This story was originally published here. 19th.
Over the course of nearly eight years in business, Dawn Kelly has repeatedly watched employees leave their jobs at The Nourish Spot, a smoothie shop she owns in Queens and Brooklyn, because they couldn't find good child care.
Sometimes it was because child care was too expensive or parents felt there were no quality options for their children. Whatever the reason, this has created retention issues for small businesses. Kelly had to ponder this issue as he considered expansion.
“We couldn't hire everyone we wanted to hire. [child care] Our work hours don’t allow us to work when we need to,” Kelly said.
Most of her 10 employees are single parents who are managing the chaos of an expensive, dilapidated child care system. Kelly empathizes: A few years ago, she was a single mother in corporate America and was grateful to her employer for providing on-site care. But as a small business owner, it's not something she has the capital to afford.
“I feel sympathy for them. I try to work around their schedule because I’ve been in their shoes before,” Kelly said. “It’s important that our legislators understand this and make it easier for us to do business and hire people in our communities, regardless of location.”
In a new survey released Thursday, more than a third of small business owners said they were having trouble operating or expanding their businesses due to a lack of child care in their communities. The survey was produced by Goldman Sachs' 10,000 Small Businesses Voices program, which advocates for small business owners. This data was first shared exclusively with The 19th.
In mid-April, Goldman Sachs surveyed 1,259 business owners in 47 states, Puerto Rico, and Washington, D.C., about their thoughts on child care and its impact on their companies. Nearly 60% said there are not enough high-quality, affordable options in their community, impacting their workforce. About 35% of those owners said a lack of childcare space and high costs were forcing staff to cut back on hours or give up work altogether.
Another poll conducted earlier this year by the Small Business Majority, an advocacy group with 85,000 members, found similar results. A third have seen a drop in sales and income due to employee childcare issues. About half reported a decline in productivity. A quarter of owners said they had had to close their businesses due to childcare issues.
Particularly since the start of the pandemic, there has been a “massive explosion” of employees talking more openly about childcare issues and employers becoming more engaged on the issue, said Sarah Rittling, executive director of First Five Years. Fund is an early childhood education advocacy organization.
The cost of child care has been increasing for several years, typically outpacing inflation each year. Child care will cost an average of $11,582 per family in 2023, according to Child Care Aware, a national advocacy group. This corresponds to approximately 10% of the median income of couples and 32% of the median income of single parents.
Small business owners told Goldman Sachs they want government support to improve their options. A whopping 77% support increased federal funding for child care. Past polls have found similar results, with small business owners across the political spectrum calling for more federal funding.
Many child care facilities and in-home child care facilities are also typically small businesses that operate on slim profit margins. Federal funding to improve sustainability will also benefit other businesses, said Jen Legere, founder and owner of A Place to Grow, a child care center with three locations in New Hampshire and one in North Carolina. Legere worked with the Department of Labor to establish the first child care director apprenticeship program.
“Childcare is the workforce behind the workforce,” Legere said. “We will not be able to grow more child care centers and increase capacity across the United States until we actually start supporting the child care workforce, increasing the level of professionalism across our workforce and creating career paths for them. Then please support our business.”
Some small business owners are willing to be part of the solution. According to the survey, 62% said being able to offer child care benefits in the workplace would have a positive impact on recruiting and retaining talent. To help, 70% said they would support legislation to increase business tax credits designed to help small businesses that provide care.
Currently, the federal government allows businesses to receive up to $150,000 in tax refunds if they provide child care to their employees. But owners surveyed said they would support increasing that amount to $500,000. This proposal is currently before parliament. The bipartisan bill, known as the Child Care Investment Act, would expand the tax credit for the first time since 2001.
The way the credit currently works, a business would have to spend $1 million to receive a tax credit of up to $150,000. The new bill would increase the refund amount to up to $500,000. Small businesses can earn more, up to $600,000. Businesses that spend less than $1 million can get more money back, up to 60% instead of 25%.
