Issues in Child Care Industry Are Costly for Families, Employers
YOUNGSTOWN, Ohio – Child care is an issue for more than just families, according to three experts who spoke during a recent Fed Talk presented by the Federal Reserve Bank of Cleveland.
Recent research by the Cleveland Fed showed turnover among U.S. child care workers was about 65% higher than the median turnover at typical occupations in 2022.
Kyle Fee, a policy advisor at the Federal Reserve Bank of Cleveland, said a third of the centers offering child care had more than a 20% turnover of staff, while about half had no turnover at all.
Fee believes it may be, in part, a wage issue. Additionally, child care workers and preschool teachers tend to be younger women and more diverse. Child care workers in the 2022 Current Population Survey by the Cleveland Fed had the 12th lowest median wage out of 825 occupations at $28,520, ranking just ahead of fast food, counter workers and cashiers. Preschool and kindergarten teachers are paid more at $40,942, but still rank 213th lowest.
“The pay for a child care worker does not pay a living wage for an adult and one child in any state,” Fee said. He added that 50% of child care workers who leave the occupation also leave the workforce.
In northeastern Ohio, those with hundreds of hours of training in child care make about $15 per hour, and teachers with bachelor’s degrees are making $17 per hour, said Nancy Mendez, president and CEO of Starting Point, which is a northeastern Ohio organization that provides resources to families and technical and training assistance to child care providers.
Mendez reacted to Fee’s suggestion that child care problems can also be tied to an equity issue, with minority populations struggling even more.
“We just have to put the value to what many of these employees – many of them black and brown women – we have to put value into what they are doing,” Mendez said. “They are creating a foundation for our children to succeed in life, and that should be worth more than $14 an hour.”
After the pandemic, child care centers failed to rebound, according to Mendez. Baby boomers who previously worked in the occupation failed to return, and when wages increased in other sectors, it became harder to hire and retain child care workers, especially when jobs with higher wages required less training.
The result in the counties served by Starting Point – Cuyahoga, Lake, Geauga and Ashtabula – has been 60% of child care providers reporting they are at low enrollment, mostly because of staffing issues.
“If you want to be able to just break even as a child care center, you need to have enrollment at 75%, and 70% of our child care centers are below 75% right now. So they’re really struggling,” Mendez said.
Additionally, she said some child care centers went against advice during the Covid-19 pandemic and used ARPA money to pay workers more and offer retention bonuses to stay open. But when the money ran out, large numbers left.
According to the U.S. Chamber of Commerce, 59% of parents who are not working full time would choose to do so if they had access to affordable child care. But Mendez said many child care centers have had to raise tuition rates to hire workers.
Starting Point has programs to help low-income families afford child care and has helped centers provide additional money to attract and retain staff, spending just under $5 million in the past two years.
Why It Is Important to More Than Just Families
Mendez said a recently released study showed an estimated $3.47 billion annual loss to the economy in Pennsylvania due to the workforce struggling with child care issues. Another study is underway in Ohio.
Sarah Savage, senior policy analyst and policy advisor at the Federal Reserve Bank of Boston, said the Council for a Strong America estimated in 2022 that economic issues associated with child care concerns cost employers $23 billion.
However, Savage said one study from Harvard Business School found only 24% of employers recognize it impacts their employees’ performance.
“The question really isn’t whose responsibility is it,” Savage said, “but in whose best interest it is.”
Savage said national trends aren’t changing over time, and about 25% of firms with more than 500 workers provide some sort of assistance with child care, while the number drops off significantly for smaller businesses. Savage said without technical assistance, few businesses are ready to offer child care to their employees, but she suggests there are several other things employers can do, including child care subsidization, reimbursement of child care costs for work-related travel, pre-tax child care funds, backup child care services, child care referrals, flexible work hours and not penalizing parents when they are late or leave early due to drop-off schedules.
In one case, Savage said three small businesses are coming together to create a nonprofit, on-site child care facility, applying for a grant to get it off the ground. There are state and federal dollars available to help create and operate child care facilities, but Savage said the uptake, especially for federal tax incentives, remains low.
While households pay 40% more for child care than the recommended federal guidelines, Fee said, there needs to be other ways to fund living wages for child care workers.
Mendez agreed, stating that increasing the cost of child care means families can’t afford access, and she believes it must be subsidized because child care does not work as a traditional business model. Mendez also believes it needs to be a group effort involving both public and private sectors, and she feels business owners and corporations are not going to help tackle the problem until some solutions can be found.
“How do we untether what child care workers make from what parents pay,” Savage said. “What can reasonably be covered by parents and what needs to cover the true cost of care so that there’s quality?”
Savage said she doesn’t believe the problem can be solved without the help of employers.
“Child care is pro-employee. Child care is pro-workforce. Child care is pro-family,” Mendez said. “It is for the greater good, and it is worth having many people at the table and figuring out solutions, long-term solutions, to be able to help families get back to work and help our children be successful adults in the future.”
Copyright 2024 The Business Journal, Youngstown, Ohio.
