A Tremendous Amount of Daycares Closed In The Last Year, Here’s Why You Should Care

If there was an industry that was fragile before the pandemic took hold that continues to suffer long after lockdowns were lifted, it would be the child care service industry. In this article, we will look at why this is and what can be done to keep struggling child care providers in business.

The Pandemic Sped Up The Process

Before COVID-19 changed the world, over half of Americans lived in parts of the country that were considered “child care deserts.” These were communities without a child care provider or communities where there were no child care providers nearby. Or, they were in communities that were so underserved by child care services that there was a waiting list of three children for each empty slot.

Then COVID-19 forced protocols that included mask-wearing, social distancing, hand sanitizing, and capacity limits of indoor facilities that provided services for groups of individuals. That eventually shifted to complete closures. It pushed many child care providers, who had been hanging on by a thread, out of business. With the country already underserved, the pandemic was the final straw for many service providers.

After The Lockdowns

Sure, there were easily thousands of child care and daycare centers that resumed business once the COVID-19 lockdowns were removed in 2020. But by that point, the damage was done. Two years later, the industry that was already suffering from a lack of providers meeting the ever-increasing demand of parents, was still in trouble. Big trouble as a wave of closures swept the country faster than a COVID-19 variant.

A Closer Look At The Numbers

It was between December 2019 – just a few months before COVID hit the US – and March 2021 when close to 16,000 child care centers and licensed family daycare programs disappeared. Not suspended until conditions improve but gone for good. Closed, never to reopen. The reason? Well, there have been several factors that have contributed to the massive number of closures. They include the following:

  • An increase in operating costs
  • Thin profit margins
  • An increase in labor costs due to inflation
  • Attendance fluctuations resulting from COVID
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Still with the numbers, although about 16,000 facilities have closed, that represents a drop in child and daycare centers of 9-percent across the US. As minor as this may sound, you have to remember that over half of the country’s population resides in childcare deserts. Places where these services do not exist or the conditions are not right for them to exist. There were not a lot of facilities around in the first place so a drop of 9-percent is significant.

What They Had To Say

Child Care Aware of America CEO Lynette Fraga says, “Childcare programs are barely staying in business. Childcare programs are short-staffed, and providers are burned out.” Add to this the fact that costs of providing the service have increased due to the lack of supply and an increase in operating expenses, and it gets even harder for providers to make any money. The cost of child care services in 2020 has gone up by 5-percent to a total of $10,174 for a child per year. Fraga adds, “Parents continue to struggle to find and afford childcare as they reenter the workforce.”

More On The Impact On Families

Families are feeling the pinch coming from a combination of higher costs and fewer providers. Estimates sit at parents with children under 5 suffering from $13 billion in lost income annually since 2020 due to pandemic-related disruptions to child care services. The lack of child care has further impacted families with many parents forced to quit their jobs. Those that haven’t reached that point have either changed their work schedules, revised their contracts, or have chosen the scale back their careers. All totaling $9.5 billion in lost wages.

How Much Should Child Care Costs Total?

According to the Department of Health and Human Services, childcare costs should be no greater than 7-percent of the household budget. However, with increases in operating expenses pushing up the childcare rates, these expenses now hover much higher than that. Child Care Aware says the costs are now 10-percent of the median household income for a married couple with children younger than 18. For single parents, childcare costs are as much as 35-percent of the household budget. Understandably, that’s far more than many single-parent homes can afford.

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The Pandemic Childcare Closures Continue To Impact Women

According to the National Women’s Law Center, women have been hit the hardest during lockdowns and closures from COVID. The group estimates that roughly a million women are still not back in the workforce compared to numbers recorded pre-pandemic. The main reasons are a desire to continue schooling and disruptions in childcare services.

The Build Back Better Plan

President Joe Biden’s Build Back Better plan was to assist by providing support for both families with young children and childcare providers. However, the program is still sitting in Congress. Even if the program was fast-tracked today, the childcare initiatives may be far short of the target. According to Fraga, “Far too many families still do not have access to high-quality child care due to barriers such as expense and lack of availability. Without large-scale investments in our childcare system, such as the Build Back Better Act, these trends will continue.”

Final Thoughts

With childcare services spread thinly across the country before COVID, and COVID contributing to the closure of many of these operations that could not survive the downturn in business as we all followed pandemic protocols, the future does not seem bright for this industry. However, with a program coming from the federal level, it may offer some relief. 

There still has to be incentives to encourage more entrepreneurs into opening child and daycare facilities in communities where these services do not currently exist. Without the proper incentives, if anything will happen, it will be the closure of more of these facilities rather than the opening of new ones. It sounds bleak, but without a major change, chances are that there will be fewer providers within the next year.

Sandra Chiu works as Director at LadyBug & Friends Daycare and Preschool

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