Child care numbers reveal the crunch

Parents pay a lot for a spot in a licensed child care facility, and while the cost of child care is high and rising, the bill doesn’t cover the actual cost of providing the service, say operators and industry observers.

Cost

The 2018 New Hampshire Child Care Market Rate Report found that parents typically pay between $200 and $240 per week for full-time care in a licensed child care facility. Those rates have been steadily increasing in recent years.

ChildCare Aware of America, a nonprofit organization that tracks child care in the state, reports that the annual cost of child care in New Hampshire is around $12,500 – about in middle of the pack among all states. Parents in Mississippi pay just $5,300, while the average cost in Massachusetts is $20,000 per year for a single child, the highest among the states, though the District of Columbia is even higher.

While there is some scholarship assistance available to low-income families, child care, especially for families with more than one young children, is likely the single greatest household expense.

That cost is driven, not surprisingly, by labor.

State licensing requirements dictate that there must be at least one teacher for every four infants in a classroom. For each year the children age, each teacher can take on more children. A classroom of three-year-olds can have one teacher for every eight children. The acceptable ratio then jumps to 12 for children four and older, and 15 children in a class once they reach kindergarten age.

From a business model, said Marti Ilg, executive director of Lakes Region Child Care Services, teachers are the income generators for a child care center. The tuition – which the teachers make possible – has to cover a teacher’s pay, plus the pay of administrative staff, and overhead costs – rent, supplies, maintenance, and other concerns. So, although parents might swoon when they get their first bill, the child care provider is probably barely making ends meet, she said. In fact, they usually depend upon additional support from the community in order to stay in operation.

“We, providers, cannot charge what it costs, because families can’t afford it,” Ilg said. “Most programs, their wages are about the same amount as what they get from fees for service. Then you might have a little bit of contributed support.”

Despite the high cost, demand for child care remains robust. According to Child Care Aware NH, the statewide supply of licensed child care is only enough to serve about three out of every five children under the age of six. And as the Market Rate Report found, not only is the cost of child care rising, the supply is shrinking.

Basic economic theory would suggest that, as demand outstrips supply, price rises. The market would correct as more providers enter the marketplace to take advantage of higher prices. Not so with child care, Ilg said.

“It’s really pretty simple – child care doesn’t respond to basic economic principles of supply and demand,” Ilg said. “We cannot charge a lot of money because people cannot afford to pay it. There’s a great demand for child care, but there’s a low supply… It’s very hard to increase supply.”

The local child care market has encountered an economic logjam. Families can’t afford to pay more, so providers can’t afford to pay their teachers more. Because it’s a relatively low paying industry, providers struggle to recruit enough staff to maintain current levels, let alone expand.

Low pay also suppresses interest in early childhood education as a career path, said Tracy Pond, of ChildCare Aware NH.

“In some cases, they can make more working at Dunkin’ Donuts than they can at a child care program,” Pond said. “Teachers want to get paid, they would like to be paid well and they want to have benefits.”

Low pay

Ilg, at Lakes Region Child Care Services, said she feels pressure to increase teacher pay – while also keeping tuition at a rate her families can afford.

“It’s a goal for us to increase wages. The challenge there is the revenue source is fees for service,” Ilg said. “What we ask of our school teachers, and what we ask of our early childhood educators is just staggering physically, emotionally and mentally.”

LRCCS has 45 employees, and to keep those positions filled, Ilg said, the organization offers competitive wages and good benefits for the industry. As a result, most of her teachers have been with the organization for more than five years – and many for more than 15 years. The greatest turnover happens in those first two years of employment, she said, when new teachers experience the job – and the pay.

Those who stick with the career are a special breed, said Karen Sanders, director of the Center for Children and Young Families, an early childhood education center at Plymouth State University. Sanders said tuition at her center covers staff pay and materials. The center relies upon significant help from the university, which provides and maintains the building and grounds.

