Part two of a two-part report on the Madison area’s broken childcare landscape.
Childcare is a broken industry. There is no money in it.
Those takeaways shattered my preconceived notions of how labor shortages, like the one the early childhood education sector faces, work. My previous coverage of labor issues indicated that problems within most industries follow a formula. Workers, struggling to make ends meet, leave for other, more lucrative work, while the wealthy business owners hoard the wealth and profits generated by their staff.
In all my initial interviews for this two-part story, I expected to find that dynamic at play in the childcare industry. However, owners of childcare centers do not look like the rich business owner class found in other industries.
They are instead stay-at-home moms looking after their own children and those of a few neighbors within their own houses. In even the cases of larger operations, owners do make more money than their workers, but usually enough to call themselves middle-class, or upper-middle-class. They remain a far cry from the ranks of the rich and powerful leeching off of society and hoarding its wealth.
As we explored in part one of our report on the state of the childcare industry in Madison, thousands of children lack needed daycare because the industry cannot attract enough staff to properly care for every kid in need. The biggest issue cited by current and former workers was a lack of pay. Starting wages average around $14 per hour in Madison. Employers recognize the problem but have no more money to funnel to salaries.
I approached all of my interviews expecting to find someone willing to speak to greed existing somewhere in the industry. No one did. Not even people who had quit. In fact, when I asked workers to tell me about their bosses, what they said was almost exclusively positive. In fact, some argued with me when I questioned them about whether ownership was taking advantage of their passion for their jobs.
The only analysis that I could find about the profitability of the childcare industry was put out by the Minneapolis Federal Reserve in 2011. It found that most daycares operate on profit margins of less than one percent. And every indication from the people I talked to is that the industry has only gotten more dysfunctional since then, helped along by the pandemic.
The market is broken. The industry generates no profit on its own, and maintains its current precarious equilibrium due to the millions and millions of dollars the government has provided in recent years.
The truth is that few people make enough money to cover the real cost of care—least of all the parents of the thousands of children going without care in Madison and Dane County. These parents cannot afford to pay more in tuition, so childcare centers can’t then raise wages to attract and retain more staff.
“I’m also cognizant of the fact that these business owners have to pay for insurance for their business, they have to pay for feeding the children,” says Jacob Posateri, an eight-year employee in the industry. “They have to pay for their actual rent and/or mortgage of the building, … they also pay into my personal insurance as well as my 401K plan.”
And stuck in the middle, suffering from lack of care, are infants, toddlers, and preschoolers.
Worth it
Childcare center owners, staff, and government officials repeatedly hammered one thought home to me in our interviews: children experience their biggest leaps in brain development during their first few years alive. While the brain continues to change across an entire lifespan, no period in a person’s life matches their initial five years in terms of building brain function.
“Education has been going on prenatally through birth, all the way up until [our kids reach kindergarten],” says Ruth Schmidt, executive director of the Wisconsin Early Childhood Association (WECA). “We just choose, as a country, to fund it once kids reach a certain age.”
College professors earn comparatively massive salaries, tenure, and lavish benefit packages in part due to the impact they have on the teens and 20-somethings they teach. Yet the cognitive impact of higher education pales in comparison to the immense influence under-compensated early childhood educators have on our impressionable youth.
Some childcare workers get bachelor’s or master’s degrees in their field, while others come to the industry without credentials beyond their high-school diploma. Only those with the highest levels of education have a chance to make enough money to live on. The lack of a degree should not be the reason why other childcare workers starve, or worry about losing their homes, while working full-time.
Many find they love the non-monetary rewards that come with teaching and raising children. Workers who desire to provide enrichment and education to kids in their care, beyond just keeping them alive, can earn two-year degrees at minimal cost while working their jobs. State funding helps offer this opportunity by covering a significant portion of the tuition costs associated with earning the degree through WECA’s TEACH Early Childhood scholarship program.
The program’s popularity doubled in recent years and WECA met that demand with additional money from COVID-19 relief efforts, Schmidt says.
But even this draw is not enough to attract sufficient labor to the industry. One worker who left early childcare told me she abandoned the degree program because her pay remained so low compared to what she could make elsewhere that not even a nearly-free education could make up the difference. She said her TEACH scholarship covered 90 percent of her tuition, and her employer picked up another five percent.
