How the Lack of Affordable Child Care is Impacting Businesses

North Bay Leadership Council actively supports quality early child education and care programs as part of its work plan for 2024.  Our member employers are reporting that they and their employees are finding it more and more difficult to find quality, affordable child care in the North Bay, especially infant care. A survey of child care costs released in early 2024 found that on average, families were spending about 24% of their household income on child care, with 60% spending 20% or more. The U.S. Health and Human Services Department defines affordable child care as no more than 7% of household income.

Lack of child care can hinder a business’s ability to grow. This is especially true for small businesses as reported by Andy Medici, San Francisco Business Times, BizWomen.

Medici notes a new “survey of small-business owners who are parents or have employees who are parents by the Small Business Majority found 59% said lack of access to affordable child care is hindering their business growth. About 59% said their child care issues forced them to take substantial time away from their business, while 58% agreed that lack of affordable child care made it harder to start their business in the first place. While child care access is outside of the direct control of most small businesses, the survey made it clear it’s weighing on their fortunes and their workers”.

He shares with us that “John Arensmeyer, founder and CEO of Small Business Majority, said 4 out of 10 small-business owners say they have lost out on business opportunities because of challenges with child care. “Our research shows that child care is essential to the small business ecosystem and is a key factor in entrepreneurial growth,” Arensmeyer said.

The survey also found:

  • Small-business owners saw their businesses suffer because of a lack of child care, with 56% saying a lack of child care forced them to take substantial time away from their business, and 39% said it caused them to lose out on business opportunities. About 26% said it forced them to shut down their business and rejoin the workforce.
  • About 51% of small businesses said they’ve experienced lower productivity and 44% said they have been unable to operate longer hours when their employees face child care issues. About 31% reported lost earnings and 28% said they had to hire temporary workers to fill in child care gaps.
  • Nearly three-quarters of entrepreneurs say that their employees adjust their work schedules due to child care issues at least a few times a month.
  • About 62% of small-business owners experienced unplanned employee work absences and 30% said they had an employee quit — or have 27% turn down a promotion — due to child care issues. About 30% said they had a job candidate turn down an offer due to child care issues.

“As we’ve noted, child care businesses themselves are struggling due to the end of support from Covid-19 relief programs, demographic shifts and child care challenges for their own employees.

Janna Rodriguez, owner and founder of The Innovative Daycare Corp in Freeport, N.Y., said investments in child care are critical to removing barriers for economic growth.”

“Small child care businesses like mine rely on a small workforce to thrive,” she said. “But that workforce also desperately needs reliable, affordable child care themselves, and they may seek other employment or leave the workforce entirely if they can’t access affordable care.”

Medici continues, “the survey comes as the Small Business Majority and other advocacy groups push congress to pass the Child Care Stabilization Program, which would provide funds for child care centers and enact other measures to keep daycares from closing and encourage the opening of others. The previous $24 billion Child Care Stabilization Program passed during the pandemic provided funds to keep child care options open — but that expired at the end of September 2023, creating what experts had warned was a child-care cliff. “

A separate survey by Motherly found that about 18% of mothers changed jobs or left the workforce in the last year — with 52% of Gen Z and Millennial mothers say the reason why was lack of affordable child care. But it’s not just risk of closures that is plaguing the child care industry, it’s that rising costs would require remaining providers to raise rates to levels even less affordable for families.”

Recent data from Bank of America shows that’s the case so far. Households with child care payments saw that those payments were 32% higher in January 2024 than the 2019 average. Even as big increases in the Consumer Price Index and overall inflation have dropped from their 2022 peaks, day care and preschool costs are now outpacing inflation as a whole, Bank of America said.”

“Meanwhile, as higher-income households are making these bigger payments, Bank of America data shows low-income household child care payments are disappearing altogether, signs that they are no longer able to afford professional options.”

“About 79% of parents expect to be impacted in 2024 by the end of the stabilization funding for child care centers, and 54% are preparing to spend $600 per month or more on child care — with 40% saying they are already spending more.”