by Jessica Brown
Access to child care is essential for parental employment, and high-quality child care is important for child development. The child care industry faces particular challenges during and after recessions. In research conducted with Arizona State University’s Chris Herbst, I find that historically the child care market has been particularly sensitive to economic downturns and that it recovers more slowly than other industries.
The child care market’s slower recovery after recessions has been evident during the current recovery as well. Although total employment surpassed pre-pandemic levels in July 2022, employment in the child care industry that month was still about 5 percent lower than it was before COVID hit. Due to the sector’s importance to parental employment and child development, it may be beneficial to support the sector during and after recessions.
One challenge with supporting the child care sector is that it is mostly made up of small businesses without the infrastructure to apply for and manage government support. As part of its initial response to the pandemic, Congress passed the CARES Act, which included the Paycheck Protection Program (PPP). The PPP provided low-interest loans to eligible businesses, with the loans generally forgiven if the funds were used to maintain employment counts and wages. Many child care providers likely would have benefited from the program, but they were less than half as likely to receive loans as small businesses overall. The underrepresentation of child care providers among PPP-loan recipients points to the need for organizations that can bridge the gap between child care providers and opportunities for support.
The Pulse Program
Founded in 2012 in Battle Creek, Michigan, initially in partnership with Michigan State University and now with the W.E. Upjohn Institute, Pulse has worked to bring together community partners focused on early childhood education (ECE). Pulse works to improve the ECE system and services for children, including increasing access to care, improving quality of care, and coordinating services across different groups and government agencies. Because they were already known and trusted in the ECE community, Pulse was in an ideal position to assist providers in the wake of the pandemic.
As the economy recovered, providers were faced with a new problem: difficulty filling open positions. In a survey of 7,500 providers throughout the country in the summer of 2021, 80 percent reported difficulty hiring. Because child care providers operate under strict child-staff ratios, unfilled positions mean providers must operate at reduced capacity or shut down. Child care workers earn wages lower than 98 percent of workers, posing a problem for recruitment and retention. Research shows that increasing compensation can benefit not only workers but children as well. A study of bonus payments to child care teachers, for example, found that teachers receiving the bonus were substantially less likely to leave their positions, and lower teacher turnover improves child development outcomes.
When the American Rescue Plan Act passed in March 2021, it included appropriations to states for Child Care Stabilization Grants. Grants could be used by child care facilities for expenses like personnel costs and facility maintenance and improvements. The state of Michigan also added its own appropriations to support bonus pay for child care employees. But child care providers needed to apply for the funds and comply with reporting requirements documenting how the money was spent. This is where Pulse stepped in to provide technical assistance to providers in the Battle Creek area with the application and reporting processes associated with the grants, helping to ensure they received the money they needed and funds were not left on the table. The initial funding call was in fall 2021, with additional rounds in spring and summer 2022.
But the Child Care Stabilization Grants provide only temporary relief. As of fall 2022, Pulse is working with local businesses, child care providers, social service agencies, and potential funders to continue to strengthen the sector for the longer term. One such project seeks to make an additional benefit available to area child care professionals: rental and mortgage assistance.
By bringing together stakeholders throughout the region who touch the ECE sector, Pulse is able to build trust and make connections that would be unlikely to happen otherwise. They are able to connect child care providers to available resources while also working toward more systemic solutions.
(Thank you to Maria Ortiz Borden and Kathy Szenda Wilson for their insights into Pulse.)
To read more, please check out the rest of our latest report: https://www.upjohn.org/major-initiatives/promise-investing-community/about-initiative/annual-reports.