Economy Matters

June 2, 2020

Millions of workers who are vital to the fight against the COVID-19 pandemic could find their ability to do their jobs hindered by a need for childcare.

The closures of schools and childcare centers in wake of the coronavirus outbreak have left many employees in essential occupations who are parents with the tough task of securing care for their young children. The availability of childcare can determine the extent to which these workers—including doctors, nurses, and first responders—are able to provide their desperately needed skills as the health crisis continues.

“It’s a critical issue. As the virus is putting a major stress on the health care system of cities and states across the country, we need all hands on deck and every health care worker available,” said Mels de Zeeuw, a senior research analyst in the Federal Reserve Bank of Atlanta’s community and economic development (CED) group. “This is an important policy problem to solve.”

The Atlanta Fed’s Mels de Zeeuw.

An analysis by de Zeeuw and his colleague Brittany Birken, a CED principal adviser, found that about 2.6 million health care workers and first responders have children below the age of 14. The two researchers studied Integrated Public Use Microdata Series (IPUMS) census and survey records to determine the number of essential workers who may need childcare in states and various metro areas. A tool included with a recent report they published on this topic provides these estimates for a host of occupations, including nurses, pharmacists, firefighters, and those in law enforcement jobs.

Their research found that childcare needs among these workers vary by location. For example, in the New Orleans-Metairie, Louisiana, metro area—which has been identified as a coronavirus hot spot—an estimated 3,912 registered nurses (RN) need child care, compared with an estimated 2,632 RNs in Jackson, Mississippi, the tool indicates (see the table).

Estimates of Registered Nurses Needing Childcare in Some Southeastern Cities

Source: Atlanta Fed calculations using IPUMS USA data

Some states take steps to help

Although some states have closed childcare centers, others have taken steps to help working parents on the front lines of the COVID-19 outbreak by setting up temporary caregiving facilities and exempting children of first responders from school closings, de Zeeuw and Birken noted.

In Louisiana, one of the six states in the Atlanta Fed’s coverage area, the Department of Education has made its Child Care Assistance Program for low-income families more widely available to essential workers. The other states in the Atlanta Fed’s district are Alabama, Florida, Georgia, Mississippi, and Tennessee.

“We are still getting a handle on the need for childcare among essential workers because the situation is literally changing day by day,” said Jennifer Roberts, president of the advocacy organization Agenda for Children and executive director of the New Orleans Early Education Network, in an email. She said Louisiana is also contracting directly with childcare centers to serve essential workers and has increased reimbursement to individuals who provide home-based care.

Birken cited the importance of maintaining the childcare sector and making sure centers can keep operating, not just to support essential workers now but also for society at large once economic activity strengthens and idled employees rejoin the work force. “When we pivot to recovery, if there are high rates of permanent closures, that’s going to be a significant hit to the segment of our workforce reliant on childcare to work,” she added.

The federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provides monetary assistance for individuals, families, and businesses affected by the COVID-19 pandemic, set aside $3.5 billion in funding through the Child Care and Development Block Grant that states can use to provide subsidies to assist childcare centers facing lower enrollments or closures and to offer services for medical personnel, sanitation employees, and other critical workers.

The Atlanta Fed’s Brittany Birken.

Childcare providers under pressure

There are concerns about the childcare industry’s ability to weather a prolonged slowdown. Advocates say much more U.S. investment is required for the sector to endure the COVID-19 crisis as stricter health mandates pressure an industry that typically operates on thin profit margins. The nonprofit Center for Law and Social Policy has called on Congress to set aside $50 billion for childcare needs in the next coronavirus stimulus package.

The $3.5 billion from the CARES Act “will be helpful, but certainly won’t be enough to sustain the industry and support a full recovery,” said Jaime Rechkemmer, vice president for education and quality at Childcare Network, a Columbus, Georgia-based operator of learning centers in 10 states, including Georgia, Florida, Tennessee, and Alabama. She said her company is currently accommodating more than 4,000 workers across all areas of essential service.

Roberts, the executive director of the New Orleans Early Education Network, said new regulations designed to increase safety and limit the group sizes of children in care are raising labor costs for childcare centers, which haven’t yet seen increases in their revenue from state sources and can’t pass on the higher costs to parents unable to afford them. “Over the long term, centers will need a lot of financial support to continue to operate,” she added.

Dan Osborne, a certified public accountant and former corporate attorney who operates three learning centers in Florida’s Palm Beach County, says many childcare centers are struggling in the current environment. In wake of business closures and layoffs as a result of the health crisis, enrollment at his facilities has fallen to about 130 kids from 500 to 600 normally, and he has had to lay off two-thirds of his staff of 50 people. “I’m able to keep my doors open” because of prudent financial management, he said.

Two of his preschools have received subsidy funding even as enrollment dropped, and that has helped offset a dramatic fall in revenue at his third learning center, which is a private pay facility, Osborne said. He is concerned that summer programs will suffer and said childcare centers that don’t have adequate financial resources won’t be around in the fall.

“Come September, a lot of preschools—especially the thinly capitalized ones in poverty areas and those that serve just private families—won’t come back,” Osborne said.

Karen Jacobs

Staff writer for Economy Matters