Investing in Child Care Entrepreneurs

(Photo by iStock/DisobeyArt)

COVID-19 didn’t just reveal a broken child care system. A confluence of events dramatically worsened the frayed patchwork of child care programs in the US, after significant drops in center enrollment when parents lost jobs, shifts from in-school to at-home learning, and uncertainty about health and safety during a global pandemic. Since a lack of licensed child care options has long correlated with higher rates of unemployment, underemployment, and poverty, these problems only compound.

Here in Maine, only 26.5 percent of children under 15-years-old were in paid daytime or after-school child care. Many parents were already shuttling children between family and friends and/or working part-time, instead of full-time, jobs. Shortages in child care not only limit family income but in some cases, keeps parents out of the workforce altogether. And over the last 10 years, almost 30 percent of home-based child care in Maine—the predominant source of licensed child care in rural communities—closed.

The reason is simple: an economic mismatch between what parents can afford to pay and the cost of providing quality care. The biggest business expense for providers is labor, driven by state-mandated staff-to-child ratios. But the pandemic further stressed this business model. Maine classified child care businesses essential, allowing them to operate, but about half shut down while parents kept children at home because they were no longer going to a workplace or were concerned about the virus. That only made the profit/loss calculation for child care operators tighter—the loss of even one child reduced revenue, while new protocols for COVID testing and cleaning required the cost of hiring more staff.

The recognized need for quality child care represents an opportunity to build a more equitable economic recovery, particularly in rural places with high rates of unemployment and under employment.

During a listening tour of the seven Maine counties that border Canada, we learned that there are many people—predominantly women—with a passion for early childhood education, who would like to start a child care business but lack the acumen and confidence to get started. Child care is highly regulated, for good reason. In order to promote learning and development and keep children safe, states limit the ratio of children to adults; require extensive record-keeping and written policies; and have a variety of rules that change from state to state, in some cases mandating water tests and temperatures for freezers and refrigerators. Because that regulation can be an obstacle to entry, part of the solution is combining small business start-up education with child care business management and coaching.

The CEI Child Care Business Lab, an intensive six-month, cohort-based program, gives entrepreneurs the tools to start a successful small business, helps them refine their education philosophy, guides them through the licensing process, and connects them with necessary startup capital. Along with providing participants a blueprint for a high-quality, financially viable nonprofit, for-profit, co-op, or shared-model child care business, the lab gives isolated would-be entrepreneurs an opportunity to connect, support, and problem-solve with others. The lab recruits aspiring child care entrepreneurs in underserved, rural communities seeking to open centers that create jobs, provide quality care to children, and allow parents to go to work. Little did we know, as we began recruiting our first cohort of entrepreneurs, that the pandemic would arrive to heighten the urgency.

In identifying promising individuals for these early cohorts, we connected with stakeholders in rural communities and conducted outreach through community colleges. State licensors stepped up as strong partners, working closely with CEI to address language and education barriers and provide guidance every step of the way. We were careful not to turn applicants away due to lack of experience, looking at what analogous training, work, or responsibilities they might have to help them understand what they were getting into. The program, after all, is intensive, with a lot of homework. But when participants are done, they are ready to open their doors: They have a financially viable business plan, written family and employee policies, and have met all the necessary licensing requirements.

We are already seeing results. In coastal Milbridge (population 1,265), after completing the program, Juana Rodriguez Vazquez opened the doors to Rayitos de Sol, a new program of the nonprofit Mano en Mano where she works. As a young child, Juana immigrated to Milbridge from Mexico with her parents, who came to Maine as migrant workers to process seafood, make wreaths, and harvest blueberries. Rayitos de Sol operates in English and Spanish and accommodates the shifting schedules of agricultural workers. It also pays staff members a living wage and provides training, health insurance, a 401(k) and vacation time. There are already plans for a new, expanded center. Further up the coast, a similar story is unfolding in Pembroke (population 860). That’s where Tabitha Bennett enrolled in the CEI Child Care Business Lab so that she could provide quality child care for her granddaughter, allowing her own daughter and other parents in the surrounding communities to work full time. In six short months, Tabitha has expanded her space and is already at capacity.

A second year of cohort training is now underway, including customized courses in Lewiston for women who immigrated to Maine from Angola, Burundi, and Somalia. Lewiston’s Tree Streets neighborhood, one of the state’s most diverse areas, has the densest population of children in the state, where only 15 percent of children under age six are enrolled in licensed child care. During recent listening sessions in the community, CEI confirmed the need for culturally appropriate, high-quality, affordable child care that is responsive to around-the-clock work schedules.

If we’re going to build an equitable economy, we need to give everyone an opportunity to earn a livable wage. Creating good jobs is a necessity; another is making sure that parents have access to affordable, high-quality child care so that they can work in those jobs. And, according to a CEI-administered survey, 46 percent of parents with children in child care programs started through the CEI Child Care Business Lab indicated they were able to start a job because their child is in quality, licensed child care. An additional 38 percent indicated they were able to keep their job because their child is in child care.

As we look to invest federal child care funding, why not direct it toward replicating child care business labs throughout the US, especially in communities with high rates of poverty and unemployment? Empowering entrepreneurs to meet market demand is a powerful strategy for revitalizing communities. Add in quality care for our young children, while helping parents earn a living, and the multiplier effect becomes multiplex.

Read more stories by Betsy Biemann & Keith Bisson.