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Charting the path forward for child care: using cost modeling to design new solutions
Charting the path forward for child care: using cost modeling to design new solutions
- Collection:
- Health Policy and Services Research
- Author(s):
- Aigner-Treworgy, Sam, author
Osborn, Caroline, (Of Early Childhood Initiative), author
Smith, Linda, (Of Early Childhood Initiative), author - Contributor(s):
- Bipartisan Policy Center, issuing body.
- Publication:
- Washington, D.C. : Bipartisan Policy Center, November 2022
- Language(s):
- English
- Format:
- Text
- Subject(s):
- Child Care -- economics
Child Day Care Centers -- economics
Models, Economic
United States - Genre(s):
- Technical Report
- Abstract:
- U.S. child care is a mixed-delivery system, meaning parents have choice regarding the type of child care to purchase to best meet the needs of their family. This also means that child care is provided in a variety of different settings, including part day preschools, for-profit child care centers, non-profit child care centers, family child care homes (FCCHs), and faith-based providers. In total, 59% of families with children under five rely on the formal child care system for their child care. Of those, about 62% of children under five are in center-based care of some kind and 18% attend an FCCH. Unlike K-12 education, early education and care is primarily provided through the free market. For most child care providers, most revenue comes from parent tuition, paid for by individual families. Child care facilities are typically businesses owned and operated by an individual, board or corporation, not the government. Yet, regardless of business type, tuition fees are unaffordable for parents while providers make low wages and can barely cover operational costs. Quality child care is simply too expensive for most families to afford. The cost of child care varies widely from place to place. The average annual cost of tuition ranges from $4,784 for a four-year-old in Mississippi to $24,243 for an infant in Washington D.C.9 Families that live below the poverty line would need to spend an average of 26% of their income to afford child care. Of working families who currently use an informal child care arrangement, 48% would consider using a child care provider if it was affordable and within their budget. Despite the high tuition, most child care providers struggle to break-even financially. Personnel expenses account for 70 to 80% of the operating costs for most child care businesses, but even still, child care professionals make low wages. Even though about half of child care teachers have an AA degree or higher, the median pay for a child care worker is $13.23 per hour, and more than half (53%) are enrolled in at least one main public benefit program (Medicaid, CHIP, EITC, SNAP, or TANF). A 2021 survey found that the overwhelming majority of child care providers say low wages are the main obstacle to recruiting new staff and the main reason child care professionals leave the field. In many regions, the cost of providing care is too high to operate a viable business at all. The gap in supply of child care leaves about 30% of young children with working parents without access to any formal child care in their community at all. The most pressing issue is how to increase workforce compensation without increasing costs for parents. Current revenue from parent tuition fees can barely support current child care operational expenses. Increasing staff wages will only make child care more unaffordable for parents, as costs are passed down through tuition. To address this tension, we must understand underlying challenges in the child care market.
- Copyright:
- The National Library of Medicine believes this item to be in the public domain. (More information)
- Extent:
- 1 online resource (1 PDF file (37 pages)) : illustrations
- Illustrations:
- Illustrations
- NLM Unique ID:
- 9918557283306676 (See catalog record)
- Permanent Link:
- http://resource.nlm.nih.gov/9918557283306676