California Democratic Rep. Salud Carbajal, who co-sponsored the bill with Oregon Republican Rep. Lori Chavez-DeRemer, said the idea emerged from a roundtable with small business owners conducted in 2022. Many people say business is parenting.
“After coming back with my team and scouring the child care tax policy space, the child care tax policy became clear early on. [business] The tax credit system that already exists is a good system, it just needs to be modernized and updated,” Carbajal said.
The bill also allows small business owners to jointly establish child care centers and continue to benefit from deductions, a provision that does not exist under current law.
Setting up a new supplier can cost hundreds of thousands of dollars, which is difficult for a single business owner to do. But if all the stores in an area, such as a strip mall or business development district, work together, it could be a community solution, Carbajal said.
Legere has already benefited from working with companies to provide treatment. For the past three years, A Place To Grow has partnered with Harmony Home, an assisted living facility for seniors in New Hampshire. Legere's company manages a small child care center on the property. Harmony Home's staff are available to care for children on site, and it is also open to community members.
This solved some of the big challenges she faced when setting up her new childcare centre. It took about two years just to raise capital and find real estate each time. The promise of business partnerships is that they can increase the overall supply of child care services rather than trying to find more space in an overcrowded system. Daycare center closures over the past four years have limited the number of places available to children across the country. Waiting lists often last for years. Businesses seeking to offer child care benefits typically establish in-house providers or contract with local child care facilities. However, other members of the community may be eliminated because there are not enough seats to begin with. Creating new options helps both groups.
“If we are going to solve this problem together, we need to build partnerships that bring us all together,” Legere said. “Companies continue to provide childcare and [saying], ‘You have to grow up.’ We can't grow without you. We need you to help us and support us.”
The Child Care Investment Act has more than 36 co-sponsors, including 31 Democrats and 6 Republicans, and is supported by the U.S. Chamber of Commerce. The bill was filed last July and likely will not pass this year, but Carbajal said it has support and could be included in a tax package expected to be submitted to Congress in 2025.
“It’s an economic issue for our economy that allows businesses to thrive. They are unemployable. They can't sustain. “It’s not scalable,” he said. “I think it actually gives us a really important tool to have more success and address the major challenges that everyone now recognizes.”
For many years, childcare was treated as a fringe topic, not part of the national economic discourse. But the impact this has on the ability of parents, especially mothers, to participate in the labor market is finally receiving more attention.
As the pandemic began in 2020, more women than men dropped out of the labor market, a phenomenon that has never happened before in U.S. history. One reason is because childcare options have disappeared. Many women had to quit their jobs to care for their children.
According to the Council for a Stronger America, a nonpartisan nonprofit group of law enforcement and business leaders focused on family policy, the loss of jobs, productivity and tax revenue due to child care issues is driving the U.S. economy today. It is said that losses of approximately $122 billion occur annually. Businesses lose $23 billion a year in lost revenue or recruiting costs due to losing working parents to inadequate care. The U.S. government loses about $21 billion in income and sales taxes because parents without access to child care typically earn less and spend less.
These are the issues small business owners want candidates to discuss this election year. About 55% of people surveyed by Goldman Sachs said the issue was not sufficiently addressed during the campaign. A May poll conducted by the First Five Years Fund found that a whopping 89% of voters want candidates to have a plan to provide parents with high-quality child care. This includes 80% Republicans, 88% Independents, and 99% Democrats.
Next week's presidential debate will provide the first test of whether the candidates are listening.
Moms First, an advocacy group that promotes child care and other family policies, is circulating a petition asking CNN to ask President Joe Biden and former President Donald Trump questions about child care during the June 27 debate. “Now is the time for our leaders to make bold promises to mothers across the country, and fixing our broken child care system is just the beginning,” the group wrote.
But Kelly is skeptical. “I’ve never heard any candidate talk about child care,” she said. “Childcare is fundamental to the fabric of our country and it’s not just for small businesses. We should want our families to be protected, protected, and placed in an environment where they can excel. And it starts with our babies.”