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Early last summer, the directors of The Katmint Learning Initiative had a series of heart-wrenching conversations with their staff. Given their dire financial situation, brought on by the pandemic, six of the Brooklyn center’s ten teachers would have to be laid off.
They had already tried everything to keep their teachers employed. They applied for multiple loans (and received one), held protests and attempted to get access to a free lunch program for their students, but it wasn’t enough.
“Our options were to reduce hours or to advise employees to go on unemployment,” said Amber Baker, Katmint’s teacher director, who took a pay cut along with the program’s other director. “And those were really hard conversations.”
Even after letting go more than half of their teachers, the directors are scrambling to keep Katmint from shutting down.
Katmint’s financial crisis isn’t unique. Across the country, the already chronically underfunded child care industry has been decimated as centers close, downsize and lay off staff as they struggle to make ends meet while awaiting federal or state aid.
A recent Center for American Progress report estimated that the pandemic could lead to the permanent loss of nearly 4.5 million child care slots. And in July, approximately two out of five child care programs – and half of those owned by minorities—were sure that they would close permanently without additional public assistance, according to a National Association for the Education of Young Children (NAEYC) survey.
If this pattern continues, access to affordable child care will decrease, creating and expanding child care deserts. This will harm the economy, as parents are forced to drop out of the workforce to care for children, and will adversely impact child care providers, who are disproportionately women of color and already make poverty-level wages, according to Labor Department data.
“The worst-case scenario is a total decimation of the United States childcare system,” said Elliot Haspel, an early childhood and K-12 education policy expert and author of the book Crawling Behind: America’s Child Care Crisis and How to Fix It. “[This harms] a lot of parents, primarily working mothers forced out of the labor market, and a lot of children who don’t have access to high quality early care and education experiences… and then it’s going to have a major impact on the economy too.”
In order to prevent this outcome, experts estimate that the child care industry requires an immediate $50 billion investment for stabilization, and approximately $82 billion per year in public funding.
“If we don’t invest in the child care industry, and by invest I mean keep it afloat by an injection of relief in government funding, then we’re in a dire situation,” said Charlotte Dodge, a senior policy associate at Caring Across Generations, a national organization dedicated to improving the care industry.
As the coronavirus surged, Katmint, like many other daycare centers, was ordered to close in March, and the directors accumulated debt for months before they were allowed to reopen in September. By then, two of Katmint’s three Brooklyn sites were permanently closed, and more than half its students were gone. During that time, the center got no aid beyond a single Paycheck Protection Program (PPP) loan.
So far, the only aid specifically given to the child care industry came from the CARES Act, which was passed March 27 and granted $3.5 billion in funding to the child care sector. Qualified providers could also apply for PPP loans, but the application deadline passed on August 8.
Many child care providers were never able to access relief at all. According to another NAEYC survey, only half of child care programs that applied for PPP loans were approved. The distribution of the $3.5 billion from the CARES Act was left to individual states, many of which used up all the funding by June.
By August, the pandemic had left one in five child-care employees, about 214,000 people, out of work, according to a Congressional report. Nationally, enrollment was still down 67% as of July, but 90% of child care centers had increased their spending on PPE and sanitation, according to the NAEYC survey.
“For the childcare centers, the really big for-profit chains, you know, they can rely on private capital and taking on debt,” explained Rasheed Malik, a child care expert at the Center for American Progress. “But most smaller child care centers, they weren’t able to access the paycheck Protection Program loans.”
That lack of support and investment isn’t new. Of 37 developed nations, the U.S. ranks the third lowest in spending on the early years of care and education, according to a 2015 report from the Organization for Economic Co-operation and Development.
“The U.S. child care system has some of the least amount of public investment of any nation on the globe,” Haspel said. “As a result of that, childcare in America is much more akin to a restaurant than it is to a library… it’s dependent on paying customers, operating very thin margins, and all of that made it very, very vulnerable.”
But substantial federal aid appears unlikely to arrive any time soon. The Child Care Is Essential Act, introduced in May, would have immediately invested $50 billion in the child care industry. But while the act passed the House with bipartisan support, it stalled in the Senate. Since then, no progress has been made towards federally funding the child care industry.
With federal aid lacking, some experts and providers are looking to states to fill the gap.
But experts have mixed feelings about whether state intervention can keep the industry afloat without the help of the federal government.
Haspel thinks it’s possible, but emphasized that the federal government should be playing a part.
