The coronavirus pandemic has battered child care providers in the U.S. over the past six months, forcing many to close, at least temporarily, and demanding those open adhere to new, stringent safety guidelines.
Unsurprisingly, these challenges have had financial consequences. To meet the enhanced health and safety guidelines imposed by local and federal agencies, the costs for licensed child-care centers have increased an average of 47%, according to a new report by the Center for American Progress. Home-based family child care is seeing costs increase an average of 70%.
Source: Center for American Progress. Note: Data reflects pre- and post-pandemic cost changes through July 2020.
The cost increases are driven in large part by the need to source and purchase additional sanitation supplies and personal protective equipment for staff. Social distancing guidelines — typically limiting class sizes to groups of 10 — also remain a stumbling block. These restrictions generally reduce the number of children a provider can enroll and increase staff costs.
The largest expense for child-care providers is staff, according to Simon Workman, American Progress' director for early childhood policy and author of Tuesday's report. Staff compensation typically makes up about 70% of a provider's business budget, even though the average employee makes just above $12 an hour.
At this point, Workman says he doesn't anticipate providers will increase tuition for families to cover this cost given how unaffordable child care was before the pandemic. To make it work, some child-care centers have tapped into state grants, which were part of the $3.5 billion allocated in the CARES Act passed in March. "But that money is about to run out and is usually based on what resources the state has, rather than what it actually costs," Workman says.
If child-care providers continue to bear the burden of increased operating costs, as well as reduced capacity, some may have to close their doors permanently. If that happens, it could create a shortage of available spots for families, and ultimately, drive up the price of care.
"This could certainly be a factor coming out of the pandemic if a lot of programs close permanently – the few remaining will be able to charge higher tuition, pricing low- and middle-income families out of the market entirely," Workman says.
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