The child care industry is collapsing under the strain of the pandemic.
Why it matters: With parents making up a third of the U.S. workforce, the fate of schools and day care centers and the strength of the economy are inextricably linked — given that the hit to closed schools could be an estimated 3.5% of GDP.
"The child care system needs a large-scale, immediate bailout. Full stop," says Alicia Modestino, an economist at Northeastern University.
By the numbers: Without financial help, 50% of day care centers will go out of business, erasing some 4.5 million slots for young kids, the Center for America Progress projects.
- Only 25% of child care businesses received loans under the Paycheck Protection Program (PPP).
- Day care centers got $3.5 billion in aid under the CARES act, but economists say the industry needs around $10 billion per month to make it through the coronavirus crisis. The latest stimulus package in Congress has no money earmarked for these businesses.
- Case in point: Mary Grimmer, who owns Little Treasures Schoolhouse, which has a few locations north of Boston, told me she went from turning an $18,000 profit in February to losing $58,000 in July. Grimmer did get a PPP loan, which softened the blow.
And even the places that are open are struggling with the additional costs and burdens of running a day care during a pandemic....
- They've had to buy new toys because kids can't share anymore; they've taken on fewer kids to abide by social distancing rules; and they've had to hire more people to keep everything sanitized. Grimmer