Child Care Centers Shut by Virus Foreshadow Lasting Economic Woe

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(Bloomberg) -- As the number of U.S. Covid-19 cases climbed this month, Pine Village Preschool shuttered all 10 of its locations in the Boston area and furloughed almost all of its roughly 125 employees.

The Spanish language immersion facility shut its doors on March 13, almost a week before Massachusetts Governor Charlie Baker ordered child care centers in the state to close by March 23. The move is part of a larger effort by local and federal officials across the country to slow a pandemic that’s already infected at least 140,000 Americans.

Daycare closures sweeping the U.S. have left many parents trying to work from home with children underfoot for the third straight week. Meanwhile, the educators who usually care for those young ones are wrestling with the the financial impacts of their virus-induced cessation.

About 30% of child-care providers said in a survey that it would be impossible to last two weeks without financial support from the public. Another 17% said they couldn’t survive any amount of time if they had to close without some kind of assistance, according to the survey of over 6,000 providers conducted by the National Association for the Education of Young Children.

If nearly a third of child care providers closed permanently, about four million children would be left without space, said Lea Austin, executive director of U.C. Berkeley’s Center for the Study of Child Care Employment.

”That would have a devastating impact on parents’ ability to go back to work, and it would have a devastating impact on the loss of jobs in the childcare sector,” she said. “This is a $99 billion industry on its own. And so the ramifications are steep all around.”

The child-care sector contracted heavily during the Great Recession but was able to rebound rapidly, said Chris Herbst, an associate professor at Arizona State University who has studied the economics of child care. He expects it to do the same thing once the virus crisis had abated.

“The extent to which the child care market is strong very much depends on the strength and the health of the broader labor market,” he said.

Child Care Centers Shut by Virus Foreshadow Lasting Economic Woe

Pine Village -- which enrolls about 500 children -- didn’t collect tuition for the month of April. Instead, it opted to ask for donations from parents that would go directly to furloughed staff, who are still receiving benefits but aren’t being paid.

“We decided that we needed to do our part as an organization to keep our staff healthy and our children and parents healthy,” said Emma LaVecchia, Pine Village’s co-founder. “It was a really difficult decision, but we were totally confident that it was the right one to make.”

No Cushion

Child care providers run on razor thin margins, and workers make on average $11.83 an hour -- less than retail employees, according to Bureau of Labor Statistics data. A 2015 report by the Economic Policy Institute found that one in seven child care workers live in families below the federal poverty line.

Herbst, the Arizona State associate professor, found that early education workers in three of the states hit hardest by the virus have barely seen their wages increase in the last 20 years.

“There’s nothing standing in between them and a recession,” he said. “They don’t have [an] economic cushion to catch them.”

Reshape the Market

Accessing affordable and quality care is already a challenge for many families, according to multiple researchers and advocacy organizations, and research suggests that more than half of Americans live in parts of the country where child care is largely unavailable.

One child care provider said the virus has the potential to reshape the labor market.

“What we’ll see if this has to extend for a long period of time is that parents will be forced to revert to single working families,” said Christopher Vuk, the Chief Executive Officer and founder of Rock and Roll Daycare in Cambridge, Mass.

Some working families already say they’re struggling to balance full-time jobs with parenting duties.

Read More: Quarantined Working Parents Are Already Desperate for Child Care

Legislators are taking steps to support the field. The mammoth stimulus package signed into law Friday includes $3.5 billion for a fund that helps low-income families access child care, while six senators signed off on a letter to their chamber’s leadership pushing for a $50 billion child care bailout.

“Our communities already face a shortage of affordable, high-quality child care,” the lawmakers wrote in a letter to Senate leadership. “Providers closing or losing their staffs during this crisis will make it even more difficult for families to find care and significantly hamper the economy’s eventual recovery.”

©2020 Bloomberg L.P.

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