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We have a gap in producing quality child-care and what parents can afford to pay: Expert

Linda Smith, Bipartisan Policy Center’s Director of Early Childhood Initiative joins the On the Move panel to discuss the impact of COVID on the child-care industry.

Video Transcript

JULIE HYMAN: According to some estimates, up to 40% of child-care centers in the United States remain closed amidst the coronavirus pandemic. Obviously, there are big implications for that, both for those small business people who own those centers, as well as the parents who rely upon them.

We're joined now by Linda Smith. She's Bipartisan Policy Center's Director of Early Childhood Initiatives. And she's joining us from Northern Virginia. So Linda, when you look at those two big implications, let's take the small business side of it first. I mean, a lot of these are owner-operator businesses, right, and there's small staff, in some cases even a staff of one. What's the ripple effect from those small businesses maybe not reopening at all?

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LINDA SMITH: Well, I think that's going to be enormous-- have enormous impact in this country. Literally, 2/3 of child-care programs-- businesses-- care for fewer than 75 children. So they're pretty small. That means they have a-- you know, you know, they're mostly in neighborhoods, in communities around the country. And they are in serious-- have serious challenges right now, because of the way the business model in child-care works. And I want to stress, one thing to your audience is that, first of all, these are businesses. And I think that, for the most part, people fail to recognize that.

And the reason that's important is because, for example, when the COVID pandemic hit, in some places, people decided to make decisions about child care similar to schools, because child care is early learning for our youngest children.

That said, they don't operate at all like school. Schools have no guaranteed income. The teachers-- you know, when they were-- when they were sent home, got paid. The lights-- the light bills got paid. In child care, exactly the opposite happened.

When child care closed, the teachers were laid off. There's no money to pay them. In many cases, even the fixed costs of running a child-care center were not there. And so that's why we've seen the closure rate that we have. And we know that we have at least 9% of all child-care programs and 14% of centers are now closed permanently in this country. So not are they just some are closed temporarily, we hope, but others are just gone.

And I think that that's where we need for the country to understand the business model of child care, that it is a business, and it is a labor-intensive business. When you look at child care, 75% to 80% of the costs of running a child-care program are in the teacher's wages. And that's where we end up with, you know, serious challenges, because the income to cover those wages comes from parents.

And that's why child care tends to cost a lot and why we have challenges for our low-income, wage-earning family.

DAN ROBERT: And Linda-- Dan Roberts here-- if you can help us move the script forward, I mean, what are the ripple effects? Because with these businesses struggling, what happens when parents start to be asked back to their offices and they need these places?

I mean, really, it goes beyond just these businesses, themselves. We're going to see an impact on how families are affected obviously. If the businesses start closing, well, where do those families who need this child care send their kids when they are being brought back to their offices? Because that time will come.

LINDA SMITH: Well, and that's going to be anybody's guess, to be honest with you. Not that, you know, I don't mean to sound glib on that, but that's the reality as parents are going to make do with what they can. And sometimes, that's not what's best for children.

I mean, having children parked in front of television sets for long periods of time is not what this country needs to be thinking about. So where they go? The survey work that we've done recently show that parents are using a lot of family members. And about a third of our parents are using family members right now to care for their children.

You know, there is a migration back to child care. We're seeing that. We've seen it over the last few months of child-care programs reopening. But many of them, the parents are not really feeling very comfortable yet with sending their children back to group care or organized care. And so the challenge for child care is going to be keeping it stable well until parents get comfortable with it.

JULIE HYMAN: Linda, coming out of this, do we have the-- need to have a nationalized childcare system?

LINDA SMITH: You know, I think there's questions. And there's several proposals on the table. I think what we do need-- you know, I kind of-- I refer to this as the gap. And what we have is a gap between what it costs to produce a reasonable quality child-care in this country and what parents can afford to pay. And that gap right now is reflected in the wages that the workforce makes.

We have a workforce that's over-- 50% of our workforce has an AA or higher degree, yet the average pay is $11.65 an hour. You can't keep qualified people with those wages for long and no benefits for the most part. So what do we really need to figure out in this country?

Is it-- you know, we have to figure out how we're going to pay for that gap and who's responsible for that. And that's some of the work we're trying to do is to figure out, how do we make it so that parents can have access with-- and it's affordable to them, but at the same time that, you know, there's some quality in it and some stability for the workforce?

So it's a challenging model right now. And I think what's happened with the COVID experience and the pandemic has exposed what most of us working in this field have known for a long time-- that the model is not sustainable. So how do we do that, I think, is going to be a question.

The issue of a nationalized model, I think, what we're trying to figure out in the work we're doing is, what is it that parents really want? And I think that we can't assume that one model is what all parents want. Do all parents want [AUDIO OUT].

JULIE HYMAN: Government-paid child care, I think, is-- [CHUCKLING] --would be pretty broadly popular. But what do I know? Linda, we've got to leave it there. Thank you so much. Linda Smith, Bipartisan Policy Center's director of their early childhood initiative. Appreciate it.