S1: Each day, Claire Suddath shows a better baby’s daycare and goes through a ritual that is wholly unfamiliar to me, a person with a couple of kids and 10 years of drop offs and pick ups under my belt.
S2: One of the workers comes out, the caregivers comes out with a little forehead thermometer and checks my daughter’s forehead temperature because they won’t take any kids if they have even a low fever, and then they take her from you and take her inside and you cannot go in.
S1: Claire’s been inside her daycare exactly twice her daughter, six months old.
S2: So when you first start, it’s just gut wrenching and you, the parents cry, or at least I did
S1: when my kids were little, I was at my kid’s daycare so often that I kind of wished for Clare’s reality once or twice. There was an annual holiday performance Mother’s Day and Father’s Day breakfasts, moving up ceremonies, Claire’s daycare. It used to be like that, too.
S2: And I know that in pre-pandemic times they would have like a Halloween party at my daughter’s daycare and like the parents would come and it was like this whole thing, which they obviously don’t do anymore. And I was like, Oh, child care and daycare before the pandemic is completely different than what it is now.
S1: During her working hours, Claire is a reporter for Bloomberg Businessweek, and she always knew child care was a fraught marketplace. But with her daughter, she’s gotten this up close look at the way the pandemic has been stretching and warping the child care business. She would read some statistic like that a third of daycare providers are considering quitting, for instance, and then she’d go get her kid and realize that statistic was happening to her.
S2: My daughter’s favorite caregiver had to quit, not because she didn’t like it, not because she didn’t not want to care for kids, but she got pregnant herself and is going to have all of these other costs. And then there was another caregiver who was her replacement, who had to quit after two weeks because she had a family emergency. Her grandfather died and she had to go home to help her family. And so now there are new people, and my daughter is only one. So she’s sort of taking this all in stride, but no one wants this.
S1: Do you feel kind of lucky to have anything at all when it comes to child care?
S2: Oh yeah, because the pandemic made everything for parents and childcare businesses so immeasurably worse.
S1: Today on the show, daycares might not be letting parents in the front doors these days. But Claire wanted to know what’s going on in there. And will the Democrats build back better plan be able to fix what she calls the most broken business in America? I’m Mary Harris. You’re listening to what next? Stick around. Your article was called How Childcare became the Most Broken Business in America, so I’m hoping you can explain a little bit how we got here, because the weird thing about childcare is it’s not a secret that the system isn’t working. Like Treasury Secretary Janet Yellen has said, childcare is a textbook example of a broken market. So why is that the case?
S2: Well, while the US government has been hesitant to. Subsidized day care, child care. It has no problem regulating it as it needs to. Over the years and decades, we have come up with a list of of rules that licensed child care facilities have to follow, and they get inspected to ensure that the children that they care for are safe. The priciest regulation this is like the real sticking point. You know, there’s like square footage per child and fire safety codes, earthquake preparedness, CPR classes. Obviously, you have to take infant CPR, all that sort of stuff. But the priciest one, the one that is like why a child care is so expensive is that you need one caregiver for every three to four infants, which is children two or younger, depending on the state. So some say at, say, three, some states say four. And the reason that is is because babies need constant supervision. So the labor costs are so high for child care relative to other industries. It’s like 60 percent of a child care centers costs go to wages.
S1: I read that by comparison, like a restaurant spends 30 percent of their budget on wages. So it’s yeah, it’s double.
S2: Yeah. And restaurants are also fairly labor intensive, you know, like, yes, there’s some automation and fast food restaurants, but like if you go to a restaurant and you sit down at a table, a server is going to come over to you. But a server can see a lot of different tables with a lot of different people. They’re not serving three customers per server for eight to 10 hours a day at a stretch with only small breaks
S1: with child care. There is this unresolvable tension. You need a certain number of workers to look after the kids for regulatory reasons, for safety reasons. But more teachers means more salaries to pay. As a result, the people who run child care centers squeeze as much money as they can out of every family.
