Everyday we here that childcare is "Expensive" and what we need is "Affordable Quality Childcare" available to everyone. The assumption is that because childcare is "Expensive" and childcare employee wages are low, the childcare center owners must be making a huge profit. The reality is just the opposite and the narrative needs to be changed. The idea that childcare is "Expensive" is relative to where you live and the type of service the childcare center is providing. In low income areas, childcare rates can run from $80 a week up to $120.00 per week depending upon the size of the center and the programs they offer. Parents in those areas think childcare is "Too Expensive". In middle income areas childcare rates can run from $120.00 per week up to $180.00 per week and parents in the areas think childcare is "Too Expensive". In upper middle income areas and more affluent areas childcare can run from $200.00 per week up to over $300.00 per week and parents in those areas think Childcare is "Too Expensive". So you get the picture? No matter where childcare is provided, parents, academia, and politicians all say "Childcare is Too Expensive." So if childcare is so "Expensive" why have so many childcare centers struggled to survive both before and now during the Covid Crisis. The rates charged for childcare vary drastically based on the economics of where the childcare center is located and what the market can bare based on what parents are making. Universally, all childcare programs whether they are home based, non-profit, or for profit have the same categories of expenses in order for them to operate their programs. There are facility costs such as rent, utilities and maintenance. There are labor costs such as wages, taxes, training and possibly benefits such as sick leave and vacation. There is liability insurance and licensing fees, along with city inspection fees and other equipment inspection fees annually. And there are supply fees that include equipment, curriculum and other educational materials for the program. And if they provide meals, there are food costs and employee cost associated with that service.
The cost of all of these elements, plus the licensing ratios that are allowed for each age group they plan to serve and how large or small a program they will have, go into determining what a center will need to charge per child in order to cover the expenses and still make a profit. If a business,(for profit or non-profit) wants to sustain itself over time, it must bring in enough revenue to cover its expenses and make a profit to build up its financial reserves to help it maintain during a downturn in the economy or during a disaster situation as we are facing now. In the past childcare providers have only been able to charge tuition rates that the market can bare for the area they are in. In order to do that they must strictly monitor and restrict their expenses, which means keeping labor cost low with minimum wage employees and little to no benefits, finding locations with low rent although the physical quality of the building may be sub par, providing very minimal training to their staff, have minimal supplies and equipment for their classrooms or participate is subsidized programs that dont fully reimburse them at their published rates and then have to right off the difference at a loss. If childcare providers charged what they should charge based on acceptable business practices in order to make a profit, then parents would really see a sticker shock of what they should be paying for childcare.
As you look at the different economic areas where childcare centers are located, the expenses to provide the service tend to increase which is then reflected in the increase in rates. And yet even those centers have not been able to make huge profits, because parents are only willing to pay up to a certain tuition point, before they too start to say childcare is too expensive. So again, we need to change the narrative. The narrative should be "It is expensive to provide quality childcare, so we need to determine if that is what the public wants and needs, and if so ,who should pay for it"? (Is it the parents, the tax payers or a combination of both?)
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Tim Kaminski
Director/Owner
Gingerbread Kids Academy
Richmond TX
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