“We would not be able to exist without university support,” Sanders said. The center has space for 65 children and is open during the academic school year. In addition to providing early childhood education, the center also serves as a teaching laboratory for university students.

Sanders, who is also part of the university’s teaching staff, said she and her colleagues are forthcoming with students who express interest in a career in early childhood education.

“One of the things that we talk about frequently is, you have to have a passion for this field, because, financially, you’re never going to make money in this,” Sanders said.

Mary Cornish, professor of early childhood education at PSU, said the numbers in her program reflect the bleak earning opportunity graduates face. When she started at PSU nearly 20 years ago, there were 150 early childhood education majors. This year, there are 85.

Those students, if they choose to put their degree to work, will enter a field where the median pay is $10 per hour, Cornish said. “And the majority of these positions have no benefits,” she said.

“What it means is, people who work in child care, they’re living in poverty,” Sanders said.

That prospect weighs heavily on the mind of PSU junior Nicole Denio. When she graduates, her degree will give her the ability to teach preschool, kindergarten or any of the early elementary grades. If she chooses to work as a kindergarten or elementary teacher, she would make significantly more. But that’s not where her heart is.

“It’s definitely up in the air. In a perfect world, I would love to work in pre-K,” Denio said. Yet, she also has to consider what her life will be like. After four years of studying at PSU, she expects to graduate with $80,000 in student debt. After her student loan payments, will there be enough left of her income to build a life for herself?

“That’s a lot – you have to think about that,” she said.

Value

Sanders and Cornish said that Denio’s dilemma represents what’s at stake for early childhood education, and for the families and communities the industry serves.

“In order to have a high quality staff, you need staff that is educated,” Sanders said. Yet, considering the pay disparities, why would a talented young teacher choose preschool over kindergarten or first grade at an elementary school, where starting pay would be several thousand dollars higher and benefits would be better?

“Where we’re at now, it has reached a national crisis level," said Cornish. "It’s not just in the Lakes Region, and it’s not just in New Hampshire. Nationally, there’s a child care crisis.”

The crisis is twofold. First, it represents a major hurdle for parents – especially those of limited means – to participate in the workforce. Looked at more broadly, the lack of available child care is a hindrance to businesses looking to expand or relocate in New Hampshire.

“A lot of why people want to be in New Hampshire is because of our communities” and quality of life, said Taylor Caswell, commissioner of the state’s Department of Business and Economic Affairs. “If you start to think that through, you start to see how critical having access to child care is across our state.”

Educators say that children who are provided access to high quality early education are more likely to succeed in their later schooling, which would both save remediation costs in older grades and generate a more able workforce when they graduate.

Kirk Beitler, superintendent for Gilford School District, said he’s seen the benefit firsthand.

“My youngest daughter attended a preschool program taught by a high-quality teacher, she was definitely prepared for kindergarten. They did some academics, but it’s about the social and emotional support, learning to work with one another,” he said. His district, like all districts in the state, seeks to identify children who need further skills before they enter kindergarten.

“Special education students, we start servicing students at three years old. When special needs students are identified, we start bringing them in for a preschool program,” Beitler said. Any progress that can be made at that age will pay dividends in the coming years, he added. “Preschool definitely pays off.”

In Laconia, superintendent Brendan Minnihan said his district decided a few years ago to open their preschool to any incoming student. “We have a lot of families that take advantage of that,” he said. City schools are expecting 145 kindergarteners next school year; their preschool program currently has 77 students.

Minnihan said that when it comes to intervention, education has a parallel with medicine.

“If you recognize that a child is having a hard time reading, the earlier you recognize that, the easier it is to put in intervention and put in supports to get the child better at the skill of reading,” Minnihan said. “Kind of like a medical model, the sooner you can attack a disease or condition, the greater the chances of success. And the longer it goes, the harder it is to treat it.” When it comes to early childhood education, the money is well spent, Minnihan said. “The more you put in on the front end, the better off you are as a society and community.”