“Child care is as difficult to find now as it was 30 years ago when I started my business…” says Pennie Watters, owner, and operator of I Care Day Care in southeast Salem. Watters began her business in 1992 when she couldn’t find adequate daycare for her two young children.

I Care Day Care survived the pandemic, despite two ten-day shut-downs which were mandated by regulations when a parent or child tested positive for Covid.

How much damage did the pandemic do to the daycare industry? Trying to answer this question isn’t easy, because many arrangements exist for caring for children while parents work. Not all of them are cataloged in an official way.

But we’ll try, and here’s why we should. The daycare industry is important to the economy because, at the very least, it’s a critical workforce issue.

Scarce and unaffordable daycare is a major reason that women’s labor force participation in the U.S. has been declining since the year 2000. Most other western countries provide daycare subsidies to working parents, and women’s labor force participation hasn’t declined in these countries.

So, we’ll analyze available data. Then, we’ll describe briefly how Oregon and some other states are tackling the problem, and try to come to some conclusions about this complicated and important subject.

Before we dig into recent data to see the pandemic’s impact, keep the following in mind.
Oregon received $224 million from the American Rescue Plan’s Child Care Stabilization program in 2021. Most Oregon childcare programs received some of this money to help keep them in business during the pandemic. The extra federal funding will be fully expended by the end of 2023.

There are a number of different arrangements for caring for children under age five.
These include:

• Licensed child care centers with employees where the number of children cared for depends on space and staffing;
• Licensed certified family day care where up to 16 children are cared for – Pennie Watters’ center is one of these;
• Registered family day care, up to 10 children;
• Daycare providers such as family or friends are paid by state funds and not licensed; and Pre-school programs such as Head Start.
• Publicly available data exist for the first three types of daycare.

Daycare centers, as businesses with employees, report quarterly to the Oregon Employment Department. (see table below)

From 2019 through the most recent year in which information is available, the number of childcare businesses didn’t change much. But the number of employees declined substantially, in Marion County, Oregon, and the U.S.

This is significant for supply because in licensed facilities, the fewer the staff, the fewer the number of children who can be cared for.

Data is also available upon request from the Early Learning Division of the Oregon Department of Education, which licenses daycare centers. Early Learning reports the following for Marion County:

• 93 Certified Centers with employees were operating in August of 2022, down from 100 in 2019 – note that this information is more current than that of the Employment Department, and shows a significant post-pandemic drop in number of centers;
• 81 certified family centers were operating in August of 2022, up from 78 in 2019;
• 136 registered family centers were operating in August of 2022, down from 162 in 2019.

The arrangements cited above do not account for all daycare arrangements. Those not accounted for include Employment Related Day Care as a welfare benefit, and informal arrangements such as family or friends doing caregiving.

Additionally, there is an overlap between the Employment Department numbers and Early Learning’s number of Centers with employees.

If this sounds confusing, it is. The non-profit Childcare of America sums up the difficulty of understanding the parameters of the daycare crisis in the following way: “…child care data are siloed and inconsistently defined across various state, local and non-governmental organizations…making it impossible to get a full picture of needs…” – all of which makes public policy decisions about daycare more difficult.

However, based on the above analysis, it is reasonable to conclude that the supply of daycare was made worse by the pandemic.

Individual states are tackling child care in a variety of ways. Oregon will have a new agency in 2023, the Department of Early Learning and Care, which will “…deliver a unified early education and child care system.”

New Mexico provides subsidies for a family of four up to 400 percent of poverty; Idaho helps with start-up costs for a childcare business; and Rhode Island provides a one-time tax credit for care.

President Biden, in The Build Back Better legislation of 2021, cited the under-investment of the U.S. in early learning and child care compared to other countries. (see graph).

The legislation would have enacted a permanent solution to the child care crisis by offering child care assistance to 93 percent of working families.

The economists of the U.S. Treasury, as background for the legislation, published a white paper titled The Economics of Child Care in the United States. It’s worth summarizing briefly:

• Child care is crucial to the American economy and is under-funded;
• The current system of mostly private financing is failing because the average family with one child under age 5 would have to pay 13 percent of their income for daycare;
• The childcare market is a classic market failure because families need to buy day care at the early stages of their earnings career when they can least afford it; and
• All this argues for government subsidies.

The Build Back Better Legislation was not enacted into law.

We’ve talked about supply and affordability – what about quality? The soon-to-be Oregon state agency mentions early education. Research shows that when children get an early learning start, they have a head start in life. If mandated, it will make daycare more expensive, as will paying daycare workers better salaries – they are among the lowest paid of all occupations. That’s where subsidies come in, to help families pay for quality child care.

If child care is in short supply and families are having a difficult time paying for it, and it’s important to the economy that we fix the problem, why aren’t we doing more?

The failure to do more for child care supply and affordability, despite dozens of organizations lobbying for the issue, including the U.S. Chamber of Commerce, may have to do with some deep-seated attitudes.

In 1971, the Comprehensive Child Development Act, which would have established a national network of childcare centers, passed both houses of Congress. It was vetoed by President Nixon. The most common reason cited for the veto was that it was too “communistic.” Today the word used might be “socialistic.”

The Pew Research Center found, in a 2019 study, that 55 percent of Americans have a negative view of socialism.

Another could be ambivalence toward women with children working outside the home.
The Pew Research Center, in a 2014 study, came to the conclusion that Americans continue to believe that having a mother who stays at home is beneficial for a young child.

Let’s give Pennie Watters of I Care Day Care the last word. Currently, Watters is caring for ten children and has an eight-family waiting list for openings in her center. She says she feels sorry for families struggling to meet daycare needs and says that “we are not a family-friendly economy.”

Pam Ferrara of the Willamette Workforce Partnership continues a regular column examining local economic issues. She may be contacted at [email protected]