Child care: Moving on to the “why”

By Marnie Werner, Vice President, Research & Operations

About 18 months ago I was sitting in front of a state senate committee on child care, talking to them about what I had found while researching the child care shortage for the previous two years. When I was done and others were invited to come up and speak, the chair of the committee instructed them (I’m paraphrasing—he was more polite), “If you’re going to repeat what others have said, don’t come up.” A lot had already been said in the weeks and months prior about all the problems happening with child care in Minnesota—how providers were leaving in droves, how regulations were driving providers crazy and how impossible it was to make any money at it. What the senator said next, though, stuck with me.

He said: “Please tell us something we don’t already know.”

It tends to get that way with issues—any kind of issue. If you’re as big a nerd as I am, it’s fascinating to just dig into the numbers, find the sore spots, the points of market failure where the system has broken down, then work up charts and tables and infographics illustrating it all. But as the senator reminded me that evening, it’s not just enough to sit and talk about what’s not working. With child care, we know what’s not working.

But once you know what’s not working, at some point you have to talk about why it’s not working, because it’s with the why that you finally get to move on to the how—how we fix it.

And so that’s the reason we conducted a survey this last winter. We sent out surveys to 1,500 child care providers around the state, both family providers and center providers, in the Twin Cities and in Greater Minnesota, to ask them about their businesses, what issues they were having, and what they would like to see done. We got back almost 400 responses—not as many as we would have liked, but enough to have firm confidence in our results.

And as we had hoped, what these providers told us was enlightening and gave us a better picture of why things aren’t working. It’s not a complete picture. From here, we’ll use the information we’ve collected in the survey to craft better questions that we can use at focus groups of child care providers later this year, where we’ll be able to get even more specific in our conversations, our understanding, and hopefully solutions.

But in the meantime, the data and comments we collected from providers are giving us an interesting window into the specifics of what it takes to run a child care business and why the current framework of economics, regulations and perspective aren’t working for so many.

The big issue is of course is making enough money to cover costs, and many in fact can’t. Family providers, who provide child care in their homes, were asked to estimate their hourly wage. The average came out to $8.50 an hour. Most providers, both family and center-based, said that compared to five or ten years ago, the cost of operating is making it more difficult to keep their businesses going. Staffing is by far the biggest issue for child care centers: They are finding it extremely difficult to attract or retain staff when they can only pay these well educated women $10 to $12 an hour. Even at that wage, staff pay is the largest and also the fastest growing cost, center providers told us. And another curious piece of information: center providers seem to be less satisfied with their business’s financial sustainability. This is one of those pieces of the puzzle we need to look into in more detail.

For family child care providers, who generally don’t hire outside help, staffing isn’t as big of an issue, but benefits are. Family providers in both Greater Minnesota and the Twin Cities are much less likely to be able to cover their own health insurance, life insurance or retirement out of the revenue from their business and much more likely to report being able to afford none of the above. But at the same time, center providers were only somewhat more likely to be able to afford these benefits for themselves and their staff, too. They could offer paid time off, and both provider types could cover their costs of training for the most part, but that’s about it.

And then we have regulations. Providers confirmed what we’ve been hearing anecdotally for several years now: regulations and finances are inextricably linked. When we asked providers if regulations were increasing their cost of operations, over half of both family and center providers (53% and 51% respectively) said they strongly agree, and another third said they somewhat agree.

In a business with razor-thin margins like child care, this level of agreement means something. When asked for specific examples, comments focused mostly on required trainings, the time needed to train staff in regulation changes, the cost of complying with new standards, new fees and the like.

We also asked providers whether changes in regulations are making it difficult to operate their businesses. From family providers, the answer was again a resounding, “Yes”—52% strongly agreed with the statement and 28% somewhat agreed. The response from center providers was a little different: there, only 39% strongly agreed while 29% somewhat agreed. Also, 20% said they were were neutral or didn’t know compared to only 12% among family providers.

What does this mean? It means that while both groups feel regulations are adding costs, FCC providers feel more strongly that regulations are also making things more difficult. But not by much. The fact that 68% of center providers agreed is nothing to sneeze at.

As we continue to go through the data and write up our report, I’m looking forward to investigating more thoroughly what providers around the state are saying. While I love digging into the data, the most gratifying part of conducting this survey was receiving emails from providers thanking me for giving them the opportunity to have their say. To them and all the other respondents, I say, “Thank you.” You took time out of your busy day to fill out that survey—to tell us the why. Child care is a tough job and not for the faint of heart. I’m hoping that with your valuable information and insights we can now get closer to figuring out the how—how we can remodel the system into one that will work for you and the families you care for.