Because of the COVID-19 pandemic, childcare centers were subject to mandated closures; increased safety requirements, including limits on capacity; and other disruptions.1 These disruptions in the childcare services industry rippled across the U.S. economy because workers were unable to access reliable childcare for their families.
The childcare industry fulfills multiple roles in the labor market. First, the childcare industry employs several thousands of workers who earn their living caring for, protecting, and educating large portions of the nation’s youth. Second, the childcare industry facilitates efficiencies and equity in the labor market by enabling parents to work outside the home. During the pandemic, mothers of younger children, those most often needing childcare, experienced the steepest declines in employment rates, specifically illustrating the importance of the childcare industry for working mothers.2 Third, the childcare industry is crucial in educating and socializing the next generation of employees and entrepreneurs. This article covers the first of these facets—employment.
In addition to the functional importance to the labor force, the childcare industry itself comprises hundreds of thousands of employees across tens of thousands of establishments. In the most recent release of data for the first quarter of 2023, the U.S. Bureau of Labor Statistics (BLS) Quarterly Census of Employment and Wages (QCEW) program reported that the 77,000 childcare services establishments in the United States employ over 942,000 workers and account for $7.2 billion in total quarterly wages.3 The childcare industry is characterized by small establishments: 58 percent of childcare establishments employed fewer than 10 employees. Furthermore, according to the BLS Business Response Survey (BRS) to the COVID-19 pandemic, establishments in the childcare industry experienced certain effects of the pandemic at a higher level (in some cases much higher) than the national average.
In what follows, we leverage new data from the BLS BRSs and other BLS sources to assess employment, wages, telework, benefits, and dynamics of the critical child daycare services industry before the pandemic, in the early days of the outbreak, and how the industry has coped since.4
Data sources and definitions
In 2020, BLS developed a new survey on how U.S. businesses changed their operations since the onset of the COVID-19 pandemic. Data from the first BRS to the COVID-19 pandemic help all data users understand how businesses responded during the pandemic through September 2020.5 Data were collected from July through September 2020. In 2021, BLS similarly developed a second survey with different questions about how businesses had changed operations through that stage of the pandemic.6 The 2021 BRS was collected from July through September 2021. Most recently, in 2022, BLS developed a third BRS with questions about telework, hiring, and vacancies.7 The 2022 BRS was collected from August through September 2022.
In this article, we complement the findings of the BRS with data from the QCEW. The QCEW is a quarterly count of employment and wages that covers about 95 percent of U.S. jobs, made available at the county, metropolitan statistical area, and state and national levels by industry.8 QCEW includes employment and wages from establishments subject to unemployment insurance (UI). This coverage represents a near census that, in the first quarter of 2023, included information on 11.6 million establishments. Note that some establishments not covered by UI laws are excluded from the QCEW. These noncovered establishments include sole proprietorships, unincorporated self-employed, and unpaid family members.9 Noncovered establishments are somewhat more prevalent in the childcare industry than most other industries.
For this analysis, the childcare industry is identified in the North American Industry Classification System (NAICS) as NAICS 6244, child daycare services, in which establishments are subject to UI. According to the NAICS manual, “this industry comprises establishments primarily engaged in providing daycare of infants or children. These establishments generally care for preschool children, but may care for older children when they are not in school and may also offer pre-kindergarten and/or kindergarten educational programs.”10
The child daycare services industry falls within NAICS sector 62, healthcare and social assistance. As described in the NAICS manual, “the Health Care and Social Assistance sector comprises establishments providing healthcare and social assistance for individuals. The sector includes both healthcare and social assistance because it is sometimes difficult to distinguish between the boundaries of these two activities. The industries in this sector are arranged on a continuum starting with establishments providing medical care exclusively, continuing with those providing healthcare and social assistance, and finally finishing with those providing only social assistance. Establishments in this sector deliver services by trained professionals. All industries in the sector share this commonality of process, namely, labor inputs of health practitioners or social workers with the requisite expertise.”11 In this article, we present national data for comparison from the BRSs for 2020, 2021, and 2022 and from the QCEW that are specifically for healthcare and social assistance (NAICS 62) and for child daycare services (NAICS 6244).12
Before the COVID-19 pandemic (2015–19)
According to the QCEW, child daycare services employed 929,000 workers in April 2019.13 In the 5 years before the onset of the COVID-19 pandemic, the industry added 116,000 jobs and 4,235 establishments. (See chart 1.) The deepest employment loss due to the COVID-19 pandemic was in April 2020. Because QCEW data are not seasonally adjusted, we chose April 2019 as a prepandemic baseline. In terms of wages, child daycare services had one of the lowest levels of average weekly wages nationally. In the second quarter of 2019, child daycare services had an average weekly wage of $461, much lower than the national average of $1,085. Research consistently finds that child daycare workers were among the lowest paid workers before, during, and after the pandemic.14
In the 5 years before the onset of the COVID-19 pandemic, approximately 2,700 child daycare services closed, on average, per quarter. Those closings were counterbalanced with approximately the same number of openings every quarter. On average, child daycare center closings affected around 13,600 employees each quarter. In second-quarter 2019, child daycare services industry was reduced by approximately six jobs per establishment, on average.
