Oregon’s Child Care Industry
By Jessica Nelson Employment Economist firstname.lastname@example.org
Many working parents in Oregon rely on the child care industry for safe, affordable, and educational care for their children. The importance of the industry has been highlighted in the pandemic recession, as child care centers and providers faced new restrictions and risks of providing care in Oregon communities. Employment in the industry dropped a staggering 35% in one month between March and April 2020, and regained less than 40% of those losses by December 2020. As with so much of our lives, the virus and its spread continue to impact child care jobs and the parents who depend on the care provided by them.
Even with the recent spike in unemployment, most parents are in the labor force and employed, translating into a lot of children needing child care. Elementary school closures and distance learning have changed the day-to-day dynamics of many households, as well as shifting their need for child care. Some families currently need fewer hours of care, or can do without a formal child care arrangement entirely as children learn at home. Some families, including those of essential workers, face limited options for care outside the home and the constant uncertainty of schedule changes and availability of care when parents need to be at work.
Child care slots were too scarce in most of the state prior to the pandemic. The Oregon Child Care Research Partnership found that in 2018, “Child care supply is inadequate across the state with 72% of Oregon communities being child care deserts, meaning there are only enough regulated slots available for less than a third of a community’s children.” For infants and toddlers, 84% of Oregon communities were found to be child care deserts, compared with 61% when seeking care for a preschooler. Parents of young children already faced limited child care options in our state, and the pandemic has caused changes in community-level demand combined with constrained supply.
On top of that, the cost of care continues to rise, with families of young children often spending more on child care than on rent or their mortgage – a trend that existed long before the pandemic but that has been highlighted as parents have left the labor force to care for children at home during COVID-19. For too many families, the juggle and struggle of finding, keeping, and paying for child care during the pandemic has not been worth the pay at low-wage, and suddenly high-risk jobs.
In responses to a Washington University study from the Social Policy Institute, summarized by the Annie E. Casey Foundation in a December 2020 report Kids, Families and COVID-19, about a third of parents responded in the Aug. 10 2020 to Sep. 2 2020 survey period that they somewhat or strongly agreed they were less likely to return to work in the fall due to a lack of child care (32%). Latino parents were the most likely to report they somewhat or strongly agreed, at 39%. “Whether these parents are finding such care is no longer available, they can no longer afford it or they themselves have been thrust into additional caregiving roles, an enormous portion of the nation’s workers could be sidelined from being able to support themselves and their families.” Disruptions in child care might seem like a household-level problem, but when pervasive and persistent, they become a large economic and business problem.
Parents make up a sizeable share of Oregon’s labor force. Labor force participation rates are higher among parents than among those without children under the age of 18. Among parents of young children under the age of six, nine out of 10 fathers and seven out of 10 mothers are working. Parents of children under six years of age make up 14 percent of Oregon’s workforce, and those with children ages six to 17 make up another 17 percent. Oregon employers benefit from the services of child care providers because these services help their workforce continue to be stable, reliable, and productive.
Small Businesses and Big Pandemic Problems
The child care sector was hard hit at the onset of the pandemic recession and heavily affected by the restrictions put in place to stop the spread of COVID-19. Due to the nature of such a close-contact business as caring for children, and additionally to the many changes we all dealt with in the spring that suddenly shifted both demand for and supply of child care, employers had to shift rapidly in the spring to reopen with new safety precautions and limitations to group sizes, cohorts, and a new, much smaller, staffing footprint.
At the onset of COVID-19, the private-sector child care industry dropped 35% of its jobs in the space of one month, moving from near peak employment of about 13,000 jobs in March to 8,400 jobs in April. As of December 2020, the most recent month of available data, Oregon’s child care businesses had regained almost 1,800 of the jobs lost this spring, reaching about 10,200 jobs. The number of businesses didn’t change much between the first and fourth quarters of the year, dropping from 1,419 to 1,392. So far, with data through December, almost all child care businesses had survived the pandemic. With COVID-related restrictions lasting well into 2021, it remains to be seen whether more widespread business closures will take place, and how that will affect local child care marketplaces as the economy recovers from the pandemic.
Over the long-term, child care has seen strong growth. Since the industry has a reliable seasonal pattern, with a drop in jobs during each summer, the 12-month moving average is included in the graph to make the overall trend a bit easier to follow. From 2009 to 2019, Oregon’s child care businesses grew 36%; just about as strong as the 38% growth in private-sector health care and social assistance, the broader sector of which child day care services is a small part. Overall employment grew 21% between 2009 – the depths of the Great Recession – and 2019.
Child care businesses tend to be small operations. In 2018, Oregon’s private-sector child care businesses numbered 1,308 and employed 12,453 workers. Half of the businesses had four or fewer employees. Fifteen percent of child care businesses employ 20 or more workers.
Average wages are low in the industry. Total payroll of child care businesses with employees in 2020 was about $271 million – this averages out to almost $27,000 per worker, less than half the private-sector average of $59,000. The low average wage is due to the low wages of the occupations that dominate the industry. For example, the median wage of a preschool teacher in Oregon in 2020 is $14.71 per hour, and the median wage for childcare workers is $12.90. These two occupations account for more than two-thirds of the employment in the day care industry.
Sticker-Shock Costs and Insufficient Pay Hamper Child Care Market
The Center for the Study of Child Care Employment at the University of California, Berkeley has studied the dynamics of the child care marketplace, which functions with far less public support than other areas of education. “Most families who rely on child care are heavily burdened by the cost, and by the time their fees are applied to all the expenses it takes to run a program, very little is available for the educators themselves. As a result, educators end up subsidizing the true cost of high quality services with their low wages.” Investments in the public good of high-quality, stable, and accessible child care will benefit all of us, yet they remain a difficult public-policy sell. There are good reasons, in terms of equity and economic stability, to increase such investments.
In its study Oregon Early Learning Workforce, the Oregon Child Care Research Partnership notes, “Lower levels of compensation have been shown to be associated with higher teacher turnover, lower teacher morale, and lower levels of observed quality.” Turnover among regulated child care facilities far exceeds turnover at K-12 schools. Teacher turnover negatively impacts children directly by disrupting the relationships with the adults caring for them, and indirectly through lower morale among remaining teachers. Between 2012 and 2018, the annual turnover rates in child care facilities ranged from 16 to 29% per year. In all, just 32% of Oregon’s 2012 child care workforce were still working in child care in 2018. Programs paying lower wages tended to have lower levels of teacher retention than the industry norm.
As the importance of early childhood education is embraced and more fully supported, efforts are underway to better measure and support the professional development of child care workers and preschool teachers and more fully align their training and compensation with the broader array of educators. The study concluded, “Low wages are associated with high turnover rates in both early learning and K-12. High turnover rates harm children and challenge professional development investments; although in Oregon’s early learning workforce we find that those in whom we made professional development investments were mainly in the group who remained in the workforce.”
The child care industry has grown over the long-term in response to the increasing numbers of families in which both parents work, and to the increasing number of households headed by women. The pandemic recession has harmed employment in the industry a great deal, and its implications for business survival and retention of the child care workforce are still developing as we struggle to get COVID-19 under control. Families and businesses rely on a stable child care industry. Increasing availability and affordability of reliable child care options will be necessary to getting Oregonians back to work in the economic recovery after the pandemic.