Child care may seem like an issue that only affects parents of young children. But the lack of quality, affordable, and accessible care for the youngest Kentuckians has emerged as a critical economic issue for the state. More than 46,000 adults are out of the workforce because they can’t find child care, according to Kentucky Chamber of Commerce. Their data also indicates one in five parents left a job in 2020 to stay home and look after a son or daughter.
That makes the lack of adequate child care a significant factor in the state’s dismally low workforce participation rate. The crisis also disproportionately affects mothers who have left a job to care for their children.
“In Frankfort we talk an awful lot about how to increase workforce participation, especially among women – and it’s been dropping in Kentucky for 20 years,” says State Rep. Josie Raymond (D-Louisville).
Once merely a clean, safe place to leave a youngster while mom and dad are at work, child care centers are now expected to also provide activities that foster brain development, prepare children to enter school, and teach them basic social-emotional skills.
“This is not just about finding a place for someone to watch your kids for the day, this is also about molding that future generation,” says Charles Aull, executive director, the Center for Policy and Research at the Kentucky Chamber of Commerce. “Maintaining high quality learning opportunities is a really, really critical thing.”
But those functions require trained staff who are hard to come by in many parts of the state. Plus many centers can’t pay their workers much above minimum wage and still make their services affordable for parents. That combination of labor issues and thin profit margins, coupled with long hours and demanding work, make operating a child care business difficult.
“The legislature and the state’s going to have to be more involved in this to create a model in the commonwealth that will grow child care facilities,” says state Sen. Danny Carroll (R-Benton), who operates the Easterseals West Kentucky Child Development Center in Paducah. “As workforce numbers remain low, we’re going to have to do this – I don’t know that we have a choice.”
New Partnership a ‘Good Start’
Earlier this year, lawmakers passed and Gov. Andy Beshear signed House Bill 499, which creates an Employee Child-Care Assistance Partnership to incentivize businesses to help their employees with out-of-pocket child care expenses. For example, if an employer offers a $200 a month stipend to employees for child care, the state will match that with an additional $200. The goal to help families pay for child care, and help employers recruit and retain employees who might otherwise exit the workforce to stay home and care for a youngster.
“House Bill 499 is a good start,” says Raymond, who is a member of the General Assembly’s Early Childhood Education Task Force.
The legislation allocates $15 million to the program in fiscal year 2022-2023 to cover administrative costs for the program as well as the matching dollars to businesses.
Raymond voted for the final bill but says making child care an employee benefit is not without risks.
“The more that we tie child care to employment, the more worry that becomes if someone loses their employment, they lose their child care, and they’re in an even deeper hole,” says Raymond.
Aull says he hopes this will encourage more employers to include child care as part of employee benefits packages. He says it will cost businesses money, but will pay off in employee retention and attraction.
“Employers provide a whole range of different benefits to their employees: Think about things such as health care, retirement accounts, paid leave programs,” says Aull. “This needs to fit in with all those other different types of benefits.”
Carroll, who is co-chair of the Early Childhood Education Task Force, says the child-care assistance partnership is “a great model” but only a part of the larger solution that needs to happen. In the short term he says he fears it will create more demand for child care at a time when providers are already overwhelmed. Over the long term, Carroll says he hopes the state can encourage businesses to offer their own child care options for workers.
On-Site Child Care for Toyota Employees
Toyota Motor Manufacturing Kentucky has hosted 24-hour, on-site child care for its workers since 1993. Lydia Irby, human resources senior manager at the Georgetown plant, says the service has been especially helpful for second and third shift workers. School buses deliver an employee’s child to the center after school, where the youngster can do their homework, have dinner, and even take a shower and get some sleep until their parents get off work.
“That’s a wonderful benefit and helps for people to be able to work that graveyard shift,” says Irby. “Oftentimes it’s very difficult to find a place that’s going to be able to take care of your child during some non-traditional hours.”
Toyota operates its child care center in partnership with Bright Horizons, a for-profit provider of employer-sponsored child care across the nation. Irby says the center focuses on whole-child learning and includes educational activities around science and technology. The program is so popular that now some employees even bring their grandchildren to the center, according to Irby. She says when parents know their kids are safe and cared for, they are better able to focus on their work.
