The High Cost of Doing Daycare
Joan Hallett’s apartment is in a wide, six-story complex on a classic brownstone- and tree-lined street of Fort Greene, Brooklyn. When I enter, it’s full of children. Beyond a leather couch and green armchair, the darkened living room holds two infants in rockers, one of them fussing while being soothed by a staff member and an older one standing in a playpen. Through a narrow hallway is the back room, which used to be a bedroom and is now painted in blue and yellow, with signs displaying the letters of the alphabet and a daily schedule and shelves of cubbies and toys lining every wall. There, six toddlers eat supper under the watch of two young, tired-looking female providers. After eating, they switch to noisily solving big wooden puzzles and looking at picture books.
Hallett arrives a few moments behind me, fresh off her part-time job as a guidance counselor at a nearby middle school, which she's worked while running this daycare center out of her home for the past 12 years. Her curly gold-and-brown braids are piled on top of her head, and she sports red cat-eye glasses above a matching magenta blouse and sneakers. Her face looks much younger than what you’d expect from a grandmother.
Most of the parents who come to Hallett are seeking a safe, nurturing environment for their newborns so they can return to their jobs. All of her current clients work. “It is so hard for parents to find just good quality daycare for their infants,” Hallett explains. This is a bit of an understatement. The dearth of decent childcare takes a big toll on the US economy; half of all American families struggle to find childcare, and mothers without childcare are significantly more likely to be unemployed.
Infant childcare might be the most difficult and expensive kind of care for parents to find, probably because infants are the most expensive children for daycares to take on. New York City, for example, requires one adult employee for every two infants, and while Hallett has the capacity and the license to take on up to six infants, that would require far more employees. Right now she has three infants and seven toddlers. If she didn’t have any infants, she says, she would only need two employees instead of three. (“A lot of daycares don’t even want to take infants,” explains Hallett. “The more infants you have, the more employees you have to pay.”)
The reality is that the country’s nearly 675,000 childcare providers are often just squeaking by.
Childcare workers make just over $22,000 a year nationally, compared to about $28,500 for preschool teachers. The low pay helps explain the difficulty most daycare owners have in retaining employees. Hallett has a loyal staff—some have been with her for as long as eight years—but nationally, the annual turnover rate for childcare providers is 30 percent. “I feel bad when I can’t pay them as large an amount that they deserve,” Hallett says. “They really do a good job.”
Employee compensation is just one of many large, fixed costs that childcare providers face. Other substantial expenditures include rent, food, and supplies. While Hallett participates in a state program that supplies her with some food, it’s just a portion of what it takes to feed the children in her care breakfast, lunch, supper, and snacks. She has to provide toys, playpens, rockers, and other equipment, all of which need to be replaced regularly, thanks to wear and tear. She has to buy materials for arts and crafts and other projects. She keeps musical instruments and CDs around. She also has to pay taxes and insurance.
“It can become quite costly,” she says. To make things work, Hallett is constantly budgeting and seeking out sales on things like supplies and toys. “For a small daycare, it adds up.”
Most of the national conversation about the difficulty of finding childcare in the United States focuses on what it costs for parents to pay for people to watch over their children, and for good reason. Those costs are high, especially in urban areas, and growing. Across the country, the average annual cost of childcare for an infant easily reaches into the tens of thousands of dollars—in New York, for example, it’s over $15,000—and nationally, it climbed 70 percent between 1985 and 2012. In fact, in nearly all parts of the country, childcare eats up a bigger share of a family’s budget than housing, transportation, food, health care, or even college tuition.
Hallett charges parents paying out of pocket $400 a week to care for their child, which adds up to nearly $20,000 a year, and even with these numbers, Hallett can barely stay in the black. She doesn’t even cover her costs for those who have low enough incomes (in New York, below about $41,000 a year) to quality for subsidies from the government; the most she gets from a government subsidy is $150 a week. “That’s not any money,” she notes. “You have to pay the workers more than that. It’s not adding up. It’s very tough.” She’s not alone: in all but one state, California, subsidies reimburse providers for less than 75 percent of current childcare private-market rates. Subsidy reimbursement rates are $200 or more below that level in 25 states.
This is the rock and the hard place that both childcare providers and parents in need of care find themselves in. The reality is that the country’s nearly 675,000 childcare providers, who serve one in three children four and under and one in four older kids, are often just squeaking by. The big payments parents make for care barely cover the fixed costs of staff, rent, food, and other necessities. There are no economies of scale or other ways to boost profits: taking on more children simply requires more employees and resources.
Amasha Griffin, of Apple Valley, in California’s San Bernardino County, ran into the problem of finding a high-quality daycare program as a mother a little over 16 years ago. She started looking for childcare, but it was “extremely expensive,” she recalls. The ones she liked and could afford were completely full. Griffin knew how important a good childcare setting was: she was working on her early childhood education degree. “I needed somewhere that was safe, and I needed somewhere high-quality, and that was a hard thing to find at the time,” she says.