“I think if states are willing to set a clear goal, name the price, name the benefits and name where the revenue is coming from, there’s an enormous potential for states to show the way,” he said. “Do I think that it would be great if the federal government came in with significant dollars? Absolutely. But I think states can’t hold their breath.”
He pointed to Multnomah County in Oregon, which voted on Nov. 3 to institute a tax on high earners that will pay for universal preschool in the county, and ensure that every licensed preschool teacher earns at least $19.91 per hour beginning in 2022. The program will roll out to every county resident by 2030, beginning with communities of color.
Some states are already implementing programs to help child care businesses. In Chattanooga, Tennessee, the Chambliss Center for Children, a 24-hour daycare, has been able to scrape by with state support.
The center shut down most of its facilities and programs in March, but continued to serve the children of essential workers. It reopened in May to previously enrolled families, and though it didn’t begin charging fees again until August, many of the center’s children haven’t returned.
“Since we serve primarily low-income families, a lot of them or some of them have actually lost their employment. So they’re not needing childcare like they were before, or they know somebody that has lost a job and so they’re using them for childcare,” explained Katie Harbison, president of the Chambliss Center.
Chambliss operates differently from most child care providers—tuition is paid using a sliding scale payment system based on parents’ income, and parents generally account for only 25% of the center’s operating costs. The rest comes from the federal, state and local government and fundraising efforts.
When the pandemic hit, Chambliss was able to get a PPP loan, as well as grants from Tennessee that allowed it to collect income from all enrolled children, regardless of attendance, and paid both the government and parents’ shares of subsidies.
“If we had not gotten federal and state assistance, we would be in a very bad place right now,” said Harbison. “I think we will slowly recover…we are lucky to be a long-standing, non-profit organization with an endowment to fall back on. But I don’t think that is the norm in childcare.”
Charlotte Dodge, the Caring Across Generations policy analyst, is more skeptical of state investment.
“States have already demonstrated that they have not made the investments in childcare previously and with the unstable economic situation that states find themselves in right now I would say that it is critical that the federal government step up and play a role in the form of a big relief package,” she said.
Dodge’s claim is backed up by pre-pandemic statistics which show that only one in six children who are eligible for child care subsidies receive them, mainly due to waiting lists and underfunding of programs on the state level. And when state budgets are tight, as they are now, education and child care are often first on the chopping block.
Some child care providers have found innovative solutions to the current crisis.
When the pandemic hit, Reed Donahue initially thought the preschool that she has run for 19 years out of a small brick building in Newton, Massachusetts would have to operate online for just a short time. But as weeks turned to months, Donahue came to a crossroads. The lease for her building was up, and she didn’t feel comfortable signing another five-year lease. In July, Donahue made the decision to give up her building and transition from daycare to Zoom learning.
Donahue’s preschool, the Little Red Wagon Playschool, ended up with 45 virtual students this fall, double what Donahue expected, and more than she could have accommodated in-person. She even picked up some out-of-state families.
“I came out remarkably unscathed. But I would not have if I still had that brick-and-mortar,” Donahue said. “I would have had to go into debt. And I just wasn’t ready for all that.”
Now, Donahue doubts that she will ever return to providing in-person childcare. For her, the idea of starting over from scratch is just too exhausting.
Experts and providers agree that in order for child care to survive this pandemic, the increased public attention the industry has gotten due to the pandemic must be capitalized on.
“I do feel hope that this experience has sort of galvanized momentum around childcare as an issue, and we can continue to use that momentum to both stabilize the childcare industry and get the childcare industry the relief it so desperately needs,” said Dodge.
But some experts, including Dodge, are worried that after the pandemic, the child care industry will fade into the background once again, in large part because it is dominated by women, and nearly half of child care center teachers are people of color, according to Labor Department data.
“American society has a tendency to look down on predominantly female professions to begin with,” said Haspel. “And then couple that with the fact that 40% of the field are women of color…it goes to why we’ve had so little investment and it goes to why it’s had relatively little attention.”
This might help explain why almost 40% of child-care teachers had annual household incomes under $25,000 in 2019. The average child care worker earns just $10.72 per hour, and a 2018 Center for the Study of Child Care Employment report found that women earn less than men and workers of color earn less than their white counterparts at every level of education. Eighty-five percent of child care providers lack health care access to paid leave and unemployment.
An important piece of high-quality child care is having child care workers who are able to form strong, nurturing, individualized bonds with the children they care for, and having a low staff member to child ratio. But this is made harder when child care workers are vastly under-compensated and centers can’t afford to hire more staff members.
Experts are adamant that any child care policy must include provisions to increase wages for providers.
