This is how we fix the broken childcare system

In the days leading up to the pandemic, Marcia St. Hilaire-Finn was responsible for nearly 80 children at the childcare center she runs in Washington, D.C. But then, everything changed. When Bright Start Early Care and Preschool reopened its doors in June 2020, enrollment had dropped dramatically. “We opened with 12 children,” she says. “Twelve! I was like, ‘Oh my lord.’ And at that time, we still had 23 staff [members].”

As parents gradually realized the pandemic showed few signs of abating, they sent their children back to daycare. Still, it wasn’t until this year that Hilaire-Finn’s center matched—and then crossed—its enrollment numbers from early 2020. To keep Bright Start afloat and retain staff through the upheaval of the pandemic, Hilaire-Finn had to raise tuition by 10% for families that were already enrolled and 15% for families new to the center. To keep Bright Start afloat and retain staff through the upheaval of the pandemic, Hilaire-Finn had to raise costs for parents, to account for both the initial dip in enrollment and to attract more childcare workers as the center bounced back. “People are demanding more, rightly so,” she says. “It’s well deserved, because this is really hard work.”

But despite charging more for tuition, Hilaire-Finn says the center wouldn’t have survived without local grants and additional aid from the D.C. government, along with a loan from the Paycheck Protection Program. “Parents can only pay so much,” Hilaire-Finn says. “We want to make sure we can provide a service that is much needed, but to do so requires a lot of funding and support for the staff.”

Many childcare centers haven’t been so lucky. Since the pandemic, staffing across the childcare industry has dropped by more than 10%, according to data from the Labor Department. A survey last year by the National Association for the Education of Young Children found that a third of respondents were considering leaving childcare or shuttering their business in the coming year. Now, the childcare industry is also struggling to retain—and attract—workers who are being lured away by retail companies and public schools that can pay higher wages, particularly in response to pandemic-era fluctuations in the labor market. 

“In addition to all the closures that happened in the first year, what we have now is this crippling staffing shortage,” says author and childcare policy expert Elliot Haspel. “While the Amazons and Targets and McDonald’ses of the world are large corporations that are able to raise their compensation in response to labor market conditions, the overwhelming majority of childcare programs, who are already scraping by, have no ability to follow suit.” 

A public good crafted as a private business

For too long, the early childhood education sector has been treated more like a concierge service than a public good. The childcare infrastructure in this country has always been precarious, propped up by a patchwork of mostly small, private businesses that are encumbered by high turnover, stringent staff-to-child ratios, and slim margins.  

“The childcare system was fragile before COVID ever hit,” Haspel says. “We had low wages for workers. We had very scarce supply in many locations. It’s extremely expensive for parents. And all of those fundamentals haven’t changed because we treat childcare much more like a gym than we do a public school or a fire department or a library. It’s pay to play.” 

After decades of inadequate investment in childcare, the pandemic presented an opportunity to upend the status quo—and for a time, advocates were optimistic the day had come. Daycare closures had driven countless women out of the workforce, and young children have paid the price: Recent studies have found that even kids in programs with remote schooling spent far less time on learning activities than they did in person, and initial data from the pandemic indicates that children from low-income families, in particular, are facing developmental setbacks. The American Rescue Plan passed by President Biden in 2021 provided $40 billion in funding to the childcare sector, and the Build Back Better proposal promised a historic $450 billion investment, which would have secured universal pre-K and subsidized childcare. A version of the bill passed in the House, but by last December, months of negotiations had fallen apart.

Where does the industry go from here? Even with federal relief stalled, the key to securing the future of early childhood education seems to lie in public policy. “Unlike many other industries, there’s no credible path to recovery for the childcare sector without public funding,” Haspel says. “I think the federal government will get something done. I do believe that at some point, they have to take some action on this.” But in the absence of immediate and expansive federal relief, state support could be crucial to raise wages across the sector and ensure families can access high-quality, affordable childcare.

The ripple effect on the Great Resignation and the role of private business

As childcare centers have closed during the pandemic—in many cases, for good, or in response to ongoing COVID exposures—women have disproportionately shouldered the burden of caregiving, leading them to quit their jobs or scale back their hours. “We’re still down more than a million women workers right now,” says Vicki Shabo, senior fellow for paid leave policy and strategy at New America. “The idea of the Great Resignation suggests agency that I think a lot of people don’t have.” Earlier in the pandemic, some families could fall back on the paid leave policy secured by stimulus bills. But that relief was short-lived, and federal support has all but dried up. Meanwhile, many companies are rolling back accommodations and asking workers to return to offices, leaving parents of young children in the lurch. 

While some employers have expanded childcare benefits and other support for working parents—both before and during the pandemic—Haspel believes we shouldn’t look to the private sector for real, sweeping solutions. Even the most generous workplace benefits, like on-site childcare, only serve the privileged few. “That works for a couple hundred employees at corporate HQ,” he says. “We don’t ask [businesses] to run a library for their employees. There are certain things which, while they have private individual components to them, are fundamentally social goods.” 

