As businesses rebound from the pandemic, one critical piece of the workforce — in fact, the part that allows the rest of it to function — is still struggling: the child-care industry. Short-staffed, underpaid, and still reeling from the losses they sustained during mandated closures, many day-care owners can’t even pay themselves a living wage. Another problem? There are 100,000 fewer child-care workers than there were before the pandemic — a loss of almost 10 percent, according to the latest data from the Bureau of Labor Statistics. The shortage has forced many day-care centers to cut enrollment numbers or even close for good. Inflation hasn’t helped, either.
Here, we talked to three day-care owners about how they’re managing to make ends meet despite the challenges they face.
“I used to post a job and I would get hundreds of applicants a day. Now I get maybe two.”—Mia, owner of a child-care center in Chicago
I started out in child care as a nanny over 12 years ago. Then I operated an in-home day care for ten years. And last January, we officially moved into the center that I’d been building for several years, including a two-year delay because of the pandemic. We’re fully operating right now with a staff of about ten. When I was in-home, I was licensed for a capacity of 14 children, and I had only one or two staff. Now, as a center, I’m licensed for 52 children across four classrooms.
It’s definitely hard to hire people. Especially back in January, February, March — that was very difficult. But it’s getting better. You need to be prepared to pay more. Two years ago, I could get an assistant teacher with no experience and no education for $15 or $16 an hour. Now it’s $18 or $19 an hour, and that’s not even with any qualifications. People who do have qualifications, they go for over $20 an hour — up to $25 an hour if they have experience. That was not the case two years ago. I used to post a job and I would get hundreds of applicants a day. Now I get maybe two. I’m not sure where they are going.
I never want to skimp on paying my teachers. I want them to earn a living wage and feel appreciated because I know how hard it is to do their job. I’ve done it myself for many, many years. So I’m willing to pay them and offer them benefits. I can’t afford corporate-style benefits, but we do health insurance and scholarships if they want to advance in the field. But then it’s a very thin line between paying our teachers enough and operating a profitable business. I’m a million dollars in debt from opening the center; that’s how much I had to take out for the mortgage and the construction.
I’m not taking very much income personally. I pay myself $1,000 a week, or about $50,000 a year. That’s what I can afford at the moment. It’s a little bit more than what I was making when we were an in-home day care, but back then a lot of our personal expenses were covered; 75 percent of our rent was paid through the business, for example, and that’s not the case anymore. I have three kids of my own, and my husband thankfully works as well. We’re getting by.
One of the good things about being a licensed center is that we’re eligible for more grants and government assistance, and so is our staff. Illinois has a wage-supplement program for early-education teachers where you can apply to just get free money, basically, from the state.
We closed for about two months in 2020. At the time, I was still doing my in-home day care and the center was under construction. Everything was heavily delayed because of COVID. We were scheduled to open in the fall of 2020, and that was pushed to January 2022. That was unfortunate and costly, but the government funding really did help. It still does. We applied for and got PPP for employee retention, EIDL loans and grants, SBA loans — all of it. And that’s still powering us, especially being such a small school and starting off.
The parents that transferred with me from the in-home day care to the center, I grandfathered their rates, so they stayed where they were. But our new rates, for new parents, are higher than they used to be even though they’re a notch below average in the neighborhood. For example, to send a 15-month-old here would cost $2,250 a month. And that is because I’m trying to attract more people and fully enroll our classrooms so that parents will spread the word about our quality of care.
I know it sounds hard, but I’m so happy to have this job. I wanted to open my own day-care center for the longest time. It was a dream of mine since college. Now I’m finally here. And if I compare this to January, February, March of this year, it’s easy-breezy (that’s when we opened and I had a baby at the same time). The pandemic set us back, but we made it through that. Nothing’s going to pull me down or stop me now. I’m an immigrant, so I’ve been through much worse in my life overall. I’m not complaining. I’m not afraid of hard work.
“Some people still think of this job as babysitting. It’s not that at all.”—Maria, owner of a day care in Connecticut
I’ve owned and operated my own child-care center for 33 years. I have one location; it’s not a franchise. It’s not an easy business to be in, but I love it. I love working with the people I work with. I love the kids. And even though you hear about a lot of challenges in the child-care industry, I’ve been around and established for so long that I never have empty spots. I’m very full, and I have a waiting list.
I know the cost of child care for parents is high, but most of that money goes directly to paying our employees. And they are not even getting paid that much. I wish I could pay them all what they’re worth, but I can’t — I’d go out of business.
The standard in child care is that about 50 percent of the money you take in goes to payroll. For us, it’s a little higher, like 55 or 60 percent. That means we have to use the remaining 40 or 45 percent to pay for everything else. I own the building that we’re in, so we have to pay the mortgage, the maintenance, utilities, taxes. Something always needs fixing. Our taxes last year were $23,000 alone. Then there’s materials for the kids, like art supplies. We also provide food: breakfast, lunch, two snacks. Right now, our building needs a new roof, which we’re struggling to afford. It’s going to cost $35,000 or something ridiculous. I’d love to redo the playground, but that kind of stuff is not in our budget and we don’t have anywhere to get it from. It’s not like we can go to the board and say, “We need another roof.” It’s just got to come out of whatever.
The other problem is staff turnover, although I have been really lucky with that. We don’t have as much turnover as some of the day cares. Not that we don’t have any, but a lot of our teachers have been here for ten or 15 years. Some teachers have been here for over 20 years. When they do leave, it’s always to go into the school system because they get better pay and benefits that I can’t afford to offer. Say we have a teacher who’s got a CDA [child-development-associate credential] or an associate’s degree — she won’t be qualified to be a full-time teacher in the public schools, but she could be an assistant and she’d still make more money and be doing less work.
