From the Advocate

By Tara Lynn Gray 

March 2024

Childcare Supply and Demand: A Business Case

Recognizing Women’s History Month

Affordable sustainable childcare. Why do these three words sound like a contradiction in terms?

Because they do. And, sadly, especially so in California, where we trail the rest of the country in replacing childcare providers lost during Covid.

We know from numerous studies the many positive outcomes of Early Childcare Education (ECE) including lower school drop-out rates and decreased social and health risks that can lead to economic mobility and greater equity.

ECE is not my area of expertise. But I do know how to spot a market opportunity…and here we have a critical resource that is both severely under sourced and sorely needed. It’s a classic supply and demand problem.

“Be good with kids” is not enough to run a childcare center. Operators need significant “how to run a business” training from running payroll, marketing, to hiring and firing, not to mention operations that run the gamut from administering first aid to applauding first steps.

Childcare center business owners face the same challenges as other businesses including workforce shortages and financial constraints from rising rents to staff salaries. They operate in a highly regulated environment with highly specific requirements for physical environments; they work unpredictable hours; and to be successful, they need Herculean-level patience with our kids and us parents.

The answer to affordable sustainable childcare could be as easy as ABC and by this, I mean – A Business Case – for funding people to start or expand their childcare small businesses.

So here we go. The study Availability of Child Care for Working Families in California stuns with the finding that there are only about 25 percent of licensed childcare spaces available for children in California aged 0-12 with parents in the labor force. That leaves 3 out of 4 California kids without an option. Separately, the 2023 report on The Status Of Women And Girls In California, found unemployment among women has risen post-pandemic from pre-pandemic numbers. I have no doubt that childcare played a factor in light of the fact that 61 percent of mothers report that they are mainly responsible for care of their children.

We are looking at a truly Golden State-sized opportunity to match women entrepreneurs with a marketplace deficit that is hampering California’s economy.

I’m proud that my office provided funding through the state’s 21 Women’s Business Centers (WBCs) within CalOSBA’s Small Business Support Center network. WBCs helped over 14,000 entrepreneurs last year, operating over 12,000 businesses and creating 30,000 jobs. Sixty percent of these business-owners were Women of Color. And, in 2023, 11 of these WBCs also ran childcare center training programs designed specifically to add to California’s inventory of childcare slots.

They assisted 439 childcare businesses with just over one million dollars in small grants and loans resulting in an impressive 3,427 new childcare slots created, a resounding success that Governor Newsom supported last year with a historic $8m in new funding dedicated to WBCs.

2023 California Women’s Business Center Childcare Training Outcomes

Data derived from 11 WBCs in CA WBC Network, February 23, 2024

Another argument for the value of this funding – as if new childcare slots isn’t enough! — is that more childcare creates more jobs.

Childcare centers support the employment of parents in the workforce…and it creates new jobs for those willing to take the responsibility of keeping our kids safe.

It’s a virtuous cycle: new childcare jobs provide confidence to working parents that their children are well-cared for so they can focus on their work, grow their own businesses and bring on more employees (who may also need childcare!)

I gave remarks last week at an event celebrating women entrepreneurs and honoring the leaders of California’s legislative Women’s Caucus, Senator Nancy Skinner and Assembly Member Cecilia Aguiar-Curry.

The event was a huge feel-good for all involved but also helped dispel what I think is a misunderstanding around the childcare provider industry: that it doesn’t provide solid business returns to owners. Tell that to one of the featured entrepreneurs at the event, Jennifer Carter, owner of Oak Tree Learning Center and a client from the Inland Empire WBC. She is a business owner now running a childcare center in San Bernardino generating over a million dollars in revenue.

As a former advisor in the network of California Small Business Support Centers that I now support through CalOSBA, I know that stories like Ms. Carter’s add up to a heck of A Business Case:

• A huge market need that supports job creation on both sides of the equation
• A proven and no-cost entrepreneurship training network
• An opportunity for women business-owners to achieve pay equity for themselves while supporting the employment of other working parents

Now that is job-friendly public policy and one I’m proud my office can support in Women’s History Month…and all year long.

References:

California Women’s Business Center Network

KidsData.org