That’s not to say businesses don’t have a role to play in ensuring broader access to childcare. “States need to head up a serious conversation about potential sources of tax revenue,” Haspel says. “I think the place to go is the businesses. The fact is: Businesses are freeloaders on childcare. They don’t pay into a system that they benefit from.” In New York, lawmakers and advocates are pushing for a $5 billion investment in the state’s childcare infrastructure. One proposal by State Senator Jabari Brisport would raise funds for providers and increase subsidies for families, with the eventual goal of establishing universal childcare in the state. Another bill, introduced by State Senator Jessica Ramos and Assemblywoman Sarah Clark, proposes subsidizing childcare for families by requiring employers to pay into it, through a payroll tax on the state’s biggest businesses that does not come out of employee paychecks. The bill also puts forth a minimum wage of $45,000 for childcare employees in the state, along with increased funding for providers.

“It really does, largely, if not entirely, pay for itself to invest in childcare,” Haspel says. “You get the benefits of increased parental labor force participation, primarily women. You get increased business productivity, because you have less turnover. And the actual economic output of the childcare sector itself is significant—there are over 2 million childcare providers in the nation.”

Moves to change the broken system

Advocates in New York are also looking to alter the payment structure for publicly-funded early childhood education, to make the sector less reliant on enrollment. “Particularly during the pandemic, enrollment really fluctuated,” says Gregory Brender, who oversees public policy for the Day Care Council of New York, a membership organization of childcare providers. “If you have, say, 15% under-enrollment, there’s not necessarily 15% of your budget that you can cut, because most of the budget of a childcare center is pretty fixed.” By moving to a line item budget, the city could help blunt the impact of fluctuating enrollment and work with centers to reach full enrollment.

For states looking to make serious investments in childcare, the path forward could be modeled on Washington, D.C., where advocates have pushed lawmakers to invest in a far-reaching program to increase compensation for childcare workers and subsidize care for more families. One reason childcare workers leave the industry is because they can get higher pay and better benefits as a public school teacher. “If they have a BA, they can just go work in D.C. public schools, [where] the starting salary is $66,000,” says Ruqiyyah Anbar-Shaheen, the director of Under 3 D.C., a coalition of organizations calling for public investments in childcare. “That’s not what teachers are making in childcare.”  

Back in 2018, the D.C. council passed the Birth-to-Three Act, which was intended to overhaul the district’s early childhood education system. But funding the program has been a challenge, despite ongoing pressure from advocates. In February, the D.C. council finally voted to use the funds from a wealth tax toward one-time payments for thousands of daycare workers across D.C. All eligible workers will receive a minimum of $10,000 (and potentially up to $14,000, depending on their position). For the average daycare worker in D.C., these payments are the equivalent of a 25% increase in pay.

But these payments are just an initial step toward the ultimate goal of raising salaries for childcare workers and, eventually, securing benefits for them as well. The D.C. Council has convened a task force of educators, researchers, and advocates—including Anbar-Shaheen—that is figuring out how, exactly, to disburse that funding equitably to childcare providers and ensure higher wages across the industry. “The pay issues, the finance issues—it’s not limited just to teachers,” Anbar-Shaheen says. “It’s directors as well, and their staff. So this is a really important first step, but we really have to be thoughtful about: How do we want to holistically support these programs in the long run?” At the moment, the task force intends to distribute funds to childcare programs by 2023, which will then go toward teachers’ salaries. 

There’s already an appetite in other regions for similar investments in early childhood education, and market forces could influence pay for childcare workers in surrounding regions of D.C. (namely, Virginia and Maryland). Some states, like New Mexico and Illinois, have already issued stipends and wage increases to childcare workers, albeit on a smaller scale.

“I think a lot of people in a lot of states really want to do something similar to what we’re doing in D.C., and have been wanting to do that for a long time,” Anbar-Shaheen says. “But we have been battling this notion in society that caring for small children is a family’s business on their own, and that they just [have] to figure it out.”

Amid the pandemic, however, there has been a greater recognition of what advocates and childcare providers have been saying for decades—that early childhood education can and should be treated as a public good. And it’s difficult to imagine a future for early childhood education without public funding, especially as childcare providers battle escalating challenges in the workplace, between unvaccinated children and recurring surges in COVID cases. Meanwhile, parents are left with fewer and fewer options as they get priced out of childcare or face the uncertainty of daycare closures. 

“Who right now wants to become a childcare instructor?” Haspel says. “At this point, you’re giving up a significant amount of pay for a job that is extremely demanding and where conditions are even worse than usual. It’s hard to see where the next generation of teachers is going to come from.”