Even before the COVID-19 pandemic, Kentucky’s child care industry faced significant challenges, ranging from a lack of centers in more than half of the state’s counties, to low wages for child care workers, to tight finances for owners and operators.
Pandemic-related restrictions made matters even worse. Under state mandates, many centers had to close for several months to prevent the spread of the coronavirus. Ones that remained open had to limit their capacity and follow strict health protocols. Now with centers returning to normal operations and pre-COVID capacities, the financial outlook for the industry remains unclear.
“Most child care programs, their goal each month is to break even – it is not a profit industry,” says Sarah Taylor Vanover, director of the Division of Child Care at the Kentucky Cabinet for Health and Family Services.
Finding and Paying Qualified Child Care Workers
In the early days of out-of-home child care, the primary responsibility of providers was to offer a safe and secure place for children to stay while their parents were at work. Hanover says that remains a critical part of the service child care centers provide today.
“Parents will not go to work if they do not feel their children are safe,” she says. “So having safe and secure child care makes sure that parents and caregivers can go to work be a part of the economy.”
As modern research has shown how much children learn from birth through age 5, Hanover says the focus of child care centers evolved to include activities to develop problem-solving, language, creativity, and social skills in children. Hanover says these exercises not only prepare children to enter kindergarten and elementary school, but will also help them succeed when they grow up.
“Child care helps prepare the next generation of the workforce,” she says. “We’re creating future architects and engineers and teachers and doctors.”
That change in mission also meant that child care workers had to expand from more of a baby-sitting function to an educator role. Hanover says the minimum standard for an employee of a child care center is a high school diploma or GED equivalent, but many centers now require workers to have a Child Development Associate (CDA) certification.
But cash-strapped centers may not be able to afford CDA-certified employees, says Hanover, much less workers with a full college degree. She says many child care staff barely make above minimum wage; only 16 percent of workers nationally get health care benefits.
“So it’s hard, based on the salary, to hire the most qualified candidates,” she says. “A lot of times child care programs will hire people who are new to the work force, young, and begin to train them through that program and help them…. to get a degree.”
When child care centers closed during the pandemic, Hanover says many laid off staff found other work that paid better, or they went on unemployment, which paid more than they made working full-time in child care. She says that’s making it difficult to lure those workers back into child care now that centers are open again.
Many Kentucky Parents Face Child Care Deserts
Even while child care centers operate on thin margins, parents face escalating enrollment costs. Hanover says she spends more on child care for her two boys than she does on her monthly mortgage. She says some families pay as much in child care for their toddler as they would to send a child to college for a year.
In fact, American parents are spending $42 billion a year on care for their preschool children. That’s more than state and federal appropriations for child care combined, according to the Economic Policy Institute.
“Parents can only pay so much, so child care providers can only charge so much,” says Hanover “They aren’t really charging the cost of quality, they’re charging as much as they think they can get from the family.”
Higher quality child care can also come with higher costs, which Hanover says leaves some parents in a bind. Wealthier families can afford to pay out of pocket, and government subsidies are available to help low-income parents afford quality child care options where available.
“But if you’re a middle class and you don’t qualify for subsidy, it can be very challenging to pay for a high-quality program,” she says.
Beyond the costs, parents also face an issue of access. Hanover says that pre-COVID, Kentucky had slots for more than 165,000 children in care centers. But U.S. Census data indicates Kentucky has more than 272,000 children under the age of 5. Hanover says the commonwealth also has 65 counties that are designated as child care deserts, which means there are more children needing care than there are available child care slots. The problem is especially acute in rural areas where geographic distances and population densities may make it difficult for centers to find enough clients to operate profitably.
Child Care and Corporate America Can Benefit Each Other
Hanover says the child care industry benefitted from three rounds of federal pandemic relief funding over the past year. But that doesn’t mean it was easy for care centers to survive.
“We saw child care providers all over the U.S., owners and directors, that were taking money out of their own pockets, emptying their IRAs, taking out small business loans, maxing out their credit cards to keep their programs open,” she says.
Now the challenge is to ensure that the industry can sustain and even grow after these cash infusions are gone. She says corporations and businesses can play a critical role in the future of child care.
“Companies benefit most when their employees come to work on a regular basis… when they’re not late, when they’re consistent,” says Hanover, “and for many working families, child care is the biggest reason that they have to stay home.”
In her new book, “America's Child-Care Crisis: Rethinking an Essential,” Hanover explains how child care is the industry that supports all the others precisely because it allows parents to work and participate in the economy.
She says businesses can offer their own child care option or provide a child care stipend as part of an employee’s benefits package. Larger companies can host on-site child care for their employees, says Hanover, while smaller ones can partner with nearby child care centers or child care homes. That way the employer guarantees the child care provider a certain number of children and a related revenue stream.
“Both entities end up benefitting because the child care program can reach full enrollment that way,” says Hanover. “The business itself, they don’t have to worry about losing staff and retraining people, which can be an expensive process.”
Child care homes operate like child care centers, only on a smaller scale. But they have to follow the same certifications, inspections, and requirements that larger centers offer. Hanover says the Cabinet is developing programs to train home-care providers on how to manage their operation and grow their business.
“This is an opportunity for new entrepreneurs,” she says. “It’s not just that you’re watching children in your home, you become a small business owner.”