‘Parents Are at the Top of Their Spending for This’ As Costs Rise, Finding Child Care Becoming More DifficultSep 12, 2023 05:19PM ● By Liv Osby
Finding child care – and often at an affordable price – is a problem familiar to most working parents.
In Columbia, South Carolina, according to one parent, women quip that the minute they know they’re pregnant, they get on a waiting list for day care, even before telling their spouses they’re expecting.
But there are waiting lists all around the state, says Connelly-Anne Ragley, director of communications and external affairs at the South Carolina Department of Social Services.
“I had a hard time finding a slot for my newborn in May 2016,” she said. “I see this as a mom, too.”
And it’s not limited to South Carolina.
Nationwide, the lack of affordable and accessible child care “shortchanges children, costs the American economy billions of dollars a year, stymies women professionally, and is pushing families to the breaking point,” according to a new report from the Annie E. Casey Foundation, a national nonprofit aimed at improving the well-being of children.
The problem is fueled by a variety of issues, including high costs, waiting lists, and low wages for workers, the report concludes.
Indeed, two-thirds of child care providers nationwide report staffing shortages resulting in more than half being forced to serve fewer children, and 37 percent having a longer waiting list, according to the foundation.
And child care costs have risen 220 percent since 1990, “significantly outpacing inflation,” the foundation reports, adding that federal estimates had the median costs in 2022 ranging “from $5,357 a year for home-based school-age care in rural communities, to $17,171 for center-based infant care in major population centers.”
Most affected are “women, single parents, parents in poverty, families of color and immigrant families,” the report notes.
The average cost for a day care center in the Palmetto State in 2022 was $8,658 per child a year, which represented 30 percent of the median income of a single parent and 9 percent for couples in 2021, according to the Children’s Trust of South Carolina.
“I have friends in Charleston who pay $1,400 a month for infant care,” said Ragley.
“Parents are at the top of their spending for this,” said Cindy Lehnhoff, director of the National Child Care Association, which represents about 6,000 small licensed and regulated child care providers and larger centers around the country.
“If you have two young children in a child care center, and both parents are employed,” she added, “they will pay well over 10 percent of their income to child care. And that’s more than it would cost to go to a state college. More than a house payment or rent.”
The lack of affordable care means parents and other caregivers often have to quit, change, or refuse a job over child care issues, the foundation reports, adding that the situation costs the American economy $122 billion a year in lost earnings, productivity, and tax revenue.
“If you can’t find someone to watch your child when you work, you can’t work,” Lehnhoff said. “That became really evident in the pandemic.”
Nationwide, more than half of working parents had been late to work or left early at least once in the previous three months because of a lack of child care and 23 percent were fired for it at some point, according to the foundation.
In addition, many women are opting to stay home with their children because they can’t earn enough to pay for child care or they can’t find it, Lehnhoff said.
In South Carolina, 14.8 percent of parents had to quit, greatly change, or refuse a job in 2021 because of child care issues, putting South Carolina at 45th in the nation in this category, the trust reports.
Meanwhile, child care workers in the state earned on average $10.94 an hour in 2022, fourth worst in the country, the trust notes, compared with $12.87 an hour in North Carolina and $11.71 in Georgia.
That pay was also lower than 98 percent of professions, “including fast food workers ($11.29), janitors ($13.06), and retail workers ($13.27) despite the higher qualifications needed,” according to the trust.
And child care salaries in the Upstate, which averaged $22,086 a year, were the lowest in the state, the trust reports. That compares with $22,695 in the Lowcountry, $22,634 in the PeeDee, and $24,472 in the Midlands.
Wages are often so low that single employees qualify for food stamps and Medicaid, Lehnhoff said.
“The average pay is between $11 and $13 nationally,” she said. “You can work at Starbucks and make more money.”
In fact, one survey showed that more than six in 10 child care workers – 94 percent of whom are women – had difficulty paying their own food and utility bills in the most recent month, the Casey Foundation reports.
Yet child care businesses nationwide operate on profit margins that are typically less than 1 percent, according to the foundation.
“Labor costs can account for more than 80 percent of a child care provider’s expenses, and caregiver-to-child ratios are mandated by law and implemented for safety, so there is little flexibility on price,” the Casey Foundation reports.
“There are razor-thin margins for operators,” said Ragley. “These providers are seeing their costs going up just like other business areas.”
The situation leads to sluggish hiring, high turnover, and burnout, and discourages new providers, according to the foundation.
While the child care conversation has been going on for decades, the Covid pandemic brought it into stark relief when more than half the child care centers in the state temporarily closed in April 2020, Ragley said, adding that 13 never reopened.
Nationally, the “already insufficient” workforce declined by more than a third in two months, from nearly 1.1 million workers in February 2020 to 677,000 in April, according to the foundation. Although it had rebounded by April 2023 to 996,000, “the sector lost thousands of providers and tens of thousands of workers since the pandemic began.”