The start of the COVID-19 pandemic
As businesses and the public experienced the fullest economic impact of the COVID-19 pandemic, in April 2020, child daycare services experienced a year-over-year employment decrease that was more than twice the national rate. According to QCEW data, employment at child daycare services decreased 33.9 percent from 928,929 in April 2019 to 613,632 in April 2020.15 During this same time, employment fell nationally by 15.7 percent and by 9.1 percent in healthcare and social assistance.
The quarterly series on Business Employment Dynamics show that between the first and second quarters of 2020, nearly 13,000 child daycare services establishments closed.16 Furthermore, 18,000 child daycare services reduced employment in first-quarter 2020. In the following quarter, 35,000 child daycare services reduced employment but remained open.
Looking at 2020 BRS data reveals that 35.2 percent of child daycare services establishments experienced government-mandated closures, compared with 18.7 percent of businesses across all industries.17 (See chart 2.) In addition to closures, an uncertainty about the safety of group settings swayed some parents to voluntarily hold their children out of schools and child daycare services establishments.18 The 2020 BRS data show that child daycare services establishments experienced a slightly larger decrease in demand for products or services compared with establishments across all industries—63.1 percent versus 55.6 percent. Child daycare services establishments were also much more likely to tell employees not to work, with or without pay. Almost 83.0 percent of child daycare services establishments told employees not to work, with or without pay, compared with 51.9 percent of all establishments. In addition, 43.3 percent of child daycare services establishments reduced hours for employees who worked at least some hours. This figure was considerably higher than the national average of 29.9 percent.
Given that workers in low-wage jobs are much less likely to have emergency savings available to them,19 these disproportionate disruptions in work hours would have been a substantial hardship on child daycare workers during the already uncertain early stages of the pandemic. Research clearly shows that child daycare workers are made up of a relatively larger share of employees who are women, Black, and Hispanic.20 Therefore, many hardships faced by child daycare workers during this period were endured disproportionally by those who were women, Black, and Hispanic.21
During the COVID-19 pandemic
According to the 2020 BRS, 82.3 percent of businesses changed operations in some way because of the pandemic.22 As the pandemic continued through 2021, businesses continued to change various operations. Workplace safety changes included requiring facial coverings to work onsite, temperature screenings before working onsite, and COVID-19 vaccinations. For the child daycare industry, these operational changes occurred at higher rates than the national average and, at times, slightly higher than the healthcare and social assistance industry. (See chart 3.)
Results from the 2021 BRS show that child daycare services required employees to wear masks (facial coverings), get temperature screenings, and get a COVID-19 vaccine at higher rates than the national average. In fact, child daycare services establishments had similar levels of masking and temperature screenings as did their counterparts across the healthcare and social assistance industry, which were much higher than the national average. Of child daycare services establishments, 42.0 percent required vaccinations for some or all employees. This percentage was higher than the 33.8 percent of establishments in healthcare and social assistance and much higher than the 17.5 percent of establishments with vaccination requirements across all industries.
Telework during the COVID-19 pandemic
The 2020 and 2021 BRS data show that many establishments coped with the COVID-19 pandemic by offering employees telework or work-from-home arrangements.23 The reduction or elimination of in-person operations reduced the risk of COVID-19 transmission while it also reduced costs and burdens associated with implementing in-person precautions, such as masking, social distancing, or vaccination requirements. The nature of work associated with caring for young children requires that workers be present in person and onsite. While some workers may have been able to increase telework, frontline childcare workers could not generally perform their work remotely. According to the 2020 BRS, 62.6 percent of child daycare services establishments had no telework before or after the pandemic, compared with 52.3 percent of all establishments nationally.24
Looking at the 2021 BRS reveals that 34.5 percent of all establishments increased telework for some or all employees because of the pandemic.25 (See chart 4.) Child daycare services establishments were similar, with 32.0 percent of establishments increasing telework for some or all employees. Note that by the parameters the telework question presented in the 2021 BRS, establishments would report that they had some employees with increased telework even if only one or two employees were permitted to telework while others remained in person.