So Griffin decided to start a daycare of her own. (She, too, runs her program out of her home.) She decided to keep going all these years “because there’s a big need for quality care,” she explains. She once contemplated leaving for the better pay and benefits of being a preschool teacher, but felt the need to stay for the children she serves.
But the difficulty of keeping her business financially healthy has taken a toll on Griffin. “Over the years, I have struggled,” she says. She can’t take any time off if she gets sick, because there’s no one to cover for her and she risks losing clients if she shuts down for a day. In December she had surgery and was told to take eight weeks off, but she felt she couldn’t. She doesn’t even have dental insurance or a retirement account because of the lack of affordable options.
While government subsidies are important to her business—about three-quarters of her clients receive them—they don’t pay her enough. When she takes into account the 60- to 70-hour weeks she works, she earns “from $2 to $4 an hour,” she says. Griffin can’t even afford to hire staff—her daycare is staffed by herself, her husband, and her own children. “The money parents are paying—at the end, I’m still losing,” she says. “All the money [I] make … I’m investing all that money back into my daycare.”
“Can you turn a profit from family daycare? Probably not,” she adds. “You more than likely break even ... You’re pretty much living at poverty level.”
Nationally, 9 percent of children are cared for in a home daycare setting like Hallett’s or Griffin’s. But the largest share of children watched by someone other than a parent—a third—are in a more formal setting, such as a childcare center or preschool. Even these larger providers struggle to make things work financially.
Take Bobbie Burrowes. After spending 20 years in the military, Burrowes decided to pursue her “heart dream” of running a childcare center. It was a lifelong dream: as the seventh child of 11, she often had to take care of her younger siblings. “I love children,” she says. “I wanted to give the parents something that I knew the kids needed: that was love, that was support, safety.”
In 2008, Burrowes opened All God’s Children Learning Center in a childcare center in Gautier, Mississippi, that had been destroyed by Hurricane Katrina but revamped with the community’s help. At first she and her two daughters were the only employees. Today she employs seven teachers and is getting ready to open a new facility around the corner to meet all of the demand. Her daughter, who currently works for Head Start, will be the director of the new center.
Burrowes serves people of all incomes, “just average, all-around people that work,” she says. She opens at 5 a.m. to accommodate working schedules and closes at 6 p.m. Parents tell her “all the time that when they go to work they don’t have to worry, that they have peace of mind about their kids being taken care of,” she explains. She was recently in a grocery store, and a woman whose children aren’t in the center anymore came up and hugged her, thanking her for what she did for her kids.
It takes budgeting to make sure “all of the priorities are met—that means the bills [are] paid,” she says. Burrowes has to cover insurance, a mortgage on the center, and teacher compensation. Sometimes an unexpected expense—like the breakdown of one of the buses she uses to pick up kids after school—means she has to dip into her own pocket. She can make do, but acknowledges that it’s not a lucrative, or easy, business. “I’m not going to say you’re going to be rich,” she says. “But I’m going to say that … your life is richer just being a part of children’s life.” Burrowes wakes at 4 a.m. every day and stays late; she says she’s always ready to jump in and do what has to be done, whether that be paperwork or mopping a floor. “Most people in the business … it’s a love,” she says. “A lot of times you have to go above and beyond the things that you have to do … You have to love what you’re doing to stay in it.”
“Because I enjoy it, though, it’s not a struggle for me,” she adds. “I thank God every day, because I’m living out my dream.”
Like Griffin, Hallett decided to start a daycare out of her home after she had two children of her own and needed to find childcare for them. At first, she put them in an in-home center similar to the one she runs now, but both toddlers ended up contracting salmonella poisoning, landing each one in the hospital for a week. “It was very scary,” she recalls. So she said to herself, “I can do this myself rather than risk my kids.”
Food poisoning is the kind of thing that government regulation could, in theory, help guard against. Hallett is fanatical about safety. But there is a cost to ensuring that daycare centers meet certain standards. Providers try to pass the costs on to parents, but also run into the simple fact that their clients’ budgets can only stretch so thin.
New York City has strict requirements for childcare providers, even those who operate out of their own homes. To be certified, providers have to be trained in first aid and CPR once a year and go through 30 hours of health and safety training every two. The regular training presents a substantial burden for Hallett and her staff, especially because, she explains, the curriculum never changes. “You want to add on all of these trainings … where do you think the money is coming from?” she asks. “You just are not compensated for all they ask you to do.” Every 30-hour training session costs her staff between $300 and $400 out of pocket. The annual CPR and first aid trainings cost at least $100 each. And the trainings have to be done during her staff’s free time, since she needs them at work every day to care for children.
