Because tuition is the backbone of these businesses, some experts predict that one-third to one-half of all licensed providers will never reopen.
Laura Minnock has been the owner and director of Milestones Childcare Center in Pittsburgh, Pennsylvania for 20 years. Before she took the reins, it was owned by her sister-in-law—meaning, the business has been in the family for almost three decades.
“Childcare is not a high-margin business to begin with,” said Minnock. It’s highly dependent on the ratio of staff to children, and when that formula needs to be adjusted to account for new social distancing guidelines, she added, “the margins aren’t there to support it.”
The COVID-19 pandemic has exacerbated the already existing crisis in the American childcare industry. Although childcare for children under five is an essential service for working parents, unlike K-12 education, it’s a primarily private industry. And the bailout offered by Congress to help small businesses hurt by the pandemic is nowhere near enough.
According to a survey conducted in early April, around 60% of childcare providers had shut down at the time because of the pandemic. Smaller, in-home daycares were slightly less impacted than childcare centers: 28% of the former remained open during shelter-in-place, while only 16% of smaller centers and 10% of larger centers continued care.
Preliminary data, as reported by CNN last week, found that about a quarter of parents have been paying full tuition for child care throughout the pandemic, while another 35% of survey respondents said they have been paying partial tuition.
Nonetheless, because tuition is the backbone of these businesses, some experts predict that one-third to one-half of all licensed providers will never reopen.
This crisis disproportionately affects women, who make up the vast majority of childcare workers. Mostly women of color, this is a low-paying industry: The average wage is only $10.72 per hour. As HuffPost reporter Emily Peck put it, “The whole industry is subsidized — not by government funds, really, but by the cheap labor these women provide.” And now, because of widespread closures, hundreds of thousands of women have lost their jobs.
As states relax stay-at-home orders and other coronavirus restrictions and daycares begin to reopen, a big question is, will parents feel safe sending their kids back to childcare, thus helping these businesses recover? One recent survey suggests 75 percent of parents are worried about exposure to COVID-19 at childcare centers.
More Work, But Half the Income
La Plazita is a Spanish immersion preschool in Oakland, California, founded by Oakland native Krystell Guzman and Guatemalan-born Lupe López. La Plazita started in 2011 as a small in-home preschool with only 12 kids, and now boasts two preschool centers; the larger one has the capacity for 110 kids. There were long waiting lists to get into La Plazita before the pandemic. (Disclaimer: The writer’s child was once enrolled at La Plazita.)
Now, López said that with the new social distancing regulations, they’ll only be able to serve half the number of kids, around 50. The center opened back up June 1. California’s Community Care Licensing Division, whose guidelines are similar to those of the updated CDC guidelines, specifies no more than 10 kids per group, and each group should remain separated from other groups; teachers must remain with their group.
There is also a whole new cleaning regime to contend with. Beyond reinforcing regular hygiene for the kids, like hand-washing, disinfecting will have to happen much more often. This means more labor by staff, despite the fact that fewer children will be in attendance. “Now we will only work with 32 children,” López said, for which “we’re going to use half our staff.” Instead of an eight-to-one ratio of kids to teachers, the ratio will now be around four-to-one.
Other social distancing steps that will require more labor is rotating groups of kids on the play structures: Each time one group leaves, the whole structure will have to be disinfected. And, while La Plazita’s larger site has multiple bathrooms for different groups of children, the smaller site only has one children’s bathroom, which means more frequent cleaning. There will also be extra costs associated with buying more cleaning products and personal protective equipment for the staff, like clear plastic face shields.
As a large center, La Plazita has had a floater in the past to cover teacher absences, but with less than half the number of families paying tuition, they can no longer afford a substitute. There’s also the problem of introducing a new teacher into a stable group of kids in the midst of a pandemic—an issue López hasn’t found a solution to yet.
Parents’ Anxieties and the Economic Impact
One of the thorniest issues to navigate is whether parents are even comfortable sending their kids back to childcare. Milestones Childcare Center serves up to 50 children normally, from 18 months to five years old. It closed on March 16, in accordance with the state-mandated order in Pennsylvania. Minnock could have applied for a waiver to stay open to serve essential workers, but her main clientele are kids whose parents are educators or academics.
When she closed, enrollment was full and Minnock had a waiting list. Now, she’s not sure how many families will return. Allegheny County began reopening on May 15, and she was planning on opening on June 1, with 22 families saying they wanted to return.
