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WHAT HAPPENS WHEN PRIVATE EQUITY OWNS YOUR KID’S DAY CARE  
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Hailey Huget
April 22, 2025
Jacobin
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_ When my toddler’s day care started turning parents away at the
door due to staffing shortages, I learned it was owned by private
equity — which maximizes enrollment to squeeze profit out of
childcare and now owns eight of the 11 largest companies. _

A KinderCare Learning Center in Pembroke Pines, Florida, on September
14, 2024., Eva Marie Uzcategui / Bloomberg via Getty Images

 

A few months ago, I was chatting with the mom of a toddler who is the
same age as my daughter. As tends to happen when parents of young kids
get together, the subject of childcare came up. She relayed that she
was happy with their current situation — a nanny share with a few
other families — and that it was a welcome change from the day care
center they had used previously. One day at their former day care,
they showed up at the door and were told to leave: the day care center
didn’t have enough staff for the day and was at capacity with kids.

My mouth fell open. “You were turned away at the door? For services
you paid for? On a day you were supposed to be at work?”

“Yup, that’s exactly what happened,” she said. I relayed that
while there were problems with our day care situation — it was
expensive, of course, among other things — thankfully nothing like
that had occurred in the nine months we’d been there.

I went home later feeling like we had dodged a bullet. My partner and
I had looked at that same day care her family had used, even putting
in an application, but we ultimately chose a different one. I may have
been patting myself on the back a bit, thinking that our intuition
about that place had been right. Turns out the joke was on us.

The history of day care is like the history of oysters: once for poor
people
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now a luxury commodity. Day cares were originally charity programs,
designed to help poor and working-class mothers who worked in urban
industrial centers. During World War II, the US government opened the
first government-sponsored childcare, intended to encourage more women
to enter the workforce and support the war effort. It was short-lived,
ending as soon as the war stopped. It wasn’t until the 1970s, when
more middle-class and upper-class women began entering the workforce,
that momentum began to build around creating universal, nationally
funded childcare programs through the Comprehensive Child Development
Act. Richard Nixon vetoed that bill
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in 1972, stopping the effort in its tracks.

The lack of a universal childcare program has left a patchwork of
nonprofit and for-profit services, of varying quality and increasing
unaffordability, to fill the void. In the last two decades, private
equity started making major moves into the sector. Today eight out of
the eleven
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largest day care companies in the United States are owned by private
equity.

There were a number of warning signs before the day I showed up with
my toddler and was turned away at the door. A few weeks before, we got
a message in the app that the day care used to communicate with
families that said they’d be shortening their hours for the coming
week because of a staffing problem. It was inconvenient but felt like
nothing major: a temporary issue with understaffing that would soon
pass.

But the hours were shortened again the following week. And the week
after that.

Then the “at capacity” messages started coming. The first one
arrived at 10:20 a.m. on a Thursday: “Unfortunately, we have reached
capacity for children today and will be unable to accommodate any more
children.”

The second one came the very next day, even earlier in the morning: at
8:57 a.m. The center was so short-staffed that if one or two teachers
were out for the day, even due to planned vacation, it would have to
turn kids away.

The message was clear: the earlier you get your kid in the door, the
more likely you are to have a spot that day. For the next couple
weeks, parents began showing up earlier and earlier to drop off their
children, the small parking lot swarming with cars by 8:30 a.m.

One day my daughter slept in a little late and we got there at 8:45.
Too late. One of the managers met me at the door, looking panicked.
“I’m so sorry, we have been so busy that we haven’t been able to
send a message in the app. We are at capacity for the day.”

One of the primary ways that private equity is able to squeeze profit
out of childcare — a historically unprofitable institution — is by
maximizing enrollment. The more kids you enroll, the more tuition
money comes in. And if you have just enough low-paid teachers to
ensure you’re in compliance with state-mandated ratios, you can keep
labor costs down. Private equity–owned day care centers also try to
lower operational costs
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by, for example, “shifting daily cleaning responsibilities from
outside companies to teachers” and reducing “the number of sheets
of paper per day” they give to kids. With this model, private
equity–owned day cares are able to turn profits of 15 to 20 percent
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While families struggle to afford tuition and day cares struggle to
retain their low-paid and overworked staff, the CEOs of these
companies are cleaning up: the CEO of KinderCare, one of the largest
childcare chains, made $2 million last year. Executives at KinderCare
are also paid in equity or stock options, where those stock options
“accrue depending on how much money the company returns to their
private equity owners
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Switzerland-based Partners Group.”