S2: You know, I paid twenty two thousand dollars a year for daycare in Brooklyn. I don’t know the salaries of the people who are caring for my daughter right now as I’m talking to you. But I can guarantee they’re not making bank, right? And if you want them to make more money, which I would, I want them to make more money. They provide a service that like I can’t put a price tag on because I can’t pay what I think that they should be paid. But if you want to double their pay, then you’re going to double. My costs, I mean, not exactly, but close to it, right? So instead of twenty two thousand dollars a year, I would pay thirty thirty five thousand dollars here
S1: and then I guess you have to make a choice, which is right. And I afford $35000 a year. How much of my paycheck is that right?
S2: And every time it goes up as it has risen exponentially, like the cost of child care since the 1970s, it’s like so far off the charts. It’s so far beyond inflation and stuff. It’s like it’s kind of like, you know, health care or something like that. Like, we know it’s so expensive and so many working parents are already priced out that when you raise prices that much, even more people are priced out and it becomes less affordable.
S1: Yeah, I mean, one of the things you found in your reporting was how the costs as they get passed on to the consumer, the way that those costs, they follow women, especially throughout the rest of their lives. The fact that they have to invest so much in child care just to sort of keep moving means that later on down the road, they’re much worse off. I wonder if you have a story that exemplifies that.
S2: Oh gosh, I have a million. But. There’s one woman that I talked to who I think sort of best embodies this. Her name is Liz. She is an attorney in North Carolina today. She’s the mother of three. But she was a single mom with a two year old when she went to law school and moved to North Carolina for law school and started looking for daycares. And costs were so prohibitive for her. You know, she’s looking at a thousand dollars, twelve hundred dollars a month. And she’s a single mom and a law student budget. And she didn’t even entertain the idea of like, there was no way to make that work. She applied to a state program in North Carolina for low income women going back to school. But it turns out it’s only four undergraduate degrees. So long story short, she didn’t qualify, so it didn’t get any money through the state. So instead, she took out a student loan and used her student loans to pay for daycare. So then she could go to law school and become a lawyer and make more money. So she graduated law school with somewhere between 130 and a hundred and forty eight thousand dollars in student loans.
S1: Oh my gosh.
S2: Then, you know, she met the man who’s now her husband, got married, was pregnant when she took the bar exam. Put her daughter in daycare when she was six weeks old and went to work as an attorney, and she says she made at the time about $45000 a year, which was just enough, you know, after taxes and everything is taken out for her to pay for child care for her two kids now. So she’s a lawyer, she’s making money. It’s all going to child care. So then she can continue to be a lawyer. And she kept saying, I just think of this as an investment in my future. At some point this is going to work out.
S1: So she’s not even making money. No, she’s just working to pay for childcare.
S2: She’s just working to pay for childcare as a lawyer.
S1: You know, she’s essentially like working on spec.
S2: Yeah, yeah. For like she’s 14 years out of college, and I think it was six out of law school like she’s, you know, mid-to-late 30s, like in her career in it, and it’s still that hard.
S1: So what you’re saying is there was a problem before the pandemic. The pandemic swooped in, everything closed and that was pretty devastating to the child care industry. For your reporting, I know you spoke to a lot of daycare providers. Can you tell me how hard it is for them right now? What did they tell you?
S2: I mean, if you talk to a daycare provider, honestly, about how they have. Survived, but navigated the pandemic. It’s like talking to someone who’s come back from war, huh? You know, they have to feel comfortable with you enough to to tell you honestly how hard it has been for them.
S1: Here’s something you don’t get. Lawmakers in Washington approved $39 billion in child care relief back in March. It was supposed to stabilize child care centers. I mean, I read that, like 2000, daycares may have closed during the pandemic. What happened?
S2: That sounds like a lot of money, and it is obviously thirty nine billion dollars is a lot of money. All told, I think it’s probably I think about like fifty two point five billion when you count up all of the different relief packages and money that is available. But this is a huge, huge industry. If you think of the number of working parents with young children in this country and the number of caregivers required to care for those kids. When you spread it out, it’s not a ton of money, like one in fifty five working women in the U.S. works in child care or early education. But the CARES Act, which was the very first COVID relief bill, gave more money to Delta Airlines, one company than all of those millions of women combined.
