Investor Alert

Sept. 29, 2020, 9:11 a.m. EDT

‘A body blow to gender equality’: Child-care centers struggle to reopen, while others may raise prices to survive

By Meera Jagannathan

The U.S. child-care system is buckling under the weight of the coronavirus pandemic, new data suggests — and economists warn that a lack of feasible options during the economic downturn could leave some working mothers’ careers in the lurch.

After COVID-19 forced the closure of many child-care providers across the country, most states allowed for their reopening, according to a report published Thursday by the nonprofit Child Care Aware of America, which advocates for access to affordable child care. But 35% of child-care centers and 21% of family child-care programs in the country remained closed as of July. 

“Time will tell if these closures become permanent. If they do, this will pose a serious problem as our nation works to rebuild the economy,” the report authors wrote. “For our economy to regain strength, we must have a steady, reliable workforce who aren’t distracted by child-care worries.”

The organization also suggested that child care could become more costly due to factors such as reduced capacity necessitated by physical distancing, supplies including personal protective equipment, training on new safety measures and communication of protocols to employees and parents. 

Changes to some states’ child-care licensing rules also allow for fewer children per classroom in an effort to prevent virus transmission, the report added. 

Meanwhile, more than half of the 32 states that provided July data had lost over a quarter of their child-care capacity, according to Child Care Aware.

While child-care attendance and enrollment appear to have picked back up since plunging at the beginning of the pandemic, they hover below their levels at the start of the year — offering “further evidence that child-care providers are struggling financially and many programs may not survive COVID-19,” the authors wrote.

“Once providers permanently leave the field, parents who were already struggling to find affordable child care that works for them will be at an even bigger disadvantage,” they said.

States are still compiling new price information from providers, the report said, and “it may be at least a year before families feel the full impact” of the coronavirus crisis on child-care affordability.

Last March, Congress approved the Families First Coronavirus Response Act, the initial coronavirus relief bill. The new law requires small employers to provide limited paid-leave benefits to employees who are affected by the coronavirus emergency. However, companies with more than 500 employees are exempt, and companies with fewer than 50 employees can also apply for an exemption.

A separate analysis published this month by the Center for American Progress , a left-leaning think tank, estimated that center-based child care that adheres to “enhanced health and safety requirements” cost 47% more on average than the cost of fulfilling requirements prior to the pandemic, an increase spurred largely by reduced program capacity and extra sanitation-related purchases. The cost of home-based family child care, moreover, has risen 70% on average since pre-COVID-19 times.

Average monthly cost increases in center-based care — just like child-care costs in general — have varied widely by state, according to the organization’s “interactive calculator”: South Dakota, for example, saw an estimated 8% increase from $777 before the pandemic to $842 during the crisis, while Georgia had a 115% increase from $548 to $1,177.

As Child Care Aware notes, many families struggled to afford high-quality child care even before the pandemic struck, and child-care supply was already in decline.

“A system that was already fragmented, unaffordable and inequitable was further weakened,” the authors wrote.

So what does this all mean for working parents? “A lack of quality and affordable child care for working parents means that less parents are going to be working, and this is disproportionately going to affect more vulnerable groups who either A, have less resources, or B, traditionally are the ones responsible for taking care of kids,” Misty Heggeness, a principal economist and senior advisor at the U.S. Census Bureau, told MarketWatch.

“The two groups I’m thinking of are working moms and also families at the lower end of the earnings distribution,” she added. “I would also argue that that comfortably reaches up into middle-income families as well, especially as child-care costs continue to rise.”

If child care isn’t available and one parent needs to stay home with the kids, parents generally make the decision based on who in the family can make more money in the labor market, Heggeness said. In about 70% of dual-earner different-sex couples, men are the higher-earning partner, research has shown

“That means that disproportionately, when there’s no child care available or it’s too expensive, it’s going to be the moms who are stepping back to take care of kids because their earnings aren’t as high as their spouse’s,” she said. “Women will put their careers on the back burner to deal with the immediate emergency.”  

Over their entire adult working-age lifespan, then, these women’s total lifetime earnings will be less than they would have been otherwise, she said.

Indeed, salaries and promotions start to diverge after heterosexual couples have children: A 2018 working paper distributed by the National Bureau of Economic Research and using Danish administrative data, for example, found that women’s incomes dropped almost 30% after the arrival of their first kid and never recovered. They also began to fall behind men in occupational rank.

“The pandemic is just another layer of burden that we’re putting on women who want to be productive and want to work,” Heggeness said. “It has the potential to hurt their careers.”

Picture, for example, that an employer delegated tasks or assigned leaders for a new project during the early months of the pandemic, when many mothers had to step away from work to balance schooling or child care, Heggeness said.

Those mothers would probably have had less of an ability to take on new roles and responsibilities for the project — leaving coworkers without kids and men without the same level of child-care obligations to fill that space. Company leadership would, in turn, be more likely to consider those people for future opportunities and career advancement, she said.

“[These women’s] ability to advance in the company is going to be delayed, and that in turn delays their ability to maximize their earnings,” Heggeness said. “Delays in promotion equal delays in pay increases.”

Diane Swonk, the chief economist at the audit and tax firm Grant Thornton, told MarketWatch the child-care crisis “has the potential to metastasize into something that lowers our ability to grow going forward.”

More than half of the 3.7 million people who have dropped out of the labor force since February are women , she said, pointing in particular to the pandemic’s disproportionate economic impact on Black and Hispanic women.

“The blow is not only to low-wage households who can least afford it, but it’s a gender issue across the board in terms of the pipeline to lead,” Swonk said. “It has the potential to set back women not just in 2020, but for years to come. It’s a body blow to gender equality.”

Child Care Aware called for $50 billion in dedicated public funding for the child-care system, improved mechanisms for data collection and dissemination, and additional investment in child-care resource and referral agencies (CCR&Rs) to provide resources for providers, kids and families.

While it’s great that many parents with resources have been able to create “DIY educational pods” to salvage some work time while their children are in virtual school, Heggeness added, it would be even better if they mobilized themselves into a larger effort to help all parents.

“It would be neat if parents would instead put that energy into advocating for national solutions to this problem — to insist to policymakers that we need solutions that are going to work for everyone in our society, that child care is an essential and critical component of a thriving and healthy economy,” she said.

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