Child Care Insecurity – The Cause

Posted: June 17, 2024  

This is the first of a two-part series.

One of the challenges we wrote about in The Big Book of HR, 10th Anniversary edition, was child care insecurity. In the aftermath of the COVID-19 pandemic, the spotlight continues to shine on the dysfunction of the child-care system in this country. It is a system characterized by high costs, waitlists and availability challenges, and lack of accessibility. These issues existed even before 2020, and the pandemic made it worse as many child-care centers and providers were forced to close.

While child care insecurity is particularly challenging for working mothers, it isn’t just a women’s problem or issue. It’s an economic and social problem. In its 2023 Kids Count Data Book, The Annie E. Casey Foundation reports that shortcomings of the child-care system cost the U.S. economy $122 billion a year—for workers through lost earnings, for employers through lost productivity, and for the government through lost tax revenue. Conversely, children receiving quality care at early ages experience healthier development, and are better prepared for and more successful in school boosting their journey toward rewarding employment.

Affordability, Availability, and Accessibility

Let’s take a closer look at these three issues—affordability, availability, and accessibility—which are intertwined and negatively impact our child-care system today.

Affordability and costs. According to the U.S. Department of Labor, the median costs for child care in 2022 ranged from $5,357 annually for home-based, school-age care in rural communities, to $17,171 for center-based infant care in major population centers. U.S. families spend an average of 27% of their household income on child care, with single parents and families of color more significantly impacted financially. Most parents need child care earlier in their careers when their earning power and job experiences are limited.

Consider how these costs impact the careers of mothers. Bizwomen reports that in a recent study 13% of the women surveyed had left jobs due to the cost of child care, with more putting their careers on pause, and 54% saying child-care needs have impacted the professional opportunities they were able to pursue. If women in professional jobs are having these experiences, imagine the impact on women in front-line and service-related jobs who are earning less and lack the luxury of taking a career pause or leaving a job.

Costs affect the service providers as well. Before the pandemic, most child-care businesses operated with less than a 1% profit—a margin that could disappear, the U.S. Treasury Department found, if a center went just two months with fewer kids enrolled than expected.

In 2022, child-care workers nationwide made an average hourly wage of $13.42 according to the Bureau of Labor Statistics. Yet labor costs, as low as they are, often account for 80% of a center’s expenses in a highly-regulated industry regarding safety and caregiver-to-child ratios.

A Dilemma for Providers, Parents

It’s a vicious cycle for providers. If they raise rates, the service becomes less affordable; thus, it’s difficult to raise salaries.

Availability. A lack of child-care centers and providers is the second challenge to obtaining child care. Long waitlists, desperate searches for providers, and decisions about continuing employment versus financial security are not uncommon for working parents.

The Washington Post reported on a child-care center yet to open with a waitlist of 1,500 families for 127 available slots. During the pandemic, nearly 16,000 child-care programs closed largely because of increased operating costs, thin profit margins, unpredictable attendance, and labor costs. In 2023 it was estimated that more than 70,000 could close as the federal pandemic child-care subsidy program ends—funding that helped many meet the financial struggles that are prevalent in the industry.

Not only are centers closing, but staffing shortages are preventing programs from caring for more children. A study by the National Association for the Education of Young Children reported that four out of five survey respondents reported experiencing staffing shortages.

Consider the dilemma one family faced when their center closed. They were able to find a higher cost alternative for their two children, but that center would not have a spot for their expected infant for 12 months. Should the mother leave her job—a job with front-line duties—for that period of time with the hope of being hired back the following year? Without her wages, do they remove the two older children from child care and forfeit their slots, hoping there would be room for all three in 12 months? That assumes that her job would be waiting for her.

Accessibility.  The final prong of this dilemma is access to available centers and programs. Centers may be available, but some workers find that they are not in close proximity to where they work and public transportation to access them is lacking. This can be particularly exacerbating in lower-income, rural areas where the availability is sparce.

Then there is the conundrum that shift workers face—centers and programs available, but not during the hours that they need them. Shift workers are often subject to unpredictable hours and changing schedules.

The child-care industry is clearly in crisis and solutions are needed sooner than later. In a follow-up article, we will explore the business case for more organization and government involvement and look at creative ways that some organizations are responding to the problem.

Originally posted on HR Exchange Network