16,000 childcare providers shut down in the pandemic. It’s a really big deal

When thousands of child care centers and day cares reopened after the lifting of the COVID-19 restrictions in 2020, it seemed that those businesses, and the families they serve, had been through the worst of it.

Little did everyone know that two years later an industry stretched to the brink even before the pandemic would be in even more turmoil as childcare providers were hit by a massive wave of closures.

Nearly 16,000 child care centers and licensed family child care programs closed permanently between December 2019 and March 2021, according to a new report from Child Care Aware of America. These closures are largely due to increased operating costs, thin profit margins, unpredictable attendance due to COVID, and rising labor costs due to inflation.

Those closed child care providers represent a 9% decrease in child care centers and daycares nationwide. And while that may seem low, the US is already suffering from a shortage of childcare workers. Pre-pandemic, more than half of Americans lived in areas considered “child care deserts” — communities where there are either no child care providers, or so few that there are three children for every open slot.

“Child care programs are barely staying in business,” Lynette Fraga, CEO of Child Care Aware of America, a national nonprofit focused on child care resources, said in a statement about the report. “Child care programs are understaffed, and providers are burned out.”

For the child care providers that remain, the increased scarcity and increased operating expenses have, not surprisingly, driven up costs. The national annual average price of child care in 2020 rose 5% annually to $10,174 per child. This is almost 4% higher than the inflation rate for the same period, according to Child Care Aware.

Higher costs and fewer providers have had a major impact on families. Pandemic-related disruptions in childcare have cost parents with young children under the age of 5 about $13 billion a year in lost income since 2020, according to a recent analysis released by the Century Foundation, a progressive think tank.

The direct effects of the ongoing lack of childcare – which include parents being forced to quit their jobs, rearrange or shorten work schedules, change their contracts or downsize their careers – amount to $9.5 billion in lost earnings.

The Department of Health and Human Services has recommended that childcare costs make up no more than 7% of a household budget. But with the price increases, childcare expenses now account for 10% of the median household income for married couples with children under 18, according to Child Care Aware. And for single parents, costs can take up as much as 35% of the household budget. For many, this is simply unsustainable.

“Parents continue to struggle to find and afford childcare as they re-enter the workforce,” says Fraga.

Women have been particularly hard hit. According to the National Women’s Law Center, about a million women are still missing from the workforce compared to pre-pandemic levels. Continued school and child care interruptions play a big part in that.

Biden’s Build Back Better plan is set to help provide much-needed support for both families with young children and child care providers, but the legislative package remains stuck in Congress. And even if it moves forward, childcare initiatives may not make the cut.

“Far too many families still lack access to high-quality childcare due to barriers such as expense and lack of availability,” Fraga said. “Without large-scale investments in our child care system, such as the Build Back Better Act, these trends will continue.”