Valuetainment - The Childcare Crisis - Why Parents Are Going Broke Raising Their Kids

00:00:00.000 There's a child care epidemic going on, and for those of you guys that have kids under the age of

00:00:03.640 five, you know exactly what this is with infants. And those of you that want to have kids, today's

00:00:06.960 going to be the podcast you're going to want to pay attention to. Here's what happened. When COVID

00:00:10.160 took place, one of the industries that no one talks about or even looks at the numbers got

00:00:15.720 destroyed. Why? Because everybody was forced to stay home and work from home, and child care and

00:00:21.660 babysitters are like, wait a minute, I went to school for this. You don't need me anymore? The

00:00:25.440 numbers decline, not as if this is a very high profit margin industry. Their margins are 1%.

00:00:30.720 And wait till you see how many of them never came back after COVID. I got a bunch of data here. I

00:00:35.140 got one study I want to read you before I get into everything else. Families are making major sacrifices

00:00:39.600 to afford quality care. Number one, working multiple jobs, 28% of them. Number two, reducing hours at

00:00:46.200 work, 27% of them so they can spend time with the kids. Number three, moving closer to family, 25%.

00:00:51.560 Going into debt, 19%. Leaving the workforce, 17%. Some of the data here is absolutely staggering.

00:00:59.080 And if you're a parent, you're going to say, I agree with all of it. We're going to talk about

00:01:02.300 all this stuff here today. Okay, so if you get value out of this video, give it a thumbs up and

00:01:14.320 subscribe to the channel. So between 2020 and 2022, 16,000 child care programs nationwide closed,

00:01:21.880 not 16,000 child care employees. Programs, 16,000 during those two years of COVID closed and a 9%

00:01:30.760 of decline in licensed providers. Meanwhile, while that is taking place, 51% of Americans live in

00:01:37.720 communities classified as child care deserts and 31.7% of U.S. children under the age of five cannot

00:01:45.000 access a child care slot. I'm going to show you a map that's going to show you where it's going to

00:01:49.600 be the biggest desert of child care where there's not a place for people to drop off their kids. What

00:01:53.840 state do you think would be like the one with the most? You would probably say some of these bigger

00:01:57.220 states, right? Maybe like a state of California, maybe. But take a look at this map. When you look at

00:02:01.180 this map, here's what you'll notice. Areas where there are few licensed slots for the number of

00:02:06.520 children who need care are known as child care deserts. The darker it is, the more of a desert.

00:02:11.360 For example, the dark brown ones, that's 60% is what it is. More than half of America's children 0.90

00:02:18.440 live in one of these areas. Now, meanwhile, if you have kids or if you want to have kids,

00:02:23.100 you need help. You're like, wait a minute, how am I going to pay for everything? I'm working,

00:02:25.940 my wife, my husband, how are we going to make, I need help. I need someone to help me out with

00:02:29.100 child care. Watch this. You know what the pandemic did to us? It made many people lonely in America

00:02:33.620 where they did not have somebody to talk to. Numbers came up saying 33% Americans feel lonely.

00:02:38.260 JP Morgan Chase just came out talking about 99% Americans are doing worse today financially than

00:02:43.080 they were three years ago. This may be tough times for some people. One of the worst things you can

00:02:46.760 do is not talk to anybody. That's why today's sponsor is BetterHelp. What BetterHelp offers you is

00:02:52.400 the opportunity to connect with over 30,000 licensed therapists who are trained to listen and give you

00:02:57.920 helpful and unbiased advice. One of the great things about BetterHelp is sometimes if you want

00:03:01.740 to go to an office or go meet with a therapist and talk to somebody because you got nobody in

00:03:04.780 your life, you go to an office, you're sitting, the other people are looking at you. What if you

00:03:07.780 run into a co-worker family? It's a little bit embarrassing. BetterHelp, you simply do it on

00:03:10.960 your phone. You talk to somebody. A therapist doesn't work out for you. They'll replace it with

00:03:14.380 somebody else at no cost. And all you have to do to get started is fill out a questionnaire to help

00:03:18.460 assess your specific needs and you'll get matched with your therapist in most cases within 48 hours or less.

00:03:24.340 Over 4 million people have used BetterHelp to live healthier and happier lives and all you need

00:03:27.900 to do is click on a link below or go to betterhelp.com forward slash valutainment to get a 10% discount

00:03:34.620 on your first month of therapy with a licensed professional specific to your needs. 61% of

00:03:41.020 parents living with at least one child age 17 or younger said they did not have any formal child

00:03:46.520 care arrangements. And when you break down the number to get a little bit deeper into this,

00:03:50.280 here's what you'll notice. Again, this is data from U.S. Census Bureau from 2022. We already said the 61%,

00:03:55.520 but look at the second one. 8.4% child care or day care center when it comes down to child care

00:04:01.440 arrangement. 5% use nursery or preschool. 5.1% before care, after care, or summer camp is what

00:04:07.560 they use. 0.8% is a federally supported Head Start program. 5.4% is a non-relative. 21.8% is

00:04:14.300 relative other than the parent. And 2.5% family day care provider. Again, for those of you that don't

00:04:20.560 have kids, you're saying, why do I care about this? But for those who have kids, do you know

00:04:23.820 what percentage of parents rely on this? 58% of working parents rely on child care centers. That's

00:04:29.300 about 6.38 million parents in the U.S. And if you break this down on how much money we're losing with

00:04:35.320 this, annual economic losses because of child care translate to $21 billion in lost tax revenue,

00:04:40.400 $23 billion in lost business revenue, and $78 billion in lost individual earnings. So let's look at

00:04:46.340 the cost. Some of you are saying, well, how much does it really cost in different places? What about a

00:04:49.280 different market like Oklahoma versus Florida versus California versus D.C.? Here's what it

00:04:52.940 looks like. 2023 average cost of a nanny, living nanny, $40,000. The average cost of daycare is $17,000.