Although child daycare services increased telework for some or all employees during the pandemic, they did not expect these telework increases to continue once the pandemic was over. Only 10.0 percent of child daycare services establishments expected increased telework to continue in their industry after the pandemic, compared with 60.1 percent of establishments across all industries. Whatever shifts to telework were made during the pandemic were largely expected to revert to onsite work in the future.
Indeed, in July 2022, the availability of telework was much lower for child daycare services than for establishments overall: 5.0 percent of child daycare services establishments had employees who teleworked some or all the time, compared with 27.5 percent nationally.
Child daycare center wages
Research clearly shows that child daycare center workers are among the lowest paid workers in the United States.26 According to the 2020 BRS, 8.8 percent of child daycare services establishments increased salaries and wages for some workers, compared with only 5.6 percent nationally.27 And 59.6 percent of child daycare services establishments continued paying employees who were told not to work, compared with 51.3 percent nationally. QCEW data show that average weekly wages for child daycare services were about 60 percent less than the national average from 2018 to 2022. From the BRS data, child daycare services and social assistance establishments saw slightly higher rates of increases in base pay attributed to the COVID-19 pandemic when compared with other establishments. In the first quarter of 2020, average wages for child daycare services were 63 percent below the national average. This gap closed slightly to 58 percent below the national average in the second quarter of 2020 but returned to 60 percent below the national average in the first quarter of 2023. (See chart 5.)
During the COVID-19 pandemic, employers made various changes in the pay of employees. These changes included not only increases in base wages but also one-time monetary awards and other monetary or nonmonetary incentives for working under the extraordinary circumstances of the pandemic. We know that establishments in industries classified as essential by the Centers for Disease Control and Prevention had different experiences from those in industries that were not deemed essential.28 And in terms of pay, essential workers were often singled out for bonuses or other pay incentives based on the critical functions that they performed during the pandemic.
According to the 2021 BRS data, 19.4 percent of child daycare services establishments increased base wages or salary, which was similar to the rate for the healthcare and social assistance industry.29 Both were higher than the national average of 14.5 percent of establishments that increased base wages or salary. Child daycare services and the healthcare and social assistance industry also showed higher levels of paying one-time bonuses for work during the pandemic, at 17.6 percent and 17.0 percent, respectively. These rates are much higher than the national average of 9.4 percent. (See chart 6.)
Beyond changes in pay, another option that employers implemented during the pandemic was to offer increased flexibilities for hours of work. Rather than continue to require the more ridged prepandemic schedules, in 2021, 34.5 percent of employers started offering at least one of the following flexibilities to their employees: flexible or staggered work hours, alternative work schedules, voluntary reductions in hours (such as a move from a full- to part-time schedule), job sharing, and/or additional paid leave. Although telework was less of an option for child daycare services to cope with the pandemic, increasing flexibility for hours worked was one strategy that the child daycare industry could implement.
From the 2021 BRS, 32.1 percent of child daycare services started flexible or staggered work hours and 30.1 percent started compressed or alternative work schedules.30 Both figures were higher than the national and healthcare and social assistance averages. (See chart 7.)
Later stages of the COVID-19 pandemic
Data from the Job Openings and Labor Turnover Survey show that that the number of unemployed people per job opening nationally was at a series low in December 2021 and remained at historically low levels through 2022.31 The 2022 BRS continued to include questions about telework, similar to the prior two versions. But in response to the tight labor market conditions, the survey added new topics to gain additional insight into businesses’ hiring practices, how long vacancies were open, and recruitment practices.32
The data introduced in the remaining paragraphs of this section are from the 2022 BRS.33 In July 2022, 39.7 percent of child daycare services establishments hired employees, compared with 22.4 percent of establishments nationally. Of child daycare services establishments that hired at least one new employee, 72.9 percent increased starting pay to attract more applicants, while nationally, 32.6 percent of establishments did so. Furthermore, 20.1 percent of child daycare services filled positions that were open for more than 30 days, nearly triple the national average of 7.0 percent. To attract more applicants, employers increased compensation, offered hiring bonuses, expanded benefits, and offered more hours (e.g., changed positions from part time to full time). Employers also turned to noncompensation means of attracting applicants, such as advertising, using recruiters, reducing qualifications (e.g., education or experience), and increasing telework or remote work.