While the on-site child care is a valuable employee retention tool for the company, Irby says a brick-and-mortar facility is a large investment for Toyota. The company also operates a child care center at its Indiana plant near Evansville, but Irby says not all of Toyota’s 12 other manufacturing facilities across America have on-site child care. She says it depends on the availability of child care services in each community and how many parents of young children are in their local workforce. For example, she says the company’s Mississippi plant refers workers to nearby private providers rather than hosting its own on-site child care services.
“Toyota is not making money on having their child care,” says Sarah Vanover, a former director of the Toyota child care center in Georgetown. “They are doing it because it is a benefit to their staff that they want to offer.”
Most Kentucky companies don’t have the resources to fund their own on-site child care. That’s why business leaders and state officials are looking for creative ways to address the child care needs of the workforce.
Vanover, who is now policy and research director at Kentucky Youth Advocates, says the University of Kentucky maintains a list of recommended child care providers who give priority enrollment to UK employees. Smaller and mid-sized businesses might partner with a local family child care home, which is a certified provider that offers care in their private residence for a small number of children. She says these homes are a critical part of the child care landscape in eastern Kentucky, rural communities, and other areas that are unable to support a larger child care business. She says these smaller operations also have the flexibility to work non-traditional hours or on weekends.
Several such homes in northern Kentucky have developed a pilot collaboration to provide child care for a medium-sized company in that area, according to Vanover. Aull says some employers will sponsor a specific number of slots with a local provider to ensure that they will have care available for their employees, especially if they work odd hours when care might be harder to find.
“It’s been a challenge for them to do that,” says Aull. “A lot of times that does involve some financial loss, but they make up for it in employee retention and employee recruitment.”
Addressing Child Care Deserts
While demand for child care services is strong and getting stronger, the supply side remains an issue for the commonwealth. Vanover says more than half of Kentucky’s counties are designated as child care deserts, meaning there are more children in need of care than there are providers who can take them.
Deserts can occur across an entire county, or they may exist within certain areas. Vanover points to Jefferson and Fayette Counties, which as a whole aren’t child care deserts, but some neighborhoods within those counties are. That may leave parents having to drive to the other side of town just to find a provider who can take their child.
Aull says deserts may also involve a lack of providers who cover second and third shifts, or who specialize in children with special needs or who are medically fragile. Other areas may not have the level of quality that some parents seek.
Providers are working to increase the professionalism of their employees with more education and training. Vanover says that should also come with higher wages for those workers. But she says that’s a delicate balance: Better compensation for employees might require charging parents higher fees, which they may not be able to afford.
“We have to invest in our workforce, not only to give them the wages that they need, but also to give them the training that they need,” says Vanover.
Providers have found some financial stability thanks to federal COVID pandemic funds targeted to child care. The American Rescue Plan Act included money for child care providers to boost wages for workers, pay overhead and maintenance expenses, and upgrade facilities and equipment. It also established matching grants to employers and counties in child care deserts that want to open new centers.
“One of the reasons we have some of these child care deserts is because no one has identified a way to make it financially sustainable in those areas,” says Aull. “So the more that we can do to make those things sustainable, I think you’ll start to see people step up and fill those gaps and provide the services in places that we need them.”
But the ARPA funding is set to expire in November 2024. Vanover says without more state or federal dollars, many providers won’t be able to pay their operating expenses or maintain the higher wages they’ve given employees. That puts even more pressure on the state legislature to act on the issue.
“We need to move forward with haste and get some solutions made and be prepared to make an investment before these funds run out,” says Carroll.
At a minimum, Raymond says lawmakers should look to continue the financial supports put in place by ARPA. But she says she hopes the General Assembly will look beyond funding the bare minimum of child care services in the commonwealth.
“One day, Kentucky could have high quality, full-day, publicly funded child care options for every kid,” says Raymond. “This can happen with a combination of Head Start, private child care centers, faith-based child care centers, the family child care homes... There’s a fit for every family, if we can support the sector.”
That would cost upwards of $300 million, according to Raymond. But she argues the state can easily afford that given the current revenue surpluses.
