The Daily Escape:
Sunset with Cosmos flowers, Blue Ridge Mountains, Franklin, NC – August 2023 photo by Amy Barr
Monday’s Wake Up Call is that weâre in the middle of a childcare crisis, one that dates back to WWII. Daycare costs too much, daycare workers donât earn enough, and many daycares donât make money and are going out of business.
Today, anyone who has tried shopping for day care knows that itâs a tough marketplace. Care.com, an online platform where people can hire housekeepers, pet caretakers, nannies, and more, publishes a yearly Cost of Care Report to help US families understand the cost of childcare. Their June 2023 report found that on average, US parents spend 27% of their household income on childcare expenses:
 âHouseholds with children make up 40% of the total US population. And with a national family median household income of $91K, child care costs for the typical American family are even more staggering:
– 45% of families earning less than $100K annually will spend more than $18,000 on childcare in 2023, amounting to 18% of their household income (HHI).
-43% of families earning less than $75K will spend more than $18,000, amounting to 24% of their HHI.
-39% of families earning less than $50K per year will spend more than $18,000, amounting to a whopping 36% of their HHI.â
And increasingly, economists are saying that more women would be working if childcare was available. From Axios:
âIn a research note about Friday’s jobs report, the chief economist at consulting firm RSM US did something surprising: Instead of talking about rate hikes or soft landings, he made the case for universal child care.â
Axios quotes RSMâs Joe Brusuelas:
âChildcare for kids under the age of 5 is increasingly an issue for more mainstream economists who are concerned about the prospect of long-term labor shortages in the US. Universal childcare is the most realistic way to help expand the labor force at a time when the economy needs workers the most,â
More:
âThe US needs more workers, and there are more women sitting on the sidelines of the labor market than men.
-Right now, close to 86% of working-age men are employed compared with 75% of women. Thatâs a record for women, but itâs also far below the rates for men â thereâs room to grow.
-Substantial childcare investments, like those proposed in the now defunct Build Back Better bill, could increase mothersâ employment by 7 percentage points, with bigger jumps for low-income families, according to estimates in an NBER paper published last year.â
The underlying problem is the economics of childcare. First, itâs difficult to get information about childcare costs either online or over the phone: Daycares often only share their prices after you have visited their facilities. And many daycares have waitlists stretching from six months to a year.
Economists say that long waitlists are a classic sign that somethingâs wrong with that particular marketplace. In this case, waitlists indicate that daycare prices are too low. But parents say that the price for daycare is actually too high. NPR reports that the median price in daycare for an infant in a large county in the U.S. is $17,000 a year. Also, more than 60% of families can’t afford the full cost of quality day care.
Meanwhile, daycare owners can barely afford to stay open. NPR interviewed a daycare provider in Iowa who said that salaries are 83% of their monthly budget:
âFive percent goes to their loan payment. 4% is operating expenses, cleaning supplies, snow removal, play kitchens, things like that. Three percent is utilities. Another 3% goes to groceries….And 2% is for their insurance and their building insurance and worker’s comp.â
Along with labor, that equals 100%, meaning the center makes no profit. Itâs probable that the daycare ownerâs pay is in the 83% labor total, but still it means zero profit. The Iowa daycare pays its staff between $12 to $15 an hour, while the local Chick-Fil-A advertises $16.75/hour to start. The Iowa daycare has a census of 72 kids, which requires 25 staff.
Daycares are required by law to hire a ratio of staff/per child, a higher number than other low-wage industries, like fast foods need. In fast food, labor is about 25% of the total costs, and the volume of sales is in the tens of thousands, not the 72 kids that a wage increase would effect in the Iowa daycare.
Since labor costs are such a  high percentage of total costs in daycare, increasing wages means prices paid by families of children in daycare have to rise drastically to cover the higher costs. Wrongo did a back of the envelope calculation for the Iowa center. If their base pay was $12/hour and it was raised to $15, the average monthly charge for one of the 72 children already in daycare would increase by $360/month, or about 47%!
The broken system is made worse in the US because we don’t have long maternity and paternity leaves.
Funding for childcare that was put in place during the pandemic is set to run out in September. Once we hit that “childcare cliff,” 3.2 million children will lose federal funding. More centers will either have to raise prices, cut staff or shut their doors.
Universal childcare has a tortured history in the US. During World War II, women replaced men in the domestic workforce. But who would take care of the children? The US government answered by enacting the Lanham Act, the first and only universal child care program in American history. An estimated 550,000 to 600,000 children received care through these facilities, which cost parents 50 to 75 cents per child, per day. The program ended in 1946.
Nixon vetoed a universal childcare bill in 1971 that would have created federally-funded public childcare centers across the US because Conservatives argued that the bill was communist and that it would be the end of the American family. A group called Iowans for Moral Education asked âWhose Children? Yours or the Stateâs?â
Time to wake up America! If you don’t want society to help take care of kids, youâre an asshole no matter what reason you give for being against funding. These kids didn’t ask to be here and they have done nothing to deserve not having societal support. If you think you can make America great again by making it harder to take care of kids, youâre wrong.
To help you wake up, watch and listen to a scene from the 2003 film âDaddy Daycareâ. In this scene, Charlie (Eddie Murphy) and Kim (Regina King) try to find a good preschool for their son Ben, but it turns out to be impossible. Lifeâs still like this 20 years later:
