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, 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 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 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 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.
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, 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. 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 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 and retail chains: Toys “R” Us, Red Lobster, TGI Fridays, Bed Bath & Beyond — the list goes on and on. They’re responsible for elder care facilities 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.
Great Job Hailey Huget & the Team @ Jacobin Source link for sharing this story.