Safety, and the cost of increased regulation, is another difficult push-and-pull in the childcare business: federal, state, and local governments clearly have good reason to ensure that children are in a safe, nurturing childcare environment, and parents are determined to keep their children healthy and happy. Generally speaking, American childcare is poor: in a 2007 survey, fewer than 10 percent of providers were rated high-quality, meaning they had adequate teacher-to-child ratios, group sizes were small, and providers were well trained. In 2013, not a single state got a top grade for its health and safety standards.
Yet as advocates and lawmakers push for an increase in regulations and rules in the name of quality, there’s often no extra money to meet them. In 2014, Congress increased funding for the Child Care and Development Block Grant, the primary source of federal childcare subsidies. But it increased regulations by even more. CLASP, an anti-poverty advocacy organization, later estimated that Congress would have had to spend $1.4 billion more so that providers and states could meet the new rules without cutting back.
Hallett, who is also a licensed teacher for pre-K through sixth grade and a guidance counselor for kindergarten through 12th grade, points out that she doesn’t have to renew either of those licenses every year; she is permanently qualified until she decides to stop working. “I think it’s too much. It’s excessive,” she says. “In any other career, you don’t have to keep being retrained, retrained, retrained.” Teachers, who make over $1,000 a week on average, don’t have to go through it, nor do many nurses, who earn more than $33 an hour. Hallett says she knows some childcare providers who have had to close their doors because they weren’t able to keep up with the regulations.
Some regulations for safety, such as covering electrical outlets or making sure doors can’t be locked from the inside, are simple and straightforward. New or unexpected rules, though, can spring up suddenly and threaten an entire business. Back when she first opened up, Hallett and hundreds of other in-home childcare providers in Brooklyn faced being shut down by the city because they were in prewar buildings with what the city deemed inadequate egress. “I was right in the crunch to be closed down,” Hallett recalls. “They changed the laws like the month before I was supposed to have been closed down.”
“I think it’s too much. It’s excessive. In any other career, you don’t have to keep being retrained, retrained, retrained.”
It’s not easy for Griffin, either. “The stipulations are growing; it’s getting a little bit harder, because they want to make sure that it is a quality and safe environment,” she says. As with the daycares in New York, all California home daycares must be licensed, comply with strict staffing ratios depending on the ages of the children, ensure providers have at least 15 hours in preventative health training (and at least one must be certified in pediatric first aid and CPR), and take mandatory child-abuse-reporting tests. Some daycares have to get food-handler certifications. Daycare providers also have to comply with a variety of smaller rules, such as keeping their homes “clean and orderly,” maintaining phone service, fencing in outdoor spaces, and even properly storing food parents bring in.
Yet there’s no extra money. “They keep adding all of these stipulations and regulations, but they’re not raising the pay at all,” Griffin says. “Unless you’re in excellent financial [shape] or you have a financial adviser and you know how to budget, it can become a real issue.”
That doesn’t mean Griffin doesn’t strive for a high standard. “A lot of people look at daycare as babysitting,” she notes. “I’m not a babysitter, I don’t sit on babies. I’m an early childhood educator; I’m a professional. We run a full curriculum here just like they do at preschools.” She takes pride in the impact she has. One family of children who were failing at school came to her for after-school care; by the time they left, they were making straight As. “I have children that … started off with me at three and four years old, and now they graduated college. That’s a big deal to me,” she says. She tries to go to all of their graduations and award ceremonies, even after they leave.
All of which is to say: it’s worth it. “Even though there are a lot of cons, the pros are that I get to see these children grow into these great individuals,” Griffin says. “Even though it is low wages, I don’t think anything is more rewarding than hearing the laugh of a child or seeing them put together their first puzzle or tying their shoe for the first time or learning how to ride a bike.”
Hallett echoes such thoughts on the intangible rewards of the job. “Their growth and development means a lot when they start talking and they’re walking,” she says. She, too, prides herself on not just watching children but helping them learn. “We actually do schoolwork with them,” she points out, including learning the ABCs, counting, and identifying shapes. Parents share their gratitude with her and her staff throughout the year. Even after she retires from her guidance counselor position next year after putting in 35 years in city schools, she plans to keep providing childcare.
As the 5 o’clock hour nears, the toddlers at Hallett’s daycare begin packing away the folding chairs and table they’ve been using for their activities. Staffers in the infant room begin storing the playpen and toys so the space can be returned to a normal living room again. Each time the doorbell rings, all the children look up with anticipation to find out whose mommy or daddy has come to collect them. “Da! Da!” yells one little boy, who can’t be much more than three years old. (He is informed that his mother has come for him.) Another sleeping infant is tucked with her blanket into a stroller by a provider to be collected by a mother who has come straight from her job. One by one, they’re scooped up in grateful arms after the working day is over.