Our day care’s staffing issues persisted for months. Like other
families, we found this totally unsustainable — my partner and I
have full-time jobs, which is why we needed a day care in the first
place. When the day care couldn’t accommodate us, we had to use
vacation days to take time off work, and when we couldn’t do that,
we had to triage our time so that we kept only our most essential
meetings and bumped everything else to other days, making those other
days chaotically busy. Of course, it messed up our daughter’s
routine as well. All of this prompted us to start investigating other
childcare options.

But the moment that really broke us happened when my husband was
speaking with the day care’s on-site manager: she let slip that new
kids would be starting soon in our daughter’s class.

Despite everything that was going on, and despite the fact that the
center was barely able to comply with the state ratio of one caregiver
for six children (some other states maintain ratios of one to four),
they were continuing to enroll more children. It was absurd. The only
thing I could think to compare it to was an airline, systematically
overbooking the plane.

I was shocked that any day care would function like this, so I started
some frantic, rage-induced research. I learned that our day care is
one of many “day care brands” owned by the Learning Care Group.
Learning Care Group is, in turn, owned by a private equity firm called
American Securities
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American Securities owns many companies, including: Conair, which
makes small appliances like hair dryers; FleetPride, a parts
distributor for the trucking industry; and the Aspen Group, a
“leading multi-vertical retail healthcare support organization
providing business support services to consumer healthcare brands”
(huh?). I quickly got the impression that charting all of these
businesses and their interrelationships would make _30 Rock_’s
satirical GE org chart
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look quaint.

Then I looked into other day cares in town. All the places we had
toured and all the ones that came recommended were, it turns out,
owned by private equity firms as well. The only places we had heard of
that didn’t appear to be owned by private equity were church-run day
cares that were only open for half the day and closed all summer.
There’s no way that would work for us.

Despite everything I’ve said so far, I think it is possible for a
child to be safely cared for in a day care that is owned by private
equity. At least I hope this is true, as our daughter started at a new
day care recently, and it is, of course, owned by private equity. The
facilities seem nicer, and their current ratio of students to teachers
is better. We get a small tuition discount because it’s associated
with my partner’s employer, so the total cost is not too much more
than our old, unacceptably chaotic day care.

But private equity companies have a playbook: buy a business, run it
into the ground, extract maximum profits, and flee the scene. They are
responsible for the bankruptcies of many popular restaurant
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retail
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Toys “R” Us, Red Lobster, TGI Fridays, Bed Bath & Beyond — the
list goes on and on. They’re responsible for elder care facilities
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imploding and closing down. Knowing this leads me to wonder how much
longer my daughter’s new day care will be an acceptable place to
send her for eight hours a day. It’s very possible — even likely
— that it’s a decent place only because we are experiencing it in
the early stages of the private equity takeover. And its implosion
wouldn’t just be an inconvenience to us as parents: consistency in
who provides childcare is critical for her and other kids’
development.

Is there any hope in this state of affairs? Of course, crisis always
presents opportunities. As private equity vacuums up more childcare
centers, and as conditions deteriorate, it may provide the fuel we
need to see mass unionization in the sector. And if parents can unite
with childcare providers to support their demands — such as for
better pay and better staffing ratios — together they could become a
major bloc that could take on the shadowy forces of capital ruining
childcare provision. (Right now, this possibility seems more likely
than the US government passing a universal childcare bill.)

While many of us know on an abstract level that private equity is bad,
we don’t really understand how it shows up in our daily lives. Most
parents I’ve spoken to in my town have no idea that their child’s
day care is almost certainly owned by private equity. Part of how
private equity gets away with running their playbook again and again,
in various industries, is by hiding in the shadows. Maybe if more
families start to draw connections between issues they experience with
childcare on a day-to-day basis and private equity’s takeover of the
sector, we can lay the groundwork for the system-wide changes we all
desperately need.

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Hailey Huget is a labor organizer who lives in North Carolina with her
partner, toddler, and dog.

* Child Care; Private Equty;
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