We just put in a 401(k) program that I do match, but we don’t do health insurance or any of that. I wish we could, but it would put me out of business. Most of my employees are married, so they get health care through their spouses. Some of them are under 26, so they still have it through their parents. Other than that, I don’t know. I get my health insurance through my husband.
My staff is all paid hourly. They’re above minimum wage, but not by a lot. Most of the teachers make about $15 an hour. And some of them are a little more, like $16 an hour. But the assistants and the high-school girls are just barely above minimum wage — maybe 50 cents more. They do get 10 percent off if they bring their own kids. It used to be that they could bring them for free, but we stopped doing that years ago.
We’ve always paid above minimum wage. But when the state raised the minimum wage a few years ago — I think this year it went up to $14 an hour — that did affect us. Because now, every employer is paying more, so there’s more competition for employees. And our costs went up, too. Food has gone up. Everybody puts a delivery charge on everything now. We did raise prices by about 5 percent this past September, and we’ll probably have to raise them again next September.
In terms of what we charge, it’s most expensive for infants, about $1,300 a month. Toddlers are $1,250. Three-year-olds are about $1,200, and 4-year-olds are about $1,150. That’s for five full days a week.
Some people still think of this job as babysitting. It’s not that at all; it’s early education. What kids learn at this young age is very important. We know how to spot developmental delays and jump on them early, which can make a big difference. We have a fabulous play-based curriculum. Our infants in our infant room are learning sign language. It’s a great program, and I’m really proud of it.
My take-home pay right now is $34,000. It’s not enough to live on. I might need to give myself a raise soon. But I live in a two-income household, so we get by. I really love what I do, and I love that we run a great place. I would hate to retire anytime soon.
“I haven’t taken a salary from my child-care business since 2020.”—Lori, owner of a child-care center in Brooklyn
I’ve been working in child care since 2008. I started my business out of my home and then expanded to a center-based location in 2016. When the pandemic hit, we were required to close and then we reopened gradually that May. We had a number of parents who were essential workers. A lot of them were in the medical field, so they helped us reopen safely, with the proper cleaning measures and rules around exposure, which also made other parents more comfortable. I’m grateful for that because we had no guidance or support from the Department of Health. Everyone seemed to be focusing on restaurants, but there was nothing about the child-care industry, which is necessary for people to actually go back to work.
While we closed, we couldn’t afford to pay our rent. Fortunately, we were able to work things out with our landlord, but it was stressful to have so many financial obligations piling up. We were struggling to pay our staff and pay utilities. We finally got some PPP money, but it was a long haul. We also got an EIDL loan for $150,000, but when you have $300,000 in back rent and utilities, that’s not enough.
We’ve obviously had to increase prices for enrollment. Unfortunately, that pushes some parents out the door. It’s the challenge that we face not just as a business but as a nation. What happens to people who are in need of child care to work, but they can’t afford it? But on our end, child care doesn’t work unless we have staff — qualified, reliable people — and payroll is our biggest expense. So we’re always trying to balance keeping our wages up so that we can retain good staff, without hurting enrollment numbers because our price is too high. And then there’s our rent. We are in a newer facility, so our rent is on the higher side and the price point starts there.
Raising prices can be a hard conversation, but I just explain to parents that the cost of everything is increasing. I also have to buy supplies. I have to pay for electricity and gas. My rent goes up by 5 percent every single year. All of those things have to come out of my operating budget.
I employ 13 people. I’d like to have 16, so we’re working on hiring for three open spots. Everything you’ve heard about child-care staffing is true. I’ll post a job and literally get one applicant. It makes things very, very challenging. In addition to paying my staff as much as I can, I offer them things that will supplement their monthly household income: metro cards, gas cards for those who drive, gift cards to restaurants and grocery stores. I do it whenever enrollment is up and we have some extra income because it allows me to make their lives easier without putting us in a position where we can’t fulfill other financial obligations if cash gets tight again.
I haven’t taken a salary from my child-care business since 2020. Luckily, I also have some rental properties, so I’ve been able to sustain the bills for my family. I know I’m fortunate to be able to do that. But this business is my baby; I’m not going to give up on it so easily. When we were in the pandemic and our bills were piling up and I saw so many other businesses close their doors, I would ask myself, At what point does it become too much? At what point do you walk away? And I haven’t hit that point yet.
Still, I’m definitely starting to feel overwhelmed and exhausted in a way that I have not before. Before the pandemic, I was just contending with staff and policies and procedures in day-to-day operations. Now it’s all that stuff and inflation. And, of course, COVID is still an issue. And this year, we’ve been plagued with so many viruses on a level that I’ve never seen before. Every week, you have a parent asking, “What are we doing to contend with this? What are we doing to contend with that?” And then we’re seeing the results of two years of mask-wearing and isolation; children have developed speech delays and other issues because they have not been interacting as much. So I’m absolutely exhausted. I don’t know anyone who works in child care who isn’t.
I’ve tried to make self-care more of a priority because if I’m not okay, then my business is not going to thrive. In addition to owning my child-care center, I have an older mom who needs care. I have a 3-year-old and a 21-year-old. So I’m stretched thin. I’m trying new things to lighten my load. I’ve started creating office hours when I respond to emails and talk to parents. I can’t set the expectation that I’m always available to address issues; then, every day, a parent will come and say, “Do you have a moment to chat?” — and it becomes a 20-minute conversation. I have to have boundaries and a home-work-life balance for myself the same way everyone else does.
The Cut’s financial-advice columnist Charlotte Cowles answers readers’ personal questions about personal finance. Email your money conundrums to mytwocents@nymag.com.