“Child care providers make poverty wages with few benefits, few ways to really access any sort of career ladder for advancement, and few opportunities for bargaining rights to make their collective industry stronger,” said Dodge. “We need to ensure that any sort of legislation or policy that’s building out the child care system really includes some key components for the child care workforce.”
Rasheed Malik, the Center for American Progress child care expert, also made it clear that while things might look bad now, they could get much worse.
“I think we could see the industry reach a tipping point,” said Malik. “Some providers are just scraping by right now…in the hopes that they will be getting some kind of relief from the government. But if that doesn’t come, their next step would be to have to shut down.”
And while a decimation of the child care industry would evidently hurt child care workers, it would also have devastating consequences for the economy and families—particularly working mothers.
Even before the pandemic, 51% of Americans lived in child care deserts, or areas where there are more than three young children for every licensed child care slot, according to a report from the Center for American Progress. The report also found that as the pandemic exacerbates child care deserts, the effect will likely be more pronounced in Black and Hispanic communities.
A survey of parents with children under age five found that 83% reported struggling to find quality, affordable child care near them. During the pandemic, nearly half of working parents reported losing their pre-pandemic child care, and 60% of families who used child care centers reported losing their provider.
“Before the pandemic, we were already in what many folks would say was a child care crisis, where child care was not affordable for most families,” said Dodge.
In many states, child care costs more than rent or in-state college tuition, and these high costs come during parents’ lowest earning years. Now, as child care centers struggle to make ends meet with increased costs and lagging enrollment, some are raising tuition and pricing out lower-income families, leading to an average 47% cost increase across the country.
“At a bare minimum, we need to work towards a system where no family is paying more than 7% of their yearly income on childcare costs,” said Dodge. “At the same time, we can’t do that at the expense of not investing in the childcare workforce.”
A fractured child care system is also bad for the economy as a whole. Prior to the pandemic, many parents left the workforce or reduced hours to care for children in order to avoid the high cost of child care—foregoing roughly $30-35 billion in income, according to a September report from Caring Across Generations. That translates to an annual loss of tax revenue of approximately $4.2 billion.
“Without a functional child care system there’s huge hits to productivity, available workers, big retention and recruitment problems,” said Haspel. “It really will hamstring the economic recovery.”
During the pandemic, mothers have left the workforce in record numbers, and of those who are considering downshifting or leaving the workforce, a majority cite childcare responsibilities as a major factor in their decision. In September alone, 865,000 women dropped out of the workforce, according to data from the U.S. Bureau of Labor Statistics.
The Caring Across Generations report warned that if the care economy isn’t rebuilt quickly, the U.S. risks undermining gender and racial equity in the workplace.
“The majority of people that are leaving the workforce right now and are getting hit the hardest and that will have lasting repercussions on their own families, economic stability and their own career goals, are women,” said Dodge. “And I feel like that’s really key to the answer, unfortunately, of why we have not invested in care.”
Being shunted between different, make-shift child care solutions isn’t good for children either. Ninety percent of a child’s brain develops before age five, and continuous high-quality child care helps children during this time helps children build strong relationships and healthy behaviors and develop learning skills, according to the Organisation for Economic Co-operation and Development.
For Katie Harbison, the president of the Chambliss Center in Tennessee, the essential nature of early education is overlooked too often.
“I don’t think people still understand how important it is for the industry to have significant governmental support,” said Harbison. “I think we are all used to the public education system being funded by the government. And we somehow have not been able to shift our minds to realize and understand that education begins at birth.”
Parents and child care workers don’t necessarily have the same resources or funding as big groups backed by lobbyists. There is no American Federation of Teachers equivalent for child care workers, and parents’ time is already stretched thin. But if there was ever a time to invest in the child care sector, it is now, according to Malik.
“Child care providers are paid near poverty wages and are working really hard to try and hold the system together. But they can’t subsidize this shortfall forever,” said Malik. “If we’re going to spend a lot of money to try and rescue our economy, this would be a wise investment.”
For Haspel, getting the funding child care needs requires a shift in mindset that many other countries made a long time ago.
“We have to treat child care as a public good, and we have to stop believing it’s some private burden that’s going to be solved with anything other than significant public investment,” said Haspel.
And for Amber Baker, the teacher director at Katmint, it all comes down to being able to bring back the employees who make child care possible in the first place.
“It is our dream, like a true, honest dream, to be able to gradually reopen our doors with more sites as enrollment picks up so we can bring those team members back, because we miss them very much,” Baker said.