycare.