For-Profit Child Care Chains See Opportunity to Monopolize Imperiled Industry

Part of the Series

The Struggle for Caregiving Equity

On April 18, the Biden administration announced a set of executive orders aimed at mitigating the ongoing crises that have wracked the U.S. child care industry. At first glance, it appeared that President Joe Biden was taking steps toward fulfilling a longtime promise of his campaign and revisiting a priority of his signature (and failed) “Build Back Better” (BBB) initiative. While the press conference made for flattering PR, that was the extent of the orders’ utility: Among the more than 50 decrees, none mandated anything close to transformational changes. Biden’s directives to federal agencies contained a lot of “issuing guidance,” “consider[ing]” and “encouraging.” In other words, they chiefly amounted to nonbinding gestures and tinkering with existing policy.

The most impactful order stipulated increased pay and benefits for Head Start program educators — certainly welcome. But the package was a far cry from the ambitions of BBB or campaign rhetoric. Even the staid and stalwart Associated Press ventured that the orders’ “impact would be limited and possess more of a symbolic weight about what’s possible.”

Meanwhile, metrics of child care availability, affordability and quality are plunging. That downward trajectory predates the pandemic — and now that COVID has been (dubiously) declared to no longer be a public health emergency, corporate child care chains are dedicating their considerable resources towards conquering newly vacated markets. As has demonstrably been the case in elder care, education, and more, injecting profit incentives into a social service is poised to more deeply entrench the already chasmic inequality in U.S. child care.

Child Care in Crisis

Biden’s failures on the issue loom all the larger for the fact that, among developed countries, the threadbare U.S. child care system ranks near the very worst tier. The crisis is rooted in a web of intersecting factors, themselves a product of neoliberal decay. COVID-19 was, of course, a powerful catalyst that pushed the system into a new phase of disruption; one study found that by April 2021, a full third of child care centers still remained closed. The years since have seen little in the way of recovery. But the core driver of the crisis, understaffing, long predates the pandemic.

U.S. child care, or preschool (the terms are often interchangeable), is really a granular set of private providers. Most of them are very small or home-based, and receive little to no government support. Subsidies vary widely between states, leading to inequalities of access — far worse for the working class, especially for families of color. Not infrequently, parents from marginalized groups find that it simply doesn’t exist in their community: a child care “desert.”

Many turn to unsanctioned informal child care, which may skirt regulatory inspections and may have questionable conditions. Parents may look to family members to provide care — requiring the caretakers, overwhelmingly women, to drop out of the workforce. These kinds of situations contributed significantly to the 2.2 million women who left jobs after the pandemic’s onset. The Department of Labor collected data that indicates nearly 60 percent of parents cited a lack of child care as their reason for leaving the workforce.

Even where care is available, the expense is staggering, with the national average at $864 a month, akin to a second rent. Given how badly U.S. families struggle to pay their first rent, this extra cost for a basic and necessary service represents an egregious imposition. Those who can access workplace-funded child care are the exception. An appalling statistic illustrates the extremity of state abdication: Among developed nations, the average annual per-child spending on child care is $14,000; the most generous, Norway, spends almost $30,000. The U.S. government allots $500.

While low wages in child care are the result of the binds placed on the industry by the market, there is an abstract sense among the public that child care is low-value labor. In truth, as many learn when they become parents, care work is a highly skilled, highly demanding professional field. (By no coincidence, it’s also work that disproportionately employs women and women of color; its devaluation is sharply gendered and racialized.)

The crisis of child care is a crisis of capitalism.

Betsy Bridge is a parent of two daughters, both of whom are just about to age out of child care. Speaking to Truthout, she expressed her deep gratitude for their caregivers’ devotion and expertise. “There’s this perception that it isn’t a profession that deserves to be paid well. I think it’s the exact opposite: It is a profession that is one of the most important that exists — formulating who these little people are going to be.”

The strain on child care workers, owners and parents is damaging enough — but the ramifications for children can be lifelong. Poor-quality child care, or a lack of care entirely, can produce significantly more adverse outcomes for social-emotional functioning and aptitude. At the same time, early developmental interventions have outsized positive effects on future well-being. Even from the coldest, most utilitarian cost-benefit angle, providing good child care is an investment with prodigious returns.

The Self-Perpetuating Understaffing Crisis

Thanks to low pay and overwork, burnt-out caregivers are abandoning the child care industry entirely. Those stressors, amplified by the pandemic, only breed further stressors: a negative feedback loop that locks in degraded conditions. Workers leave the field, leaving facilities understaffed, creating even more demands on those who remain, who then leave the field, and so on.

“Understaffing leads to all of the working condition crises,” Nat Glitsch, a child care worker and preschool teacher in Portland, Oregon, told Truthout. “You can’t get breaks when you need, children are not safe.… It’s not survivable to work in this field, emotionally or economically, and ethically, when children are in danger. I’ve now left two preschool jobs because I’ve felt like I was endangering children by continuing to work there.”

Before the pandemic, Betsy Bridge was delighted that her two daughters would both be attending the same child care. However, thanks to the timing of COVID’s disruptions, each had a markedly different experience. Said Bridge, “Things went awry in many different ways. [The facility could no longer] provide teachers with training.… COVID was a huge factor, obviously. But I also think we can’t continue to pay these highly skilled professional teachers at wages that are below a living wage.”

The issues that Glitsch and Bridge describe occur at a national scale, driven in large part by massive losses to the workforce. Bureau of Labor Statistics information, cited by The New York Times, recorded that 100,000 child care workers have deserted the field; unsurprising, given that it’s one of the country’s lowest-paid jobs. Only those in the very top percentile are earning even $18 an hour. The median wage is $13.71 — an unlivable pittance.

Lily Mosby is a former employee of KinderCare, a major corporate child care chain. Asked what she saw as the most pertinent crises, she replied to Truthout by email: “Lack of staff. Lack of available child care options for families. Lack of affordable child care options. Lack of paid family leave.… The industry is low pay, high stress and physically demanding — many child care workers left at the beginning of the COVID pandemic and never looked back!”

A New Territory for Organized Labor

To confront these unacceptable conditions, employees of Growing Seeds, a small Oregon child care chain that operated three locations in Multnomah County, took collective action. Around 75 workers organized, then voted to join the International Longshore and Warehouse Union (ILWU) Local 5, creating one of the first unionized child care employee workforces.

It’s worth noting that there are child care provider unions, like those organized with the American Federation of State, County, and Municipal Employees (AFSCME) in Oregon. However, these represent the owners and managers (along with some staff) of child care businesses, whether self-employed individuals or small operations with a worker-owner and/or a few employees. Some states consider both child care owners and workers to be public employees, so collective bargaining rights allow them to negotiate with the state for higher subsidies.

In other states, like Oregon, child care provider unions are organized to represent child care owners and their interests. Many of these owners are doing the work themselves or with a handful of staff. However, there are contradictions in this arrangement: In Oregon, for example, AFSCME allows child care employees to join too — but employees have interests that conflict with those of their bosses. Staffers at Growing Seeds — which, with three locations, was significantly larger than a home care business (under new management, it has since split into three separate businesses) — therefore saw fit to organize as a union of employees to assert their particular needs.

Glitsch was an active organizer in the union drive, which went public in February 2020 and secured an in-person election on March 11: the day COVID was deemed a pandemic. Workers quickly found themselves contending with an anti-union campaign from company owners. Despite resistance, they won across all three locations in a landslide.

All workers shared serious concerns not only about wages, but also potential risks to the children, for whom, Glitsch stresses, they care for deeply at a personal level. Understaffing led to inadequate supervision, with staff and children sent home or shuffled between rooms to hold teacher-to-child ratios at the government-mandated minimum. The staff was also given unsanitary cleaning duties — and while cleaning, had to not only leave children unattended, but also potentially exposed them to cleaning chemicals.

Perhaps a silver lining in the ubiquity of these unenviable conditions was that other workers were primed to recognize their shared interests. “Since Growing Seeds successfully organized,” Glitsch told Truthout, “we’ve organized a bunch of other preschools in Portland as well, under our same union.”

Unfulfilled Dreams of Universal Care

Child care staff unions will be necessary for improving conditions. But given that so much of the U.S. child care network is made up of small providers, higher-order action will be necessary to address the crises inflicted on the industry by COVID and the free market alike. For small providers, slim profit margins mean low wages and minimizing staff — and the fact that many customers are in equally dire financial straits precludes raising prices. When necessary social services are made beholden to the demands of the profit model, catastrophe results. The crisis of child care is a crisis of capitalism.

Chains have taken advantage of the shuttering of mom-and-pop care centers to absorb more of the $60.4 billion child care market.

The only means of resolving these contradictions is to underwrite the industry with state funding. Ideally, the model would provide universally available free child care — not means-tested programs that introduce bureaucracy and burdensome reporting requirements. As Truthout reported last year, organizers nationwide are making small but meaningful gains toward the former, achieving some universal programs on a local scale.

Both on the campaign trail and in office, Biden promised the moon: universal free preschool and direct support for child care. (His upcoming 2024 campaign will reiterate those promises.) Perhaps we could commend Biden for the ambition, however hollow it rings. Regardless, the plan dissipated with the death of BBB, thanks to the turncoat vote of reliable corporate servant Sen. Joe Manchin.

Hostile Takeovers

As always, it seems like we are left to confront the problems caused by the free market by turning to the “miracle” solutions of the free market. In the wake of the pandemic, corporate providers have leapt into action — profiting from crisis being the animating principle of so-called disaster capitalism.

Corporate chains were not exempt from closures during the pandemic. But with over 1,400 locations across 40 states, KinderCare casually shrugged off the attrition, and all of the chains emerged from the pandemic with innumerable small competitors cleared away. Despite COVID closures, KinderCare’s 2020 revenue was still $1.4 billion.

The largest operators are KinderCare, Bright Horizons and the Learning Care Group. Top corporations have gone on an expansion spree, extending and consolidating operations. Learning Care Group, for instance, has been readily acquiring numerous smaller child cares in order to open new locations. All chains have taken advantage of the shuttering of mom-and-pop care centers to absorb more of the $60.4 billion child care market. In The New Republic, Elliot Haspel cites a report indicating that the largest chains grew 8 percent from 2020-2021. The profit potential implied by such explosive growth is irresistible to capital. All the child care chains that haven’t gone public with an IPO have been lavished with investments by private equity.

Corporate child care providers have their advantages. Certain chains may furnish strong developmental environments for their exorbitant price tags, but some studies have found that chains tend to be lower in quality. Still, in part due to inconsistent regulation and inspection, accident and fatality rates are higher on average at home-based centers. Glitsch agreed that the reality can run both ways: In small centers, she says, “There are so many violations that go unreported. There’s a statistic: that child care and home care workers are the places where the most [labor and regulatory] violations but the least reportings happen.”

The profit-driven incentives of corporate child care also intensify pressures on employees. For her part, Glitsch would say that’s putting it lightly: “Anyone I know who’s ever worked at KinderCare is really concerned about the working conditions. And the general conditions there, it’s kind of like a horror story.” It’s sometimes true that benefits are better at chains, and pay can be higher — but only marginally, a matter of cents per hour. (KinderCare CEO Tom Wyatt is paid $1.95 million a year.)

Mosby worked at KinderCare from 2014 to 2016. “KinderCare was my first introduction to a large, for-profit child care industry,” she told Truthout by email, “and it became clear to me very quickly that the children and families were viewed as dollar signs.” Mosby said that KinderCare shuffled around caregivers and kids to maintain minimal ratios and would regularly “[send] anyone ‘extra’ home to save the company money.… For many children it was dysregulating.” Staff turnover churned at a rapid pace, in her experience, and teachers were forced to skip breaks, even bathroom breaks — meaning that, appallingly, recurrent UTIs were a known job hazard.

“I believe large for-profit chains … are making things worse for the smaller, locally owned and operated businesses competing to stay open,” Mosby wrote. “The one thing I will say, for better or worse, is that KinderCare almost always has openings[.]”

It’s true that chain expansion might increase access in some localities — but affordable access is a different matter. Their growth is concentrated in high-income areas, which is of course deliberate: As Dana Goldstein notes in The New York Times, in major cities, Bright Horizons and KinderCare charge as much as an annual $44,000; year-to-year, fees can leap up by 7 percent.

The cost of these chains, and the erasure of smaller local options, will only entrench inequality and inaccessibility. Whatever the consequences of their rapacious market domination, for-profit chains have played a more insidious card still. In fact, they had a direct role in stifling the only realistic near-term hope of achieving anything resembling nationwide universal care.

The major chains lobby Washington in a bloc — or as they call themselves, a little ominously, a “consortium.” The Early Care & Education Consortium publicly claimed to support BBB. “But in lobbying meetings,” as Goldstein reported, “it argued to policymakers that the bill’s numbers did not add up.” Whatever the stated intent, it’s abundantly clear that the real concern was the possibility of government subsidies for small competitors.

Bright Horizons and KinderCare have admitted as much. Goldstein highlighted the fact that in its 2021 report, Bright Horizons said that state support “could adversely affect our revenues.” And, in an SEC filing, “KinderCare warned that expanded government child care benefits could lessen demand for its services.” Most revealing of all: before the BBB vote, consortium lobbyists met with Sen. Joe Manchin. Once Manchin had rung the bill’s death knell, executives from the top firms poured donations into his campaign and PAC. “Shortly after,” wrote Goldstein, the senator and his new donors all went out to dinner.