To attract additional applicants, in July 2022, child daycare services establishments increased starting pay and offered hiring bonuses at much higher rates than those offered by establishments nationally. However, unlike in 2021, when child daycare services establishments increased flexibilities for hours worked, in July 2022, child daycare services were just slightly more likely (6.9 percent) to offer more hours than establishments in healthcare and social assistance (5.9 percent) and the nation overall (4.5 percent). Remember that childcare workers are and continue to be among the lowest paid workers (see chart 5), so these increases in pay were not substantial enough to elevate wages in this industry to within even half the national average. (See chart 8.)
In July 2022, in establishments that hired at least one new employee, 11.3 percent of child daycare services reduced qualifications to attract additional applicants, compared with 5.8 percent nationally and 4.8 percent in healthcare and social assistance. (See chart 9.) Child daycare services were also more likely to expand advertising and start using a recruiter. In keeping with all previous findings on telework, child daycare services were less likely to expand telework, at less than 1.0 percent, compared with 3.1 percent nationally across all industries.
Child daycare services were more likely than establishments overall to have vacancies both in August and September 2022 and in the 12 months following. From August to September 2022, 38.3 percent of child daycare services had at least one vacancy, compared with 20.9 percent nationally. Furthermore, 65.0 percent of child daycare services had at least one vacancy between August 2021 and September 2022, compared with 40.5 percent nationally.
Conclusion and a look ahead
Most child daycare services employ fewer than 10 employees, have wages below the national average, and are made up of a relatively larger share of employees who are women, Black, and Hispanic. The childcare industry was hit particularly hard by the COVID-19 pandemic. Data gaps limit the ability of data users to fully explain the impacts to this crucial industry. The BLS BRSs for 2020, 2021, and 2022 served as nimble tools that allowed data users to study the impact of the coronavirus pandemic on the labor market and broader economy. Using these data, we filled in a few of the known data gaps to more completely explain the impact of COVID-19 on the childcare industry.
Our results from the 2020 and 2021 BRS data show that some workplace flexibilities, such as telework, were offered at lower rates at child daycare services, while others, such as alternative work schedules, were offered at higher rates.34 Required safety protocols for COVID-19 were implemented at higher rates at child daycare services.
The COVID-19 pandemic necessitated new, possibly permanent, requirements on child daycare services so that they can operate safely. These requirements included vaccinations, COVID-19 testing, masking, screening tests, cleaning and disinfecting, handwashing and respiratory hygiene, and ventilation improvements.35 These requirements have associated costs that affect operational costs of child daycare services.36
Results from the 2022 BRS data show that child daycare services establishments were more likely to hire and have vacancies than were establishments in the nation overall. This finding is important because, in the childcare industry, continuity of individual workers is necessary to build bonds with young children and families.37 Costs are also associated with hiring and filling vacancies, such as posting jobs, onboarding, and training new employees.
Looking at March 2023 QCEW data, the most recent datapoint available, we find that child daycare services employed 942,000 workers, surpassing its prepandemic level of 929,000 workers in April 2019.38 Average weekly wages in first-quarter 2023 were $592, compared with $1,487 nationally. Wages in childcare continue to be among the lowest nationally.
The childcare industry is marked by low wages and high labor turnover, yet it is critical in supporting workers across all industries.39 Future research on the child daycare services industry and the supporting labor market may be fertile ground to isolate the impact of COVID-19-related requirements on establishments with respect to employment, wages, and labor turnover.
Also worth noting is that in March 2021, the American Rescue Plan (ARP) included $24 billion for the Child Care Stabilization Program.40 According to the Health and Human Services Office of Child Care, as of December 31, 2022, the ARP Child Care Stabilization Program had served more than 220,000 childcare providers, affecting as many as 9.6 million children. Providers used such awards to help with operational costs such as wages and benefits, rent and utilities, program materials and supplies, and cleaning and sanitation.41 These federal funds needed to be fully used by states, territories, and tribes as of September 30, 2023.42 New research points to considerable difficulty across the childcare industry as it continues to operate absent these stabilization funds.43
United States Department of Labor
