Fresh Takes: The Cost of Caregiving, Part 1
- Endowment for Health
- Dec 2, 2024
- 7 min read
Updated: 19 hours ago
Winter 2024
In the next two editions of Fresh Takes, we’re sharing stories about caregiving at every stage of life – from young children to older adults. We hope that this short discussion can carry the conversation forward, and we are honored to feature the voices of people who work – on the ground and around the clock – to make New Hampshire a state where everyone is cared for, where everyone is heard, and where everyone belongs.
Nicole Heller: Childcare Is Good for the Economy
A conversation with Nicole Heller, Senior Policy Analyst at the New Hampshire Fiscal Policy Institute, about the true cost of childcare.
How does a healthy childcare industry affect New Hampshire’s economy?
A healthy childcare industry benefits all of us. Parents who have access to affordable childcare can go into the labor force, if they choose. Less financial stress and more household income benefits families and our economy. Currently, we need more people in the workforce: There are about two jobs available for every one person in New Hampshire’s labor force. If parents can’t go into the labor force, that limits the hiring pool available to businesses. Limited business growth impacts the overall economy. Finally, and possibly most importantly, high-quality early care and education is important for the healthy growth and development of our youngest Granite Staters. Positive early care and education can help buffer against adverse early experiences and have long-term positive impacts that benefit both individuals and society overall.
What are some challenges facing the childcare workforce?
A big challenge is a shortage of childcare workers. New Hampshire Employment Security projected an annual turnover rate of 17% for childcare professionals every year between 2022 and 2032, and in Spring of 2023, the Department of Health and Human Services reported a 26% vacancy rate for early childhood educators. The high turnover and vacancy rates are likely due to the low wages for childcare professionals, which were lower than the median wages for retail workers in 2023. But people in the professional childcare sector need a specialized skillset. I have heard teachers indicate that the job is rewarding, but it’s also very difficult. Current salaries and wages don't reflect the skills these professionals need – and the challenges they face – in their classrooms. If there aren’t enough teachers, providers might need to close classrooms. That limits the number of childcare slots – which in turn can further contribute to the workforce and childcare shortage.
How much does an average New Hampshire family pay for childcare?
For center-based care in 2023, a family with an infant and a preschooler paid an average annual tuition of just under $32,000. The median income for a married couple with children that year was about $145,000 in New Hampshire; $32,000 a year is approximately 20% of that income. When we add the high cost of housing into consideration, families do not have much left over for food, for baby supplies, for student loan payments, for emergency savings – or for saving for retirement. For many families, the high cost of childcare doesn’t allow for wealth building.
What does the financial burden on childcare providers look like?
Some research suggests typical profit margins for childcare providers may be lower than one percent. With high teacher turnover rates, providers are regularly hiring and training new employees, which takes time and energy away from other administrative and teaching tasks. Due to the workload, being an administrator in early care and education can be draining, and burnout is real – especially for providers who may regularly need to close classrooms if too many teachers are sick at the same time. If enough teachers are sick, an entire center might have to close for a few days – and that has ripple effects for parents as well as local employers.
Why does childcare cost so much?
There’s a mismatch between what childcare actually costs and what providers are charging families for childcare. Maintaining a safe and healthy environment for kids requires small child-to-teacher ratios. For example, in New Hampshire the ratio for infant classrooms is four infants to one teacher. Keeping infant classrooms small is expensive for providers, but putting more children in a classroom to generate additional revenue isn’t safe for the children or the teachers. There's also other overhead associated with running a childcare business, like liability insurance and mortgage or rent. On top of that, to ensure high-quality care and educational experiences for the children, childcare businesses need to provide professional development and required training for their staff. To stay afloat, providers are often forced to subsidize tuition prices by paying staff less – because parents can't afford to pay more. Providers do not charge enough to cover the true cost of care, but they can only charge so much before parents can’t afford care. It's not a sustainable business model.
What solutions are on the horizon?
