An economist says the faltering childcare industry will have far-reaching effects

Resignations, closures and the risks of COVID-19 continue to plague the childcare industry amid the pandemic, and some are warning of far-reaching repercussions beyond diminishing access to essential service. The effects of changes in the industry today can be felt for years, said Betsy Stephenson, a University of Michigan economist.

“The decisions we make about childcare availability today will shape the overall economy of the United States for decades to come by influencing who goes back to work, the types of jobs parents take and the career path they can pursue,” Stephenson said.

Child Care Aware of America estimates that 9 percent of childcare programs in the United States have closed since the start of the pandemic, according to the Associated Press. As a result, many people who do not have access to reliable and affordable childcare, especially women, have been forced out of their jobs.

The more people leave their jobs in an already exhausted economy, the worse the labor shortage gets. The Associated Press reports that businesses without enough workers could suffer, and access to goods and services could become even scarcer.

For more reports from the Associated Press, see below.

As resignations, shutdowns and the risks of COVID-19 continue to engulf the childcare industry amid the pandemic, some are warning of far-reaching repercussions beyond dwindling access to essential service. Above, Amy McCoy reads a book to preschoolers as they finish lunch at her Forever Young Daycare facility on October 25 in Mountlake Terrace, Washington.
Eileen Thompson / AP Photo

The childcare business has operated for years in a broken and contradictory market: low wages for workers and high costs for consumers. However, critical service somehow managed to falter.

Now, the pandemic has made clear what many experts have long warned: The absence of reliable, affordable childcare frontiers that people can accept is making it difficult to climb the corporate ladder and ultimately limiting the ability of the broader economy to grow.

“Early learning is no longer seen as just a women’s issue or a children’s issue. It’s really seen as an economic issue. It’s about workforce participation,” said Mario Cardona, chief policy officer at Child Care Aware of America. “It’s about employers not having to worry about whether they can count on employees.”

President Joe Biden She pledged an unprecedented increase in federal spending in hopes of reforming the child care market. At a recent town hall in Baltimore, he assured parents that they “will not have to pay more than 7 percent of your income for childcare.” Federal funds will go directly to care centers to cover costs over the 7 percent cap. This means that the average American household earning $86,372 would pay $6,046 annually for childcare.

Biden’s plan also includes universal preschool, which can reduce childcare expenses for families. The expanded monthly payments from the child tax credit approved in Biden’s $1.9 trillion coronavirus relief package will be extended for another year. The president also proposed increasing the size of the tax credit for the cost of childcare, all of which would help improve access for families.

The Congressional Budget Office has yet to record costs, as measures are still being negotiated ahead of Biden’s departure on Thursday for the G20 conference in Rome. But Donald Schneider, a former chief economist for the House Ways and Means Committee who now works for the Cornerstone Macro consultancy, estimates that childcare and pre-kindergarten support will cost $465 billion over 10 years. The one-year price for the expanded child tax credit would be about $120 billion. The credit would cost an additional $940 billion if it were renewed for another nine years.

It remains to be seen what survived the brutal negotiations in Congress For Biden’s extensive family services agenda, but the pandemic has proven to be a catalyst for the future of the childcare industry.

At Forever Young Daycare in the Seattle suburb of Mountlake Terrace, Amy McCoy burns fast.

She’s spent half of this year trying to hire a new assistant to take care of her kids at home, but until then, the former public school teacher works 50 hours a week to take care of the kids herself, and more to do the cooking, cleaning, and administrative chores needed to run her business.

At what point is my care more important than my family? McCoy asked.

One of McCoy’s aide, who had worked there for five years, quit the $19-an-hour job in April for $35-an-hour as a nanny. McCoy posted the opening for Junior Assistant on Indeed and Facebook social networking site, makes $16 an hour — nearly 20 percent more than the state’s minimum wage. She received few responses, and all of them declined her salary, making recruitment impossible without a tuition increase.

“Nobody wants to work for what I can pay right now,” McCoy said. “I totally think these are $20 an hour employees, but I hate that most likely, I’m going to have to increase my tuition.”

The US Treasury indicated in a September report that child care workers earn an average of $24,230. More than 15 percent of industrial workers live below the poverty line in 41 states and half of them require public assistance. The sector enjoys high levels of sales, with 26 percent to 40 percent leaving their jobs each year. There is not much room to offer among child care centers that tend to operate with profits of 1 percent or less.

In neighboring Edmonds, Brianna McFadden closed her business, Cocoon Child Care, last month due to the pressures of the pandemic, although McFadden believes it would have remained open if there had been government support to stabilize the industry.

In her 12 years in business, McFadden said she’s never raised her tuition and has been a scarce daycare in the affluent northern suburbs of Seattle to accept low-income families on a government subsidy. In pre-pandemic times, Cocoon employed seven people to care for 37 children. Now McFadden plans to open a convenience store.

“It wasn’t worth it,” McFadden said, trembling with emotion. “Day care is hard work.”

Tatum Russell’s livelihood relied on McFadden’s daycare as much as the restaurant that employs her handcrafted seafood.

During the COVID-19-related daycare shutdown in August, a single mother could only gather help from relatives for some time. Russell eventually had to miss four days of work.

“It was a nightmare and it’s not over yet,” Russell said.

Pandemic affects child care
Every teacher’s resignation, exposure to the coronavirus, and daycare closures reveal that childcare is an industry on the edge, with wide-ranging workforce repercussions for the entire economy. Above, Amy McCoy serves lunch for preschoolers at her Forever Young Day Care facility on October 25, in Mountlake Terrace, Washington.
Eileen Thompson / AP Photo

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