The Day Care Industry

   The Day Care industry provides day care to infants and children in addition to preschool services. Industry operators are mostly private and rely primarily on tuition paid by parents and funding from the government, which attempts to alleviate the cost for low-income households. Over the five years to 2022, IBISWorld expects revenue to rise at an annualized rate of 1.4% to $60.8 billion. Demand for child care services has steadily risen for most of the period, driven by a healthy domestic labor market and rising disposable income levels. However, more substantial revenue growth was offset by a 12.6% decline in 2020 alone, directly resulting from the COVID-19 (coronavirus) pandemic. Layoffs in 2020 and stagnation in average wages lured many workers to higher paying and less stressful jobs, such as retail. While the industry is forecast to recover 3.7% in 2022, a full-scale reopening of child care centers remains stalled due to staffing shortages.

   During the period, demand for child care services has remained strong despite the high and increasing cost of day care services. Although created at the state level, regulations have tightened across the nation to ensure the quality of care and safety of children. For providers and families, this has increased the cost of care, since staff-to-children ratios limit enrollment. Limited reopening has created unprecedented excess demand and high prices. During the period, increased disposable income and government subsidies have helped alleviate the expense for some families, increasing access to child care services and contributing to industry revenue growth as well. Operators have had to increase purchases of personal protective equipment in 2020 due to the pandemic, leading to a decline in profit.

   Over the five years to 2027, revenue for the Day Care industry is expected to grow an annualized 1.1% to $64.1 billion. Growth in per capita disposable income is expected to benefit the industry as child care services are likely to remain in high demand, despite pandemic concerns. Over the next five years, higher unemployment following anti-inflationary monetary policy is expected to limit growth. Additionally, the high cost of day care services is likely to continue to be a significant burden to some families, which could negatively affect the industry moving forward. Info source - IBIS World Report 2022

The Industry Today

   The Day Care industry provides essential services to working families by providing day care for infants and children, while also offering preschool instruction that prepares them for kindergarten. The industry can be broken into two primary categories: center-based day cares and home day cares. Center-based day cares are usually larger in size and enrollment and, therefore, generate the largest portion of industry revenue. Home day care providers usually consist of a single primary caregiver (a nonemployer) and thus have a much smaller enrollment and staff-to-child ratio.

   Over the five years to 2022, total revenue is expected to increase at an annualized rate of 1.4% to reach $60.8 billion. A healthy labor market and rising disposable income levels for the most of the period generated consistent revenue growth. A more substantial annualized expansion, however, was subdued by an expected 12.6% revenue contraction in 2020 alone, directly resulting from the COVID-19 (coronavirus) pandemic. Many competing enterprises temporarily closed amid health and safety concerns, forfeiting a substantial amount of revenue in the process. Industry operators have slowly reopened as mass vaccination efforts have been initiated across the United States. While this is expected to generate a 3.7% recovery in 2022, the industry has not yet fully recovered from 2020 losses.

   The substantial cost of child care illustrates the industry's prime vulnerability to the coronavirus pandemic. The national unemployment rate increased 120.7% in 2020 alone, dramatically reducing affordability of services for the domestic population. Moreover, many parents who could transition toward remote work opted to remove children from day care services to prevent a possible infection, which amplified the negative revenue effects.  Info source - IBIS World Report 2022

Day Cares & Pre-Schools

Problems in the industry...

• The child care crisis predates the global pandemic.  COVID-19 only reaffirmed this industry is still struggling.
• Over 60% of parents claim that child care is unaffordable.
• 1 in 3 families struggle to find child care at all.  Most desirable daycares and preschools are often at capacity.  This requires the child to be turned away or put on a waiting list which often becomes one in the same.
• A Forbes article reported that only 10% of all child care is "quality".  Many families simply take what they can get.
• Child Care workers are some of the lowest paid employees in the US, often other companies with less stress such as retail jobs offer higher pay and better benefits.

   As inflation continues to rise more and more families are becoming dual income and will require the use of a daycare or preschool at some point in time.

   We looked at reviews from many of our competitors, companies that you would know.  It was disheartening to discover issues such as.

• Not reporting child incidents or accidents to parents.
• Teacher and staff being violent toward the children.
• Proper cleaning and pest control.

   There are of course more than this, but you would think anyone in the child care business would obviously view these issues are common sense.  Apparently not...

   Not all Child Care centers are guilty for these problems, however only one center with these problems is one too many in our opinion.

   In the aftermath of COVID-19 the time is now for a change. Through proven leadership and experience while utilizing new technologies, USH will be on the forefront to bring this vital industry back to glory.

Info source IBIS World Report 2022, Forbes - Child Care Crisis 2022, and independent research.

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