WHY IS CHILD CARE EXPENSIVE?
by Pat Alexander
It cost to run a child care. Parents need to know that their child care fees are not a total profit.
Contrary to popular belief providers are not getting rich running a family child care. Often they are making a nice supplement income for their family.
Here is an expense list providers have in order to run their child care programs:
The child care fees include 5 breakfast, 5 lunches, and 5-10 snacks per week per child.
Approximate cost per meal per child is
Lunch or Supper $2.61
Average: $27.80 per child per week.
And this can run higher.
Infant baby foods and formula are higher if supplied by the caregiver. (The USDA food program pays some but not all food expenses.)
Other expenses: The cost of running the child care.
Toys, supplies (toilet paper, paper towels, cleaning products, daily products,first aid) Diapers, wipes, and extra's provided by some providers.
Crafts/art supplies, curriculum, utilities, space allowance, home insurance % and child care insurance. Office supplies for papers, reports, files, etc.
Auto expenses for gas, wear and tear on the car, % of auto insurance. (for those who take kids off premises or do school pick up/drop off.
Home maintenance, (kids can destroy carpeting, walls, and fixtures) Legal expenses such as tax consultants, child care insurance or attorney fees. (it is not wise for a provider to do her own taxes it's more complicated). Other legal expenses.
This is only a sample of the cost. Cost vary from program to program and this list can be longer.
Employees: A big expense when provider is paying anywhere from Min. Wage to $12.00 hrly or more for an employee. Plus covering employers share of taxes and workman's comp.
Plus other expenses not mentioned: Replacement expenses.
Health insurance and paying self employed taxes. All of which are pay at higher end cost because they are not provided through a company.
As a self employed worker, a provider will pay her/his self employment taxes since no one is taking taxes from their pay check like they are when working on the outside. And depending on the profit margin will also pay Federal and Tax taxes on their own without the match from an employer. So taxes are higher for the self employed.
For a large capacity child care employees are a heavy expense and it's required by law to have a 2nd person on duty after certain ratio's are met. And they must pay workman's comp on the employees as well. A major expense.
NOTE: A lot of parents want to know why they still pay if their child is absent.
The program's cost of operating the child care does not decrease when one or more children are absent. Unless at least half of the children are absent or the ratio demand is less then what is needed for two providers , the same number of staffs has to be present to ensure the health and safety of the children in a large capacity child care. The fees collected from parents are used to pay the care giving staff and those costs do not decrease because of the absence of a few children. Even in a small child care, the child care is still open whether one child comes for the day or all the children. The only cost decrease is less meals are served that day. Keep in mind, you have to pay your mortgage or car note even when you are on vacation and away from the house and not using it. Your car still gets paid even if it sits in the driveway undriven...Child care is the same way. It's still paid even if you're not using it for a few days.
Child care is based on enrollment not attendance:
Child care is an expensive service to purchase because it is labor intensive. Children need to be supervised and cared for and it takes a provider to be there to do these things in order for the parents to report into work without worrying about their children.
Keep in mind Quality first and then fee cost. Fee's do not dictate the quality of the program.
Keep in mind a program that is spending money on their business, re-investing back into the business cannot afford to operate on low substandard fees. If the average child care for a preschool age child in your area is $150 per week, and you find someone for $100 a week asks yourself if they are able to afford to re-invest back into their business? Especially in a large capacity where employees are needed.
Some parents want to know why holidays and provider vacations should be paid time off:
Providers need the time off just like any working American needs time off (vacation/holidays, personal day or sick day off). The cost of running the program is not going to change that much because it was closed down for a holiday, or even a week here and there for provider's vacation. If a provider has employees she will most likely pay her employee vacation time off like your employer will pay your vacation time off and holiday's off. Providers cannot afford to take the time off if they are losing fees for a week. The providers who do no charge for vacation time off are most likely to work 12 months a year without any breaks. This can be unhealthy for the provider. Less chance to have some R&R. More chance of physical disabilities, and high risk of burn out. Most providers figure out what it will cost to run the child care on a annual basis.
And what they will need for the year. Then divide that up into Monthly / weekly amounts to allow themselves the time off. Your fees could be higher if they don't charge for the time off because they have to compensate for the down time. So it's easier to come up with a weekly rate for 52 weeks a year and keep the fees steady. This allows the much needed R&R.
Most providers put in an average of 10-18 hours a day running the program and being with the children. Just because your child went home at 4 p.m. or arrived at 9 a.m. doesn't mean the provider wasn't working at 6:00 a.m. greeting early arrivals, or closing at 6 p.m. after the last child leaves. She still has to be there. Shopping, cleaning, and other business related duties are done after hours. So her work did not stop at 6:00p.m. Add those hours up and your provider is putting in a pretty long week of 50-90 hours per week on the average. This does not count the providers who run extended care, or 24/7 care where they are working around the clock basically. Even if the children are there over night and the provider is sleeping she is still on alert and responsible for the well being of the children.
Providers who run 24/7 have a higher risk of health problems or burn out.
So remember just like you like to have your holidays and vacation time off and PAID, so does your provider.
Unlicensed vs. Licensed: This does not dictate quality either. However, unlicensed will operates outside the law and run over capacity. They might charge lower fees because they are running more children then the law would require for one or two people. They also might not reinvest back into the program. Or they might not be paying taxes on the income they are earning. If a provider is unlicensed and claim all her income to the IRS it is a red flag to the IRS to report the unlicensed activity to the state licensing agency. So it's highly probable that the provider is not paying taxes. There are separate controversies surrounding illegal providers. Some states do not require a license, or you can simply just register and not be licensed. Illegal providers are
providers who operate outside of the state's requirements. If your state allows unlicensed providers then they are legally operating. If your state requires that all providers have a license or they are limited to how many children they can take without a license then they must follow those regulations set forth by the state. Otherwise they are illegal. Check your own state regulations for the requirements.