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Day care industry struggling to bounce back from COVID closures

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Posted at 10:01 AM, Aug 10, 2022

MORRISON, Colo. — Thousands of day cares in the United States closed during the pandemic, and most never reopened. This created an extreme child care provider shortage and forced prices up for the day cares that could stay open.

Even as life seemingly returns to normal, this industry is not bouncing back as quickly as other industries, and families and small business owners are paying the price.

Many childcare providers are trying to open a new business or expand, but they cannot get funding. Jennifer Mackety runs the Little Den Early Learning Center in Morrison, Colorado.

“Since I was about 14, I wanted to own a day care center. It was always my dream,” said Mackety, who has spent the last nine years building the center. “We were constantly in the red. I didn’t take a paycheck for the first eight years. Thank God my husband had a job!”

Her business struggled to survive at the beginning of the pandemic, and thousands of day cares like hers shut down permanently. In fact,10% of all child care centers permanently closed during COVID-19. Now, the ones left are overburdened.

“We have a wait list now of about 150 kids,” said Mackety.

Mackety is so busy that she’s trying to expand her center, but she can’t get funding.

“The problem we’re seeing there: banks want a large down payment,” said Mackety. “Banks don’t see the struggles of child care in the sense that our revenues don’t look the same as say—a restaurant—so they see us as a high risk, and they don’t want to give us a loan for that.”

The difficulty in getting a loan is a major reason keeping new day care businesses from starting.

“Typically, a child care business is two to five times more expensive than the average small business to actually open when it comes to the capital investment and the funding you need,” said Nicole Riehl, president and CEO of Executives Partnering to Invest in Children, or EPIC. “You need special little toilets, you need lots of fun materials and furniture, and that costs money.”

Riehl is an advocate for access to child care based in Colorado. She said the shortage of care is also due in part to a labor shortage worse than other industries are seeing.

“We know that most industries have returned to their normal operating workforce, within 2-3%, but the child care industry is missing about 11% of their workforce, so they really haven’t recovered,” said Riehl.

However, bringing back workers won’t completely solve the issue. Riehl says it’s also about access to resources.

“These are largely women entrepreneurs who want to open new businesses and serve the families and children in their communities, but they need help doing that. We need to make sure these business owners can access low cost or free real estate,” said Riehl.

Riehl is also working with local leaders to create tax cuts for child care businesses and to encourage lower-cost home day cares, like Carrie Kennedy’s, to open.

“I do think family child care is one solution that needs to be looked at more because we do charge less, and I think it's an amazing environment,” said Kennedy, who runs Miss Carrie’s Child Care in Arvada, Colorado.

Kennedy has survived on grants throughout the pandemic and hopes more grants and incentives become available for in-home providers and day care centers.

“Since September 2021, I've given over $10,000 in discounts to my families, either in the form of lower tuition rates, or if their kids are sick because of COVID, or whatever they want to pay me. I would never have been able to do that without these grants,” said Kennedy.

Kennedy, Riehl and Mackety said they worry without child care spaces for kids, there are consequences for society as a whole.

“There's so many big pictures: we're going to lose workforce, you're going to see a big difference when kids entering school having more problems. It's going to be a trickle effect,” said Kennedy.

A trickle-down effect Mackety knows she can help solve in her community if she can just find a little help.

“This work to expand, it’s been a dream for about four years now, and I’m hoping this is the year,” said Mackety.

To see other solutions Riehl and her partners are working on, click HERE.