The coronavirus pandemic has plunged U.S. day cares into a financial crisis.
Child-care centers across the country—big chains, tiny in-home operations, nonprofits—are teetering. Enrollment slumped in the spring and never fully recovered. Extra expenses, like protective gear and deep cleaning, are piling up. By some estimates, some 40% of U.S. day cares are closed. Many of those that are open have half the number of children they did in February, or less.
Lawmakers and economists are warning that many child-care providers will fail without government help. If that happens, parents who struggled to find a day-care slot before the pandemic would have to compete for even fewer spaces when it is over. Already, the pandemic is forcing many mothers out of the workforce, a decision likely to hurt their career prospects for years. And if parents can’t work, the economy can’t flourish.
“If the virus magically disappeared, could we go back to where we were in January? We couldn’t if there’s no child care,” said Elizabeth Davis, an economist at the University of Minnesota.
Even in good times, the U.S. child-care industry operates on slim margins. Children come and go, which means revenue is unstable. The businesses have little in the way of collateral. Banks are rarely interested in lending to them, beyond costly credit cards, making it difficult to ride out rough patches.
