16,000 childcare providers shut down in the pandemic. It’s a really big deal

Little did everyone know that two years later, an industry that was stretched to the brink even before the pandemic would be in still more turmoil, as childcare providers have been hit with a massive wave of closures. 

Nearly 16,000 childcare centers and licensed family childcare programs closed permanently between December 2019 and March 2021, according to a new report from Child Care Aware of America. Those closures are due, in large part, to increased operating costs, razor-thin profit margins, unpredictable attendance as a result of COVID, and rising labor costs owing to inflation.  

Those shuttered childcare providers represented a 9% decrease in childcare centers and day cares nationwide. And while that may seem low, the U.S. is already suffering from a dearth of childcare providers. Pre-pandemic, over half of Americans lived in areas considered “childcare deserts”—communities where there are either no childcare providers, or so few that there are three children for every open slot.

“Childcare programs are barely staying in business,” Lynette Fraga, CEO of Child Care Aware of America, a national nonprofit focused on childcare resources, said in a statement about the report. “Childcare programs are short-staffed, and providers are burned out.”

For the childcare providers that remain, the increased scarcity and increased operating expenses have, unsurprisingly, driven costs up. The national annual average price of childcare in 2020 increased 5% to $10,174 per child annually. That’s higher than the rate of inflation for the same period of time by nearly 4%, according to Child Care Aware. 

Higher costs and fewer providers had a major impact on families. Pandemic-related disruptions to childcare have cost parents with young children under the age of 5 roughly $13 billion per year in lost income since 2020, according to a recent analysis released by the Century Foundation, a progressive think tank. 

The direct effects of the ongoing lack of childcare—which include parents being forced to quit their jobs, rearrange or shorten work schedules, change their contracts, or scale back their careers—amount to $9.5 billion in lost earnings. 

The Department of Health and Human Services has recommended that childcare costs constitute no more than 7% of a household budget. But with the price increases, childcare expenses now make up 10% of the median household income for married couples with children under 18, according to Child Care Aware. And for single parents, costs can take up as much as 35% of the household budget. For many, that’s simply unsustainable. 

“Parents continue to struggle to find and afford childcare as they reenter the workforce,” Fraga says.

Women have been particularly hard hit. There’s still about a million women missing from the workforce compared with pre-pandemic levels, according to the National Women’s Law Center. Continuing school and childcare disruptions play a huge role in that. 

Biden’s Build Back Better plan was set to help provide much-needed support for both families with young children and childcare providers, but the legislative package remains stalled in Congress. And even if it moves forward, childcare initiatives may not make the cut. 

“Far too many families still do not have access to high‑quality childcare due to barriers such as expense and lack of availability,” Fraga said. “Without large-scale investments in our childcare system, such as the Build Back Better Act, these trends will continue.”