S1: Claire says she looks at the way the childcare industry keeps getting stiffed, and she can’t help but think it’s got something to do with who is doing the work.
S2: This is an industry that isn’t just like majority female or excuse female. Like this industry is female, and 40 percent of those women are women of color. Many of them were not born in the U.S. There are many immigrants who work in this industry. And so I think you just have a lot of compounding factors that have led us to not address this for a number of reasons. You know, I think individual people themselves who are the caregivers. Are not the type of people that. Are going to get the ear of a senator. They just don’t have the the political clout, essentially. And on top of that, working women historically, you know, have been discounted. You know, if you want to work as a woman, fine, but like, we’re not going to pay for your child care. You have to figure it out yourself. We see those same arguments again and again. Like just this past March, the state of Idaho was awarded. I think it was like a $6 million early education grant for low income preschoolers like preschool. We’re not talking about should you put a newborn in daycare. And they ultimately rejected it. And on the floor of the State House, while they were debating this, there was a state representative who said that he didn’t think that they should take this money because anything that made it easier for women to come out of the home. He didn’t think that was a direction that Idaho should go in
S3: any bill that makes it easier or more convenient for mothers to come out of the home and let somebody else raise their child. I just don’t think that’s a good direction for us to be going,
S2: and that was this year in March.
S1: When we come back, could Biden’s build back better plan fix this mess? Well, the state of the day care industry in the U.S. has been in shambles for a while ever. Earlier this year, there was this glimmer of hope in Biden’s build back better plan. One of the bill’s largest sections is devoted to fixing child care infrastructure. It gives out subsidies for a large number of families to cut the cost of care or even make it completely free. But Claire Suddath says don’t get too excited. The daycare industry is sort of like a Jenga tower if you move one piece. Another is going to come loose somewhere else.
S2: I think the most important thing to understand about build back better is, let’s say it passes and tomorrow we wake up and everything is, you know, Congress has gotten their act together, right?
S1: That’s not a given right.
S2: Let’s say let’s say that you know what is proposed now it’s enacted. It’s not creating a whole federal program. It’s not even creating a whole federal subsidy program. All it is doing is saying to the states, Hey, we have a bunch of money that’s available for you. If you come up with your own child care plans that meet a bunch of this criteria, but it is contingent upon all 50 states coming up with their own unique plans of how they are going to fix child care within that state.
S1: That sounds like a lot of work.
S2: Yeah. And it, you know, build back better includes a lot of things that are necessary, completely necessary. It is going to cap costs for families. There’s like different sort of income thresholds and different percentages, but in general, it caps it at about seven percent of a family’s costs and makes it completely free for low income families. That would be great for parents and people struggling to afford child care to begin with.
S1: It also says you have to raise salaries for child care providers to a living wage.
S2: Yeah, so it doesn’t exactly say what a living wage is, but I think that the general idea is that it would be sort of the equivalent of like a kindergarten teacher salary. And while that absolutely is needed because these people are making no money for a really hard job that I think we as a society should truly value, I as a parent value it and want them to make more money. But the only way these small businesses can afford that, one of two things is going to happen. The state will have to subsidize that higher cost and give that money to the businesses themselves, or they’re going to have to jack up their prices to the families so that they can pay people those rates also. Well, I kind of think will happen is given the lack of specifications, maybe they won’t actually pay a living wage.
S1: Because living wage isn’t defined, right?
S2: It’s not defined and like I don’t know what sort of mechanisms are in place to force states to comply with every single regulation and build back better. I say that because we have a subsidy program for low income families. It’s like, yes, chronically underfunded. Yes, only 14 percent of people who qualify even get any money. There are a lot of problems, but it does exist, and the regulations say that it’s a block grant that goes to states and states are allowed to decide how they want to disburse it. So it’s a sort of similar situation of like the federal government’s like, Hey, we have money. You guys work it out amongst yourselves. States are supposed to subsidize at 75 percent of the current market rate, which means the amount of money that daycares. Child care centers charge.
S1: Do they do that?
S2: No. In reality, only two states as of last year were doing that. Maine and South Dakota were hitting that, that 75 percent mark.
S1: How do they get away with that?
