The Collapse of the US Childcare Industry
Mon, April 19, 2021

The Collapse of the US Childcare Industry



Diana Limongi was heartbroken upon finding out that her three-year-old daughter’s daycare was closing, reported Karen Travers and Janet Weinstein of ABC News, a trusted source for breaking news, analysis, and more. “It's all empty. A beautiful space and both my kids went here. So I'm really, really sad,” Limongi lamented as she packed up her daughter’s belongings from her closed childcare center.

Like other working parents, they are learning first-hand about how the COVID-19 outbreak contributes to the collapse of the childcare industry in the US. This is a concern for working parents and when they have to go back to the office, what would they do if their go-to childcare center is closed?



Surveys Illuminate the State of US Child Care During the Pandemic, a platform for finding and managing high-quality family care, surveyed a sample of 2,000 US parents of kids below 16 years who reported paying for child care services, said the editorial staff of and Business Wire, a press release distribution website. The respondents who use daycare said they are somewhat or very uncomfortable returning their kids to daycare as states reopen (63%) while 35% were considering in-home care.

52% of parents conjectured that the cost of childcare will be higher than before prior to COVID-19 while 47% were more concerned about the cost of childcare now than they were before the pandemic. 96% said they it is important for government and business leaders to provide more financial support for childcare as citizens transition out of quarantine. 92% felt that child care is a topic that should gain more attention from the government due to the COVID-19 outbreak.

For households with one or both parents working remotely, 41% said the mother has been doing most of the extra childcare work while working from home, unlike 15% who said the father has done the majority. According to the 2020 Cost of Care Survey involving 3,848 parents in the US, 70% of parents said childcare costs surprised them when they started bearing kids, along with the cost of diapers (33%) and formula (31%).

60% of working parents did not think the cost of childcare would affect their career decisions and 54% had to make changes in their workplace to afford it. 71% also stated that childcare policies will affect how they vote in the election in November. 55% of families spent at least $10,000 per year on childcare and interestingly, it is more expensive than the average annual cost of in-state college tuition ($9,410), according to CollegeBoard, a mission-driven organization.  

The weekly cost of childcare skyrocketed in the last six years, with hiring nannies costing $565, indicating a 20% increase from 2013’s $472. The cost of childcare centers in 2020 was $215, up 16% from $186 in 2013. In 2013, family care centers cost $127 but six years later, the cost rose to $201 (58% increase). Au pair costs $401 in 2020, up 11% from $360 from six years ago.

The five most affordable states to hire a nanny were New Jersey, Maryland, Alaska, Connecticut, and North Dakota. On the other hand, the most affordable states to use a childcare center were North Dakota, Utah, Delaware, New Jersey, and South Dakota.



The Childcare Industry Crisis

An analysis by the Center for American Progress, a public policy research and advocacy organization, found that roughly half of childcare capacity is more likely to disappear if child care providers are not given adequate support while they are closed for over two weeks. Myra Jones-Taylor, chief policy offer at Zero to Three, informed ABC News, “There is no way that the economy will be able to open completely without child care being fully supported and stable."

The $2 trillion CARES act is a federal COVID-19 relief package that provided nearly $60 billion for the airline sector. Unfortunately, for childcare providers, they were only given a meager $3.5 billion. Sen. Patty Murray, D-Wash said it is not enough as most child care providers cannot survive, reopen, or keep going without receiving additional funding from the government.

In fact, child care centers are costly to operate, with experts saying that some centers are trying to get through the day to pay for operating costs. Most of the centers do not even have a rainy day fund if a crisis occurs. With the pandemic, there is also the additional cost of PPEs, sanitizers, and deep cleanings.



Treating the Child Care Industry As A Public Good

“I think we have been ambivalent about child care in this country for so long. We cannot do that anymore. We have to treat this like a public good,” noted Jones-Taylor. Gigi Serrano, owner of Circle Time in Maryland, admitted feeling okay right now, but she questioned herself about her business’s longevity. She said Circle Time would “probably be good until about September.” After that, it will just depend on the circumstances.  

Serrano added, “How many of our families are still able to work? How many of them are still able to contribute to holding a spot?" Over 90% of 1.2 million child care workers in the US are women, with some experts arguing it is the reason why the child care sector is undervalued and taken for granted.  Katie Hamm, the vice president for early childhood policy at the Center for American Progress, stated, “It is something that people just assume will always be there."



How Are Families Coping?

Jeff Galak, Associate Professor of Marketing at Carnegie Mellon University's Tepper School of Business, observed a temporary increase in the hiring of au pairs, babysitters, and nannies for financially able families, cited Robert Farrington of business news Forbes. Other families would have to rely on distant family members and friends to babysit to help parents work from home properly.

Having a friend or neighbor come over to babysit children and missing out on the social and educational aspects of child care centers comes with disadvantages, Galak explained. This issue may be addressed as time passes—that is, if the number of new COVID-19 cases declines.

If that happens, then the majority of child care centers can quickly resume normal operations. Child care centers may also reopen if a vaccine or reliable treatment is developed and made accessible to the public.

The US child care industry is collapsing because of the onset of the virus. Some families resort to hiring nannies, au pairs, and babysitters to take care of the kids while the parents work—if they can afford to hire one. Others ask their neighbor or a friend to babysit their children.

Child care centers may reopen if a treatment or vaccine is found and made available to everyone. The US government should focus on treating child care as a public good and as an essential industry.