Struggles in the Child Care Industry

Struggles in the Child Care Industry – Part 1

By Charles Gascon, Senior Economist, Federal Reserve Bank of St. Louis

June 23, 2023 

When the pandemic hit the economy, the child care sector was significantly impacted. It became less available in some cases. It became less reliable to families in others. And on top of that, it became much more expensive. 

How Many Workers Quit?

On the availability side of things, about 30% of child care workers left the industry, either due to fears of COVID or just the on-the-job stress that had to relate to working in that space at that point in time. Some centers had to close and were forced to close due to the pandemic and were never able to reopen. 

It became much less reliable in many instances because classrooms had to close due to COVID cases, and centers had to change working hours to accommodate their working staff, so they were open at different times than before. And then they also had to limit some of the services that they typically would have provided, such as playgrounds not necessarily being open to the same degree that they were, food service being cut, and services like that. 

How Much Did Wages Rise?

And then last but not least, it had become much more expensive. As we saw firsthand during the pandemic, many of these frontline workers saw pretty significant increases in their wages as an incentive for them to show up to work. Child care was no exception to this. Child care workers' wages went up by 20%. And because this is such a labor-intensive industry, many of those costs were passed on to households, and overall child care costs increased by about 15%. 

So why is it a problem that the child care sector lost capacity during the pandemic? As child care became less reliable, more expensive, and in some cases just less available overall, it forced households to make much more difficult decisions between how they spend their time at home and how they choose to work. In some cases, they are not necessarily taking the job that's the best match for their skills and time allocation. And that has long-term costs for the overall economy. 

Source: https://www.youtube.com/watch?v=flyJfB9X9rs 

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