S2: Because there’s not a punishment. Was the government just not going to fund child care in California now? So because there’s not a anything in place to force states to do all of this and it’s so expensive and the amount of money that is coming to the states anyway is so low that only 14 percent of families are even getting it to begin with. Like it just requires a stretch of the imagination to think that all 50 states are going to somehow. Get enough money together to provide a living wage to childcare workers.
S1: Yeah, I’ve read some people compare this child care plan and build back better to the Affordable Care Act because like the ACA, this plan, it sort of allows states to opt in. And of course, with Obamacare, many states did not opt into things like Medicaid subsidies, so they could just not offer the program that the federal government wanted them to offer. And that seems like a problem. But then I also see this other problem with build back better, which is the ACA. I feel like the whole reason it’s stuck around is because it was permanent. It was a permanent program, but the daycare childcare program and build back better is scheduled to sunset after a few years. And so Republicans had to get votes to kill the ACA in a way that they might not have to for something like this child care program. They just wait for it to die. And in the meantime, the way it’s implemented could make a lot of people unhappy. So having it die? People may think that’s a good thing.
S2: Yeah, I think that’s a fundamental criticism on both sides of the aisle of a build back better. You know, people who support the act say, Whoa, whoa, whoa, wait a minute. What do you mean? You’re going to help us pay for child care for a couple of years and then it’s going to go back to normal. And also, if you do miraculously give everyone else living wage, you’re only going to do that for a few years and then it goes back down again, like, that’s not what we want, and that’s not a workable solution at all.
S1: I guess the hope is you convince the states to build enough infrastructure that they just can’t roll it back. It doesn’t make sense in some way.
S2: Yeah. And opponents to this say, Well, you’re just saying that it’s going to sunset and it’s clearly not going to sunset because once you get this up and running, it’s going to be really hard to roll it back. My thought is like, Well, both of those are kind of correct in that. Why are you going to put so much effort into creating this really intricate, workable solution for only a couple of years? It’s going to take years to get it up and running. And then you just you don’t get the money again, like the concessions that politicians have had to make to get this to even be on the table are such that. I worry about the feasibility of the program. And yet at the same time, I think, well, I’m not saying don’t do it at all because clearly the the road we’re going on now is not good. Yeah.
S1: Even if this bill passes, you’ve really. Sort of opened my eyes to a system that’s in crisis right now. Would money from Washington reach child care centers in time to, I don’t know, help the people who are looking after your daughter?
S2: I mean, listen, I think the U.S. government, when it wants to get its act together, has done incredible things, so it’s possible. But by doing it is the sort of like stair step thing of like, Well, then we get the money to the states and then the states give the money, you know, have to come up with a system and providers have to sort of apply to join this program. You know, if a state comes up with something tomorrow, you know, build back better passes tomorrow and the state surprises us by having something ready to go. Providers still have to apply to join the state’s program, like how does the state find the providers? It’s not an immediate fix. You know, I think at best it will take a few years. You know, when I talked to providers who sort of made it through the pandemic this far, a lot of them applied for the small business loans and the payment protection program and all that sort of stuff. And those programs had their own issues, but they did ultimately give them money, but they’re still struggling. I mean, half of child care providers now are still saying they’re losing money.
S1: Are the providers you’re speaking to? Optimistic?
S2: I think the ones that I’ve talked to about it have said that they want it to pass because they know that the way that their industry works now is not ideal, but they worry about those high labor costs. And so. They’re hopeful, but you know, at this point, kind of so battered and shell shocked that, you know, I don’t think anyone thinks this is like the thing that is going to save them.
S1: Claire Suddath, thank you so much for joining me.
S2: Thank you. I’m sorry, this was a bit of a downer.
S1: Claire Suddath writes for Bloomberg Businessweek. And that’s the show. What next is produced by Carmel Delshad Danielle, Hewitt olina, Schwartz and Mary Wilson. We’re led by Alison Benedict and Alicia Montgomery. And I’m Mary Harris. You can go track me down on Twitter. I’m at Mary’s desk. But in the meantime, if you’re staying off social media, I’ll catch you here tomorrow.