Today I attended a presentation by York Day Nursery on early childcare. It was a real eye opener. If you are a business owner, manager, or community leader, you should get your eyes opened, too.
Everywhere I go, I hear about staffing shortages. Over and over I hear about business’ inability to recruit people. For a long time, extended unemployment benefits and COVID-related government checks were blamed, and for good reason. But those programs are ending, and the problem remains.
Lack of, or cost of early childcare has been named as another headwind in getting people, especially mothers, back into the workforce. I’ve heard some people poo-poo that idea, so it’s important to deal with facts. Today I got facts from the presentation and more from independent research.
According to the Economic Policy Institute (EPI), the annual median cost for infant childcare in Pennsylvania is $11,842. If you put one child in early childcare so you can earn minimum wage, you’ll make $15,080 per year. That’s daunting math, don’t you think? And that’s for one child.
Even for a family making Pennsylvania’s median income of $67,628, the cost of early childcare for one child is 17.5% of income. According to EPI, to be truly affordable, early childcare would be about 7% of income. At today’s cost, that would require an income of $169,171.
The costs are just too high for the average person entering the workforce at a low wage. But cost is only half of the story. The other half is the story of the workforce in the early childcare industry.
The National Association for the Education of Young Children (NAEYC) is a professional membership organization that promotes high-quality early learning, from birth to age 8. It conducted a nationwide survey completed in July of 2021 with over 10,000 respondents.
Nationwide, four out of five early childcare centers report staff shortages and 78% reported that low wages were the primary obstacle to hiring. One out of three respondents is considering shutting down their programs or leaving the industry. More than half of minority-owned programs are facing the possibility of permanent closure.
The picture for Pennsylvania is only slightly better with 18% considering leaving the industry or closing programs and 35% of minority-owned programs facing closure. Also in Pennsylvania, 64% report that low wages are the primary reason workers are leaving the field. It’s not just a hiring problem; it’s a huge retention problem.
According to a 2015 EPI report, the median wage for early childcare workers was $10.31 an hour. Only 15% received health insurance benefits. This is consistent with the presentation I attended, where it was shown that most early childcare workers, providing both care and education, are paid less than half the salaries of public-school teachers and receive no benefits.
The wages are so poor, the NAEYC survey revealed, that 26% of early childhood educators fear losing benefits such as SNAP or housing subsidies if they receive token salary increases.
This is a conundrum. Early childcare workers are poorly paid, yet the cost for too many parents is prohibitive. There are federal and state subsidies available but it’s not enough for all the families that need help.
York Day Nursery is using every dollar from those sources and the local community and still has a two-year waiting list. That tells you people need early childcare and want to go to work. It also tells you this system is badly broken. If you want more people in the workforce, those of us in business must acknowledge this problem and play a role in solving it.
Richard Randall is founder and president of management-consulting firm New Level Advisors in Springettsbury Township, York County. Email him at [email protected].