How one rural childcare provider is bracing for the ‘childcare cliff’

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How one rural childcare provider is bracing for the ‘childcare cliff’

By Pavithra Mohan

As of this weekend, tens of thousands of childcare providers across the country could be at risk of shutting their doors . September 30 marks the end of federal funding promised by the American Rescue Plan in 2021, which secured $24 billion to help sustain an industry that had been devastated by the pandemic. An estimate from the Century Foundation projects that more than 70,000 providers—and the 3.2 million children who rely on their care—could be impacted.?

Among them are home-based providers like Corrine Hendrickson, whose daycares can be a lifeline for many families, especially those outside of metropolitan areas who often have few to no childcare options. “Rural areas are a bigger problem because in order to make a go of it, you need about a hundred children in a group center to make enough money that you can pay your employees and continue to operate,” says Hendrickson, who operates her childcare business out of her home in New Glarus, Wisconsin. “Family childcare is definitely the answer to that.”

But Hendrickson says thousands of home-based childcare centers in Wisconsin have already closed over the last 15 years, faced with the challenging economics of the childcare industry and a dearth of investment from the state. And as federal funding runs out, the state shows few signs of stepping in to help providers like her stay afloat.?(In Wisconsin, the federal funding from the American Rescue Plan was used to create the Child Care Counts program , which in turn distributes funding to eligible childcare centers.) Hendrickson talked to Fast Company about how she has kept her business going for nearly 16 years, and what the end of federal funding will mean for providers across the country.

‘WHAT IF I QUIT MY JOB AND USE MY DEGREE TO START A CHILDCARE BUSINESS?’

I have a bachelor’s degree [for teaching] six weeks up to sixth grade. I graduated with that in 2001 and wasn’t able to find a teaching job at that time because there were lots of people interested in teaching, and that’s when we had a mini recession [so] a lot of districts stopped hiring. So, I substitute taught, but then I also worked part-time [in] retail and worked my way up to store manager at Bath & Body Works. In the meantime, I had a child. [When] he was about 10 months old, I had three pregnant friends that were talking about how they couldn’t find [childcare]. So, I said, Well, what if I quit my job and use my degree to start a childcare business? And they were like, ‘You would do that?’ And I was like, sure, why not. I’ll just talk to my husband and tell him I’m doing this.?

Two of the babies were born within a week, so I gave my notice at work because I knew when they were going to start needing care. My last day of work was on a Saturday, and I opened my business the following Monday. And I also had my own 10-month-old son. It was hard work because I was [in] retail and then my husband worked full time and was in a band. So it was really hard for us to finagle childcare around our schedules. We had family that could help us out, but it was still kind of hard during the week.

‘I PUT IN ABOUT 70 TO 80 HOURS—AND HAVE FOR ABOUT 16 YEARS’

Looking back, I was in my twenties and very naive—as we tend to be in our twenties. I never expected that I would continue on for this many years. I am in charge [from] 7 a.m. to 5 p.m. Monday through Friday, and then I put in another 20 to 30 hours a week on paperwork, advocacy, and professional development. So, on average, I put in about 70 to 80 hours—and have for about 16 years. I’m tired.?

I did have substitute [teachers] last year; one was going to school for her master’s [degree], and one was a mom who had been forced out of the workforce when her kids were born. I ended up taking some classes, and I was able to utilize them to care for and educate the kids while I did paperwork, so I could have a better work life balance; they could [also] cover when I had appointments and things. So last year, I had my Saturdays back for the first time because I got that paperwork and writing done during the week. But now I can’t find anybody again.?

Getting into the business, [I did] not anticipate the 15% sole proprietor [taxes] that I have to pay for Social Security and Medicaid. When I was figuring out how much I needed to charge so that our budget would work as a family, I wasn’t thinking about all those extra things. So I definitely didn’t charge enough at the very beginning. I didn’t even put anything in there for my own wages—that I should earn a certain amount of money an hour. That’s something a lot of us in family childcare don’t think about and still don’t really acknowledge.?

We’re giving individuals who care about kids [and] their families. So for us, it’s really difficult to remind ourselves that we need to also care about ourselves and our families. That’s why a lot [of providers] leave. They’re like: “I can’t do this anymore. I can’t keep doing this to my family, I can’t keep sacrificing my own health and well being. I have no retirement.” People who are fantastic and wonderful leave [the industry], and so we’re missing out on all these opportunities for the kids.?

‘PROVIDERS HAVE BASICALLY BEEN SUBSIDIZING THE INDUSTRY SINCE IT BEGAN’

In Wisconsin, we get a check every month. A lot of the family childcare providers are not going to [be able to] offset the entire loss of that [state funding] by raising their tuition. You’re cutting your own wages. We pay our taxes at the end of the year, and what’s leftover is our profit. That’s how we look at it because we don’t draw paychecks. [When] having that conversation with other providers, they’re like, “oh, it didn’t even occur to me that I’m cutting my own paycheck.” And I’m like: “Yeah, you are. And are you okay with that?” So, a lot of us are increasing our rates.?

Of my revenue stream last year, 22% was from Child Care Counts, and I had not increased my rates since 2018. The way Wisconsin is doing the funding, the amount [of assistance] got cut by 50% in June. So I increased my rates by 12.5% then, which is about $20 a week per child. During the pandemic, they made the USDA Food Program a one-tier system, so we all got reimbursed at a higher amount. That [just] ended—so to offset that loss of revenue, I had to increase my rates by $15 a week per child at the beginning of September.

Our state is not looking like it’s going to do anything for us. They don’t see us as an investment; that’s been made abundantly clear by Republicans. So in February, when the [Child Care Counts] program is gone, I’ll be raising my rates again by another $25 a week per kid. So my families will have seen a rate increase of $60 a week per child between June 2023 to February 2024, which is untenable. It just doesn’t make sense to me. We as the providers and educators have basically been subsidizing the industry since it began because we don’t take the wages that we deserve. So we’re subsidizing the parents and their employers—and everybody else who benefits.??

The government should be investing in [childcare] just like we do with any other public good. We’re not only the workforce that allows parents to work, but we are tomorrow’s workforce because we are teaching these kids and giving them the skills that they need in order to be decent humans and thrive.

We’ve been working on this since the 1970s when Richard Nixon vetoed universal childcare. It’s been a workforce issue since before the pandemic. The pandemic revealed the problem and was an opportunity for us to advocate and get the government to invest in us and prove it would work—and we did. And it still isn’t enough, because now they’re just like, “We just needed that funding because of the pandemic.” No, we’ve always needed that. I just feel like people are grasping for whatever excuse they can to not do it.?

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