There have been some exciting changes in state legislation in the past couple of years. Policymakers are listening to parents, childcare professionals, and childcare providers. In the 2024-2025 state budget, $15 million was allocated for recruitment and retention of the childcare workforce – known as the Childcare Workforce grant. This one-time funding may help providers hire more people, keep their workforce, and increase the number of childcare slots. The current budget also expanded childcare scholarship income eligibility to up to 85% of the state median income. During the 2024 legislative session, a pilot program was approved that will give childcare teachers an opportunity to enroll in the childcare scholarship program if they earn less than 100% of the state median income. Overall, future policies that help ensure providers can be reimbursed the true cost of care – rather than what providers are currently charging – will be critical. A multi-prong approach will be vital to decrease childcare costs for low- and moderate-income families, address workforce shortages to recruit and retain teaching professionals, and ensure childcare businesses can remain open in our local communities.
Watch the New Hampshire Fiscal Policy Institute's Explainer: A Healthy Child Care Industry Helps All Granite Staters and check out the accompanying blog post.
"Talk to People:" Community Advocacy in Childcare
For years, childcare advocates have tried to get people to understand that childcare is as critical for a healthy community and thriving economy as hospitals and fire stations. Advocates knew that when people fully understood the importance of childcare, they’d come together and work to support it.
That’s exactly what happened in Gorham.
In Gorham – a town of little over 2,500 at the base of the Presidential Mountain Range – community members came together to solve the problem. Business owners, nonprofit leaders, municipal officials and educators all saw the need for Gorham and the surrounding region to have adequate childcare services that met demand.
Director Melinda Fauteux and Assistant Director Mariah Middleton at the Gorham Community Learning Center understand the ever-present need for childcare in their community. To be able to live in Gorham, families need to work. To work, they need childcare.
The Learning Center is an integral part of the Gorham community. The success of the center affects everyone: Gorham is a small town in a close-knit area, and as Middleton says, everybody has a child at the center or knows someone who does. What started in 1978 in a church basement has been operating continuously ever since, save a 6-month stint during the pandemic.
But as other centers in the area closed and scarcity of childcare slots grew, the Learning Center struggled to fill the gap. There weren’t enough spots for the children who needed them – and there wasn’t enough space to put them.
Fauteux and Middleton realized that they needed to expand. That expansion would mean hiring more staff and moving into a new space.
So the women turned to their community. They talked to parents and neighbors. They found advocates – including Airole Warden at the Coös County Childcare Directors’ Network. They listened to what the community needed. They expanded, first, into a classroom at the local school. They got local high schoolers to volunteer after school. And when Northeast Credit union closed its Main Street branch, Fauteux and Middleton saw an opportunity for a new space. They had a vision.
What they didn’t have was experience in real estate negotiations.
But this is small-town New Hampshire. When you don’t know how to do something, you know someone who does.
With Warden’s guidance, and the help of the community and The Coös Directors Network, they started the process to buy the empty bank building. Local housing non-profit AHEAD facilitated the transaction and mortgage, and Northeast Credit Union agreed to sell its building on favorable terms. The Town of Gorham kicked in and is helping manage a community development block grant. The Granite United Way and the New Hampshire Charitable Foundation and its Neil and Louise Tillitson Fund all provided funding for the project.
Part of what drove the collaboration was a shared understanding of the ripple effects of the childcare crisis. For example: Gorham, like many rural New Hampshire towns, desperately needs healthcare professionals. And those professionals need childcare so they can go to work.
Now, the Center is on the cusp of doubling its capacity and opening two new locations, while continuing to focus on quality care and keeping critical staff. The Learning Center offers free childcare to staff, a benefit that is a huge draw – and helps staff stay in their jobs and in the area.
When asked about what other childcare centers can do similarly, Fauteux has a simple answer. “Just talk to people,” she says. “Talking to people leads to community advocacy.”
That kind of community advocacy came together at a critical moment for this town. And that, said Airole, is not a surprise.
"That," she said, "is Gorham."
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