Center for American Progress

With Decreased Enrollment and Higher Operating Costs, Child Care Is Hit Hard Amid COVID-19
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With Decreased Enrollment and Higher Operating Costs, Child Care Is Hit Hard Amid COVID-19

A statewide survey of Colorado child care providers shows unsustainable business conditions and bolsters the need for federal child care relief.

A woman consoles her daughter on her way to daycare, Reston, Virginia, August 2020. (Getty/Jahi Chikwendiu)
A woman consoles her daughter on her way to daycare, Reston, Virginia, August 2020. (Getty/Jahi Chikwendiu)

In the spring of 2020, the coronavirus pandemic forced many child care providers to close, while others were thrust into the emergency response and called upon to provide child care services for front-line workers. But with the pandemic continuing throughout the summer and now into the fall, the child care industry is suffering unparalleled financial challenges. For decades, parents have struggled to find quality, affordable care that meets their family’s needs, and the child care industry has operated on razor-thin margins with limited revenues and insufficient public funding. This has left the industry extremely vulnerable to enrollment declines, as paying families are the major source of revenue in a sector that has significant fixed costs. A new CAP analysis of data from a comprehensive survey of Colorado’s licensed child care providers, conducted by Early Milestones Colorado, unfortunately shows that enrollment for infants, toddlers, and preschoolers had only returned to 52 percent of prepandemic levels as of July 2020, when the survey was conducted.* If child care were publicly funded rather than funded largely by parental tuition and fees, the industry’s ability to withstand the pandemic would play out more similarly to that of K-12 schools, which may close in the short term but will retain their staff and facilities so that they can reopen when it is safe to do so.

Despite having fewer paying families, many child care providers are contending with operating costs that are higher than before the pandemic. A recent comprehensive CAP model of child care provider expenses found that, on average, Colorado child care providers’ operating costs could be 60 percent higher than before the pandemic. This is because providers may need personal protective equipment and weekly professional sanitation, and they must keep group sizes smaller to limit interpersonal contacts. Some may even need to make physical infrastructure improvements to their air filtration systems and hand-washing stations. These are catastrophic conditions for an industry that has been battered by decades of persistent public underinvestment. The National Association for the Education of Young Children estimates that as few as 18 percent of child care providers say that they can survive a full year without federal relief funds.

Child care has always been a core support for the American labor force. It is part of the economic infrastructure that gives working families a better chance to achieve financial well-being. But with less revenue and higher costs, the child care system is at risk of collapse. This is already resulting in the worst labor market recession for women in history, as mothers are dropping out of the workforce at much higher rates than fathers. Without a sufficiently funded child care industry, the economic recovery will continue to stall for parents with care responsibilities who will be unable to rejoin the labor force.

Key findings from the Colorado child care survey

Using data collected by Early Milestones Colorado, this column summarizes the state of Colorado’s child care market well after the state allowed child care programs to reopen. Throughout the spring and summer of 2020, Colorado had relatively lower rates of COVID-19 cases and was able to lift many restrictions on child care providers earlier than other states. It should be noted that some providers never closed, staying open to serve the children of front-line workers, while others never reopened. This analysis reflects the state of the child care market in July 2020, when most child care programs in the state reopened.

  • Enrollment of infants, toddlers, and preschoolers was only 52 percent of prepandemic levels. This equates to a statewide drop in enrollment equivalent to 56,000 infants, toddlers, and preschoolers for the Colorado child care system.
  • These enrollment declines vary by the type of child care provider, with child care centers retaining 52 percent of their prepandemic enrollment, pre-K programs retaining only 27 percent of their prepandemic enrollment, and home-based child care retaining 66 percent of their prepandemic enrollment.
  • Enrollment declines also differed by the age of the child, with providers retaining 59 percent of their infant and toddler enrollment but only 48 percent of their 3- and 4-year-old enrollment.
  • Prior research has shown that child care deserts in Colorado disproportionately affect low- and middle-income neighborhoods and communities of color. The coronavirus pandemic has hit these communities harder—as both an economic crisis and public health crisis—and child care will be critical to restoring and rebuilding these communities.
  • Colorado child care providers lost about 23 percent of their staff as of July 2020. Extrapolating this statewide, that would mean about 4,300 early childhood educators lost their jobs due to the pandemic. Most early childhood educators are women, and many child care providers are minority-owned businesses.
  • Programs that received some type of public funding—whether through the federal, state, or municipal government—were able to retain more of their enrollment (54 percent versus 48 percent) and more of their staff (80 percent versus 73 percent).

These estimates of enrollment declines are in line with analyses of national child care attendance data, which showed that as recently as late September, the overall child care attendance rate was down 51 percent from early March levels. As child care providers head into their eighth month of reduced revenues and increased costs, the American child care system is perilously close to the brink. The system could lose as many as 4.5 million child care slots without federal relief such as that included in the Child Care Is Essential Act, which proposed a $50 billion stabilization fund that would keep child care businesses afloat during the pandemic. A new federal COVID-19 relief package must include comparable funds for the child care industry to avoid thousands of programs closing their doors for good.

Child care supports workers across many other essential industries, which is why more than 100 economists signed an open letter to Congress in June urging lawmakers to rescue the child care industry, calling it an “essential precondition for a successful economic recovery.” The health of the child care industry is directly linked to women’s employment and labor force participation, and it will be key to a faster and more inclusive recovery. These early data from Colorado show that child care providers are in an untenable position, with fewer children and families to serve and greater expenses to cover. Action is needed now—before we lose this crucial economic infrastructure.

Rasheed Malik is a senior policy analyst for Early Childhood Policy at the Center for American Progress. 

The author would like to thank Early Milestones Colorado for generously sharing their survey data.

*Author’s note: This survey contacted more than 1,200 licensed child care providers, including child care centers, home-based child care providers, and school-age child care venues. This analysis did not count school-age enrollment and excluded programs that operate on an academic calendar, which reduced the sample size to approximately 950 respondents. The survey was conducted by Early Milestones Colorado during the months of June and July 2020.

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Authors

Rasheed Malik

Senior Director, Early Childhood Policy