But the same week coronavirus restrictions were relaxed and the county moved to “yellow” phase of the governor’s mitigation plan, stories about multisystem inflammatory syndrome started to come out. In the wake of that news, Minnock said, most parents changed their minds and only five families wanted to send their kids back. Now, Minnock plans to wait until July or August to reopen, gauging the pulse of anxious parents to decide on an exact date.
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Noting that everyone is worried about a spike in COVID-19 cases now that businesses are reopening, Minnock said, “Everyone wants to adopt a wait-and-see attitude. No one wants to be the first one in the pool.” However, it’s also true that most of the Milestones parents either have the summer off or work from home, and they have the privilege of waiting until August to send their children back to childcare.
Some parents expect their childcare providers to hold a spot for them until they feel comfortable sending their child back, perhaps not understanding the economic precarity of these small businesses. When asked whether she planned to give parents a cut-off date by which they would commit to returning, Minnock said she hasn’t had to do that yet, but that it may happen at some point: “I don’t wanna give people ultimatums, but it’s not sustainable for a small business.”
Fortunately for López and La Plazita, many families want to send their children back, and she’s relieved she doesn’t have to pick and choose. “I was crossing my fingers that not everyone would want to come back and then have to tell them we don’t have capacity.”
Angel Academy JC is another Pittsburgh-based childcare center with a capacity for 31 children, both toddlers/preschoolers and school-aged children with before- and after-school care needs. Angel Academy’s owner, Tiffani Best, said that her clientele is made up of many families with essential workers. However, almost no one wanted to send their child back in mid-June: “They do need childcare,” she said, “but everyone’s scared to bring their kids out.”
One factor that distinguishes Best’s facility is that 45% of the children she serves receive subsidized childcare from the state—the rest pay tuition privately. She’s been closed since March, and she’s only been able to survive because the state has continued to pay the subsidized tuition while she’s been closed.
“Even though we have some [funds] set aside for three months, it would have been devastating to start back, to try to maintain, to keep going,” Best said. Initially Pennsylvania was paying for subsidized care through the end of May, she said, but state officials recently extended that until the end of June. As a result, Best is considering not opening until July—that gives her time to see whether there’s a spike in coronavirus cases this month.
Government Bailouts and Staff Retention
Minnock and Krystell Guzman (owner of La Plazita) have received relief through the Paycheck Protection Program (PPP), part of the CARES Act passed by Congress in late March that’s designed to help small businesses.
Minnock was able to pay her staff until the end of March, and then laid them off so they could file for unemployment, which gave them access to an extra $600 on top of the regular state unemployment funds. However, she’s been struggling with the terms of the PPP relief, and she’s not alone. For the funds to be forgivable, businesses are supposed to use them within eight weeks from the day they received them. And, 75% of the PPP funds have to be used on payroll, on the same number of employees as before; for every employee you don’t bring back onto payroll, it reduces the amount that’s forgivable.
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Minnock’s funds came through in early May, which means they were set to expire in late June, and she isn’t even planning to be open by then. The funds would be essentially unusable, she said, because they would become a loan: “I’m afraid to touch it at this point, because if I can’t use it to make it forgivable, I certainly don’t want to acquire debt.”
Recognizing how the PPP’s rules have left many small business owners with their hands tied, Congress approved legislation that extends the time limit for using PPP funds beyond June 30 and drops other requirements.
Beyond this measure, Democratic members of Congress recently introduced legislation to specifically address the economic needs of childcare providers, named the Child Care is Essential Act. The HEROES Act, passed by the House in May, also includes $7 billion to stabilize childcare businesses, but the GOP-controlled Senate is not only unlikely to vote on it soon, but probably won’t pass it in its current form.
Uncertainty About the Future
A major concern among childcare providers is how to handle the uncertainty of this moment. Providers won’t know if they are reopening only to have to close again in a few weeks or months due to a new outbreak. A parent called López recently to ask about what their regulations will be for when his child begins attending La Plazita in September, and she had no idea how to respond—she can’t even plan for the fall.
Best was similarly anxious about her reopening, which she’s currently thinking will be on July 6. But, she noted, “I know people are gonna be together like crazy for the 4th of July,” which could mean increased exposure to COVID-19.
Despite the many variables, Minnock said, “I do think we’re gonna reach a point where we have to figure out what amount of risk we’re going to accept in our life,” because a vaccine won’t be quick to come.
Best added, “Our normal is gonna be totally different, but at some point … we need to start moving forward. It’s just crazy and scary.”
Editor’s Note: This story has been updated to remove information that may put some workers at risk.