A recent Goldman Sachs poll found that private companies couldn’t be competitive with public firms’ retirement plans and medical benefits. In the same vein was child care.
It’s not a secret that hiring is the most pressing issue for companies these days. For smaller private firms, this issue is more serious.
With its 10,000 Small Business Voices initiative, Goldman Sachs regularly surveys the 12,000 participants of the 100-hour business education program (provided by community colleges and selected four-year colleges) on their top issues. Employment is near the top of the list.
The most recent poll, which was conducted in January, showed private companies could not keep and hire employees; among other reasons, they were unable to match the pension plans and medical benefits provided by larger public firms. However, not too far behind was childcare. 38% of owners of private companies stated that childcare was among the most challenging issues they encountered when hiring workers.
The latest survey by the firm revealed an overwhelming majority of small-sized businesses are struggling to find workers. Joe Wall, national director of Goldman’s 10,000 Small Businesses Voices, claims that, while large employers offer white-collar employees the option to work from their homes, and when they need to work in an office, offer childcare on-premises facilities, “most smaller businesses need their staff physically. If I’m employed at a restaurant , or a dry cleaner, I have to be in the office to earn my wage,” Wall says. “But it’s the workers who earn lower than average incomes who cannot find childcare. A lot of them are left at home and leave working.”
Child care, primarily for preschoolers, is a significant issue. Kimberlee Hendricks is the proprietor of A Child’s Space in Chicago’s South Loop neighborhood, operating for over two decades. It has a license for 50 children and has typically had more than three dozen children in attendance. At present, because of problems with staffing, she’s only down to just a dozen children.
There were ten teachers at one point. However, she has a half-staff today. “We’ve had many teachers leave this kind of work in the past couple of years,” she states. The main reason for this is that teachers earn between $15 and $17 per hour, which is competitive with the other schools’ pay. “But you can make $17 an hour now beginning their careers at a fast-food establishment. Teachers are leaving their jobs to pursue other types of jobs.” But she is hoping to begin hiring again and bring it up to the 30th grade by the end of June.
Certain child care facilities are non-profit and run by parks districts and churches. A Child’s Space is for-profit and is a whopping 90percent of the sector and is as strained in its quest to earn money. The financials for child care is depressing, According to Linda Smith, director of the early childhood program of the Bipartisan Policy Center in Washington, D.C., which has worked together with Congress on a study of the issue.
“Most child care centers in the U.S. are small, typically with 50 kids or less in neighborhoods, and the reality is that very few of them ever turn a profit,” Smith declares. “Essentially the cost to provide decent, high-quality childcare is far more than what parents are able to afford. The majority of these facilities are run with a shoe-string budget. A lot of them are in operation because the folks who manage them are dedicated to their children and are passionate about what they do.”
The cost of caring for one child of a small size is around $24,000 per year in large city centers, Smith estimates. Even a major chain that is a significant national, such as McDonald’s, “could not cut those costs much without slashing worker costs,” she declares. It’s unlikely. “If we are going to find the child care workers we need, we need to pay them $25 and more an hour, not $15,” she says.
Does there exist a solution to the issue of child care? Smith suggests that small businesses join with other companies in their locality and set up centers for children based on private donations. Another possibility is to get more federal subsidies, but Smith acknowledges that some taxpayers may not like the idea of federalization for the childcare sector.
However, in Goldman Sachs, Wall argues that the states and local governments might need to step up to finance child care the same way as they do for the regular education of public schools. “Studies have shown that children who are fed three healthy meals per day and learning at an early age are the greatest advantage in the classroom later in life. The return on investment is clear,” he says.