NEW HANOVER COUNTY –– The childcare system is fragmented and strained, on the precipice of a national crisis emerging from the pandemic.
In New Hanover County, 748 otherwise eligible children with working parents –– bigger than an entire elementary school –– are currently on a waitlist to receive public vouchers to help offset the cost of childcare.
“When we think about public school, we’ve decided as a community, as a country, that we’ll pay for school with taxes and school will be available to everybody as a public good,” said Jane Morrow, executive director of Smart Start New Hanover County. “But not so for childcare.”
The pandemic agitated pre-existing failings, leading to troubling trends in a quiet industry, an important bedrock of the economic system. “Because it is something that families struggle with individually, it’s hidden,” Morrow said. “It’s you trying to figure it out on your own.”
North Carolina and New Hanover County lost 3,382 and 76 childcare workers respectively between the first quarter of 2020 and 2021, according to the latest state commerce data. It represents a 10.8% and 8.7% drop in the workforce.
The exodus is having a crippling effect on childcare facilities, which by state law must staff by ratios, with one employee for: every four babies under 1; up to 20 4-to-5-year-olds. With depleted staff, established centers are forced to lower enrollment numbers; this has left families vying for spots in a competitive market where waitlists abound.
It’s hard to blame employees for leaving, overwhelmingly women and disproportionately Black, who have endured low wages and likely lacked benefits. Compensation in New Hanover County is on par with the state average, at $14 an hour, or $29,190 a year, according to the latest state commerce data, a few thousand shy from the federal poverty line (starting teachers made $10 an hour, according to a 2019 survey that yielded responses from nearly three-fourths of all New Hanover County childcare directors).
Less than half of the surveyed New Hanover County centers provided partial or full health insurance to its employees.
“If Target or Costco or somewhere is offering $15 an hour and benefits, you can earn more money there than in childcare,” Morrow said.
Making it work
High-quality childcare –– provided in facilities with more than three stars in the state’s five-star rating system –– is expensive. In New Hanover County, the market rate in 2018 was $841 a month for children under 2 and $766 for 3-to-5-year-olds (the state-determined market rate represents the 75th percentile of what parents pay, not the average). That’s roughly $10,000 or $9,200 annually.
Some centers offer a modest sibling discount, while others don’t. Two kids under 5 in daycare eats up a significant chunk of working parents’ income –– upwards of 30% for a family of four earning $60,000, out of the eligibility range for subsidies.
A state subsidy program helps offset the cost of childcare for eligible working parents, but only kicks in after 10% of gross family income is exhausted. The U.S. Department of the Treasury calculated in a comprehensive report of the childcare system that families with children under 5 spend 13% of family income on childcare on average; the U.S. Department of Health and Human Services has determined childcare becomes unaffordable when it consumes over 7% of family income.
To be eligible to receive subsidies for children under 5, the maximum annual income for a single parent is $34,836 or a household income of $53,004 for a family of four in N.C.
The 10% income ceiling doesn’t apply for a family with an infant and a 2-year-old, Morrow explained. For this hypothetical dual low-income family, the math can quickly prompt some –– most often mothers –– to drop out of the workforce entirely: “OK, I’m making 30 [thousand] and then paying $18,000, for childcare, this doesn’t make any sense,” Morrow played out.
This equation creates a defeating cycle. “It’s expensive, you can’t afford it, but if you don’t have it, you can’t work — if you don’t work, you can’t earn money,” she said.
New Hanover County receives about $7.6 million to subsidize childcare annually. Children are added to the Department of Social Services’ waitlist on a first-come, first-served basis, according to director Tonya Jackson. However, when funding availability is less than the need, as is often the case, the department prioritizes services based on a set of predetermined criteria.
Mid-September, nearly 1,400 children were being served by the subsidy program.
The current waitlist, about 750, is about “mid-average” for DSS’s historical list, Jackson explained. “However, we have recently been notified by the state that we can take kids off our waiting list, which is great news, because the state has determined that there is funding available to support those children,” Jackson explained in an email.
The incoming funding will help remove 614 children off the list and alleviate their parents within the next 45 days. From there, the department will then revisit how to assist the 134 children that will remain on the list.
Jackson said her department’s biggest challenges are a lack of funding and the industry’s staffing shortage, which limits how many children each center can accommodate. “The state is well aware of this issue facing the counties and they are working on support avenues for centers that participate in the program in order to mitigate the deficit of childcare spots for the children who we serve,” she wrote.
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