“Pre-pandemic, the industry was already struggling to attract qualified individuals to meet higher quality child care and education,” Lehnhoff said. “We’re seeing that child care centers have openings for children, but they can’t fill them because they don’t have the staff. One center in Oklahoma has a waiting list of 156.”
In South Carolina, DSS got more than $900 million in federal funds in 2020 to help keep child care centers afloat during the pandemic, Ragley said.
Most of those funds went directly to providers through stabilization and operating grants to replace lost revenues; retain staff through bonuses, raises, or health insurance coverage; and help with other costs, such as cleaning supplies and technology, she said, noting that as of mid-July, $693 million had already been spent or obligated.
South Carolina had 2,336 regulated child care providers as of July 13, up from 2,223 in July 2022, she said.
In June of this year alone, DSS licensed 13 new child care homes and 12 new child care centers – five each in the Upstate and the Lowcountry, eight in the Midlands, and seven in the PeeDee, she said.
Meanwhile, Ragley said, the state has had a program for 30 years to help offset child care costs for qualifying parents using ABC Quality centers, or those that promote excellence in meeting the total needs of children in addition to state health and safety standards.
In 2022, some 1,331 centers participated in the voluntary ABC Quality program, she said.
In October 2020, DSS added another scholarship because too many people earned just too much to qualify for the existing program but still needed help, she said. That new program is for parents at or below 300 percent of the federal poverty level who are working at least 15 hours a week or are in school or a training program, she said.
With an $848 million allocation, it provides up to 52 weeks tuition for a child enrolled in an ABC Quality center, though parents may have a small copay, she said.
As of July 2, 66,460 children had been approved for that scholarship, and 17,464 had entered the program since Jan. 1, 2023, she said.
And by July 19, 26,537 children were receiving scholarships from both programs, she said.
DSS also raised scholarship payments in October 2021 to close the gap between them and tuition to incentivize providers to participate, Ragley said. That rate went from $205 to $296 a week for a full-time child up to age 2 in a Level A-Plus urban child care center, she said.
“The need is there,” she said. “Families are having a hard time making ends meet.”
Nationwide, more than 12 million children are in child care, according to the foundation, which notes that the vast majority of parents receive no subsidies.
And the Child Care and Development Block Grant, which is the main federal tool for subsidizing care, “partially offsets costs for only 1.3 million” of those children, the group reports.
To ease the burden on child care providers and their employees, DSS is covering the cost of relicensing fees and employee background checks required by law, Ragley said. It also launched a new online portal to speed up that process to cut down on hiring times, she said.
DSS is also looking to create a pool of qualified substitute day care teachers to fill in when center staff are on vacation or out sick, she said.
The agency also plans another round of grants to encourage existing centers to expand and to provide seed money for new ones, she said.
In addition, the agency is looking at increasing existing tax credits for employers that locate child care centers on their premises or contract with a third-party provider to do so, but that’s up to the state legislature, she said.
For example, Ragley said, the University of South Carolina has a child care facility on campus operated by a national child care company.
“Lots of conversations about child care have been going on for years, but it’s reached a crescendo where it’s something employers are really going to have to think about if they want a quality work force, if they want to compete on a global scale,” she said.
The Casey Foundation says an executive order issued by President Joe Biden in April could help by “expanding access, lowering costs, and raising wages.”
But it adds that more must be done to create a healthy child care system, including greater federal, state, and local investment; reauthorization of the federal Child Care and Development Block Grant Act which offsets costs for just one in six eligible children; increased funding for public pre-kindergarten and Head Start programs; and lowering barriers to home-based child care.
Lehnhoff agrees, saying that the U.S. spent on average less than 10 percent of the federal pre-Covid budget on children’s issues even though they make up 25 percent of the population.
Federal Covid funds pushed that to 11.2 percent in 2021, according to First Focus on Children, a bipartisan group that advocates for children and families in federal policy and budget decisions.
“One of the most startling details in the (Casey Foundation) report is that among 40 countries in the Organization for Economic Cooperation and Development, only Turkey spends less per child as a percentage of GDP than the U.S.,” Lehnhoff said.
It’s not a new problem, she said, but it gets little attention from Congress even though seven in 10 voters support more funding for child care.
There are more children needing care than spaces available, Lehnhoff said, noting that 51 percent of children 6 and younger lived in a child care desert before the pandemic, when thousands of homes closed. And the workforce never fully recovered, she said.
Meanwhile, as federal Covid funds dry up, as many as 70,000 licensed child care centers and homes could close, she said.
But early education is critical to a child’s development and to a knowledgeable workforce in the future, and it’s an important piece of the economy, experts say.
While South Carolina still has about $200 million in federal funds to spend, Ragley said the big question is what happens when that runs out.
“How do we make sure there is access, affordability and quality care for parents working outside the home?” she said. “Do we keep this going or do we scale back? What the future will hold (is what) we’re trying to figure out.”
To read the full report, go to How the High Cost of Child Care Hurts Families, Workers and the Economy - The Annie E. Casey Foundation (aecf.org).