“Multiple thousands of individuals every month are getting stipends from us who work in this field,” Schmidt says. “We’re concerned about what happens when we go back to what we call ‘base funding’”—that is, a minimum level of funding, which would not be enough to accommodate the increased demand for the program’s opportunities.
Perhaps we as a society should make a concerted effort to compensate childcare workers for the great contributions they make to our future.
“Pretty much every other wealthy nation in the world has figured out how to support young children, and how to support moms and dads,” Schmidt says. “Childcare should be a bipartisan issue.”
Above all, workers in this space despise their place in the collective consciousness as nothing more than babysitters. As if their only purpose is to make sure the children in their classrooms don’t die. It’s insulting.
Aid it
That slight piles on top of the injury early childcare workers already seem set to endure in the form of wage cuts due to legislative inaction.
The federal government failed to muster, let alone sustain, an effective response to the economic devastation wrought by the COVID-19 pandemic. One of the few actions taken by Congress managed to pump money into early childcare centers.
Posateri sees much he would like to change in his profession. But one of his chief concerns is the pay cut he may soon take if the government fails to continue its current levels of subsidies to the industry.
“We actually received a $2 pay increase per hour,” Posateri says, referencing a benefit he received as a result of the federal American Rescue Plan Act passed in early 2021. “But now with that going away, we are no longer able to receive that benefit.”
With Congress giving up on a soft landing for industries reliant on emergency funds, the onus now falls on state governments to provide the parachute.
In Wisconsin, a state riven with deep political faultlines, the idea of a Republican Legislature cooperating with a Democratic governor seems far fetched. Yet, Gov. Tony Evers made it clear that he wishes to provide continued funding for childcare.
“If we want to address our state’s workforce challenges, we have to make sure childcare is accessible and affordable,” the governor said in his January 2023 State of the State address. He went on to say that he intended to accomplish this by including the continued funding in his next state budget.
The governor and state Legislature will battle over spending in the budget this summer, all while the state continues to sit on a surplus of $7 billion.
For all his dissatisfaction with the state of wages in the industry, Posateri still sympathizes with the difficult position in which his employers find themselves amid this political wrangling.
Socialize it
With private early childcare reliant on public money to simply exist, why then shouldn’t the industry be subsumed into the public education system and become an extension of our schools?
“Yes, we need it, and we also recognize what that could mean,” says Lisa Fiala, project manager with Red Caboose, a Madison childcare center. In our interview, Fiala went on to imply that under a publicly run childcare system, her employer would no longer exist and the kids in its care would instead enjoy free education just as slightly older children do in public schools. But Fiala also notes that public schools already rely on private childcare centers like Red Caboose to provide space and other services for which they do not currently have the money.
Still, a publicly funded approach would solve multiple problems at once.
First comes access. With thousands of kids stuck on waiting lists to get the care they need, bringing early childhood care into the public education system would afford families the same guaranteed free resource that schools offer once a child hits kindergarten.
The approximately 2,500 children the City of Madison estimates are currently on waitlists would all get the chance to learn and grow along with their peers.
Second, early childcare staff would likely see a drastic increase in their wages and benefits.
The public education system already features strong teachers unions that guarantee their members wage scales, robust benefits, and contractual protection from various work hazards. Even in a post-Act 10 world, Wisconsin’s public school teachers earn more and enjoy more job stability and support than early childhood educators, who lack a major industrial union.
Multiple childcare centers I spoke to for this story identified public schools as an employer to which they lost qualified employees. Usually these workers left for higher wages or to pursue other career goals. The centers said they couldn’t offer the same given their current economic footing.
If you can’t beat ‘em, join ‘em.
Third, and perhaps most importantly, socializing early childcare would have a drastic leveling effect vis-à-vis current educational outcomes. Kids who, through no fault of their own, would otherwise have fallen behind during crucial years of brain development, could instead keep pace with their peers born to wealthy parents.
Too often moms and dads hear the above and worry their children will lose out if other kids are allowed to succeed. But this only perpetuates current disparities that benefit the rich to the detriment of everyone else.
Without a systemic change, the United States’ economic competitiveness on the global stage will also suffer against other countries that arm their next generations with the cognitive abilities to succeed.
“I think if it was going to be 100 percent publicly funded, you’d see a lot of change in the programming for a lot of centers,” says Aaron Richardson, a parent and president of Red Caboose’s board of directors. “There wouldn’t be such a diversity in approaches to early childhood education. We would see a much more standardized [approach]. And maybe that’s for the best.”
