What Government Can Do Before a Childcare Center Closes

Childcare as it exists in the US today is a massive market failure. Costs for families are too high, workers’ wages are too low, and private equity firms are swooping in to extract profit from an industry intended to meet essential community needs.

In a new brief, Capita Senior Fellow Elliot Haspel argues for local, state, and federal government action at a key decision point: when providers retire, close, or move on from running their businesses.

Independent for-profit childcare programs make up at least 30 percent of all childcare centers. When an owner retires, they face a choice for the future of their service: close or sell. But often, investor-backed firms are the only ones with the resources to buy, leading to an unstable childcare economy dedicated to profit maximization instead of ensuring that families have the care they need.

Haspel presents six different models for publicly supported ownership transitions with increasing levels of investment—from a statewide childcare acquisition marketplace that connects sellers to trusted community buyers, to the direct government purchase of childcare programs. 

“If the childcare sector continues to have no publicly supported ownership transition models, the consequence will reliably be more program closures and more market share flowing to large investor-backed chains,” Haspel writes. But publicly supported transition models “can position childcare as the essential part of social infrastructure that it is, leading to a healthier sector, better supported staff, a more secure retirement and legacy for owners, and an abundance of high-quality options that serve the diverse needs of America’s children and families.”

Read the brief: “Have You Ever Considered How You Might Transition Your Business to a New Owner?”

What We're Talking About

What We're Reading

• On “Trump accounts”: The GOP’s proposed lump-sum payments of $1,000 to new families won’t help them build substantial wealth, Roosevelt’s Stephen Nuñez argues in a piece for MSNBC. Universal baby bonds, on the other hand, would provide much more of a boost to working families—and create an actual dent in the racial wealth gap.
• On the price of raising kids: The childcare affordability crisis is worsening—new estimates show that in an overwhelming majority of states, families are spending more on childcare for two kids than on mortgage or rent payments.  
• On labor and abundance: Abundance is harder to achieve without unions. Monica Potts pointed out in The New Republic this week that the decline in union density over the past few decades has gone hand in hand with decreasing political will for government-funded projects that serve the public. And as Kate Andrias and Alexander Hertel-Fernandez wrote for the Roosevelt blog in March, unions provide skilled labor, coalition building, and democratic legitimacy to major public projects.

Note: The Roosevelt Rundown will be on hiatus until July 11.