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Investing in Childcare Entrepreneurs

This is a powerful strategy for revitalizing communities

COVID-19 didn’t just reveal a broken childcare system. A confluence of events dramatically worsened the frayed patchwork of childcare programs in the US, after significant drops in center enrollment when parents lost jobs, shifts from in-school to at-home learning and uncertainty about health and safety during a global pandemic. Since a lack of licensed child care options has long correlated with higher rates of unemployment, underemployment and poverty, these problems only compound.

Here in Maine, only 26.5 percent of children under 15-years-old were in paid daytime or after-school child care. Many parents were already shuttling children between family and friends and/or working part-time, instead of full-time, jobs. Shortages in childcare not only limit family income but in some cases, keeps parents out of the workforce altogether. And over the last 10 years, almost 30 percent of home-based childcare in Maine—the predominant source of licensed childcare in rural communities—closed.

The reason is simple: an economic mismatch between what parents can afford to pay and the cost of providing quality care. The biggest business expense for providers is labor, driven by state-mandated staff-to-child ratios. But the pandemic further stressed this business model. Maine classified childcare businesses essential, allowing them to operate, but about half shut down while parents kept children at home because they were no longer going to a workplace or were concerned about the virus. That only made the profit/loss calculation for childcare operators tighter—the loss of even one child reduced revenue, while new protocols for COVID testing and cleaning required the cost of hiring more staff.

Please select this link to read the complete article from SSIR.

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