December 9, 2020  |  Lynn Schear

The future of child care is uncertain, but help could be on the way

Pre-pandemic, child care was already a troubled sector of the American economy, with parents struggling to find spots and centers operating on razor-thin profit margins.  What 2020 revealed to both public and private leaders was that ignoring child care needs cuts drastically into our nation’s productivity.  The pandemic laid bare the flaws in the system, with far-ranging consequences for families and businesses alike.

A hit to the bottom line

In some areas, most day cares never shut down, while in states like Pennsylvania hundreds of licensed facilities remain temporarily closed.  Researchers fear that as many as 4.5 million child care slots could be lost permanently – nearly half the nation’s capacity.  Less than 6% of Paycheck Protection Program funding went to child care businesses, with loans helping to retain 31% of the industry workforce.

Analysts predict that 2020’s pandemic child care crisis will set women’s progress back a generation – a bad sign for economic recovery.  One in four women who lost their jobs during COVID-19 say it was due to a lack of child care, with mothers of young children closing their businesses or leaving their jobs, representing a GDP loss of $64.5 billion.

Meanwhile, factors point to an upcoming spike in demand: A swell of children held back from kindergarten and preschool may return in the fall, especially if vaccines are readily available and effective.  As the economy reopens, women will be called upon to fill the in-person service and retail sector positions they had to abandon – but they will need child care options that make sense.

So, what could actually happen?

President-elect Biden campaigned on a promise of funding high-quality universal preschool for 3- and 4-year-olds and improving pay and benefits for early childhood educators, pumping $335 billion into the effort over a decade.  Experts also expect his administration to push for an immediate stimulus bill that would include relief for child care.

Some federal legislation is currently stalled, like the Child Care Is Essential Act, passed by the House in July, which would create a $50 billion fund to stabilize the child care sector.  The proposed Child Care for Working Families Act would provide grants for states to boost access for families on a sliding scale based on income.

Both Republican and Democratic lawmakers have proposed their own versions of child care relief, signaling hope for a bipartisan effort to come to fruition sometime in 2021, particularly in the areas of direct relief funding and new tax credits for working families.

Some states have decided not to wait for Congress to act.  Colorado voters just approved a tax to fund free preschool for all 4-year-olds in the state by 2023.  West Virginia is expanding its universal preschool program, with a handful of other states like Vermont already achieving almost full enrollment.

When and if states receive more federal resources to move the nation toward more universal preschool, public-private partnerships will begin to redefine and transform current models of care, with a continued emphasis on increased sanitation and safety measures.

An assist from the boardroom

Right now, only one in five employers helps out in any form with day care for employees, but that might have to change.  As corporate decision-makers watched their workers struggle to find child care solutions, they began to seek solutions.

The previous gold standard in employer assistance was on-site work day cares, but those are falling out of favor due to liability issues and the move away from office-based professional models.  Instead, some companies are paying to send in-home assistance to parents through portals like Care.com.  They’re also providing more scheduling flexibility and paid leave policies for parents.

Meanwhile, Silicon Valley companies are rolling out digital services, like Wonderschool, MyVillage and WeeCare, that link a company’s working parents with licensed home day cares while helping their affiliated operators with business, legal and marketing needs as well as curriculum and learning supplies sourced from external vendors.

With so many potential changes coming from all directions, child care businesses could struggle to find staffing, hard supplies and PPE if faced with an influx of enrollment.  Staying abreast of funding and regulatory updates at the federal, state and local levels can help businesses keep early childhood education centers operational.

At MCH, our market-leading child care contact database is sourced and updated directly from state licensing registries, putting your company’s resources in front of decision makers.