00:05:02.020 And when you look at this map to see where are the highest versus the lowest, you'll notice D.C.

00:05:06.600 all the way at the top for child care costs. Again, this is now 2024. At 19,214, Massachusetts

00:05:12.780 runs $17,000. And you'll see Washington, Jersey, Connecticut, Minnesota, New York is around $12,800.

00:05:18.040 California is $12,168. Now look at the lowest, Mississippi, $54,39. Four times less than D.C.

00:05:25.320 It's almost as if D.C. parents should send their kids to Mississippi to save the money and then

00:05:30.100 flying back on a Friday. That would be less than sending them to child care in your state. Think

00:05:34.600 about that stat right there. Obviously, I'm just being funny here, but the idea is you're saving

00:05:38.320 that much money sending them to a different place. Then it's Arkansas, South Dakota, Kentucky,

00:05:41.980 Missouri. Look at Florida. $71,86 for child care in the state of Florida. That's very

00:05:49.040 impressive. So the Department of Health and Human Services came out with a number on what

00:05:52.140 percentage of your income should be reasonable for you to spend for child care. The number

00:05:55.980 they came up with was 7% of maximum percentage of household income spent on child care. Yet,

00:06:03.160 you know what the number is? 24% is the actual number families use on child care. That means

00:06:10.320 if you make 80K a year, it's $20,000. That means if you and your husband make $160,000 a year,

00:06:17.420 it's $40,000 being used for child care. If you're a parent and you got infants, you're sitting there

00:06:22.520 going, yeah, honestly, Pat, I don't have a clue how we're doing it. Exactly. I understand. That's why

00:06:27.100 these stats are a child care epidemic that a lot of parents are going through today. So now you may be

00:06:31.680 sitting there saying, well, we got two problems. One, these guys got 1% margin. They're not making any

00:06:35.780 money. So guess what? If you're only making 1%, why do you keep doing it? You're not. You're going to

00:06:39.720 shut down more because there's no money to be made. So if you're doing a million dollar business

00:06:43.740 per year, you're making 10 grand margins. That's it. Why am I doing this? Now we need to make sure

00:06:48.520 they're making more money. But at the same time, we need to make sure parents can afford to do this.

00:06:52.960 So you got a couple of problems. One of the problems that they have on why this is so expensive

00:06:56.340 is the ratios that classrooms have to follow it state by state. But some of the ratios are actually

00:07:01.180 very high and very low. You'll see why. Again, the guidelines on how many kids can be per caretaker

00:07:07.340 vary state by state. But I want you to take a look at some of these here. This is the ratio that we

00:07:11.100 have right now, right? Recommended staff, child ratio and group size at childcare centers. Infants

00:07:16.580 younger than 12 months, one adult should care for no more than three infants. One. What if they took

00:07:23.420 that to four? Now you may be a parent saying, I don't want it to be four, but you also want these

00:07:27.060 guys to stay in business or you spend more money. So as a parent, you have to be like, I guess if we

00:07:31.220 had one more, I would be okay with that. Guess what? That's increasing their margins by 25%

00:07:35.720 specifically to this category, right? Number two is 13 to 35 toddlers is one adult per four.

00:07:41.180 Number three is preschoolers, three years old is one per seven. Then it goes to one per eight,

00:07:45.840 four and five. Then it goes six to eight is one per 10 and then nine to 12, one per 12, right? So

00:07:50.700 then the numbers are kind of going in a higher direction when there's some money being made.

00:07:54.480 But this is one area where is an issue why the margins are so small for some of these businesses.

00:07:59.420 Now here's what some of the industry folks are saying about this who actually do this for a living.

00:08:02.920 And because of these limits, that means more staffing, which means higher payroll costs,

00:08:06.580 says Melissa Clagraso, who has a place in West Virginia called Place to Grow. She said,

00:08:12.180 you also have to pay for supplies, insurance, utilities, equipment, advertising, amongst other

00:08:16.740 expenses. On top of that, loosening the staff to child ratio, Diana Thomas and Devon Gorey use

00:08:23.300 variations in prices and state regulation requirements to estimate that loosening the

00:08:27.300 staff child ratio by one child across all age groups reduces center-based care prices

00:08:32.700 by nine to 20% generally or two to 5% for four years particularly. And by the way, watch this

00:08:38.840 complete opposite argument being made by Randil Hebe and Rebecca Kildern, who found increasing

00:08:43.780 the stringency by reducing the number of children in the allow staff child ratio by two, raise the

00:08:49.400 price of child care by 12%. So if you have a limit of five, you go to three, you just raise the

00:08:54.420 child care price to people by 12%. If you kept it at five, it would have been 12% less. So again,

00:08:58.980 these are people that are running a business saying this is exactly what we're experiencing,

00:09:01.980 apply to real world child care costs. The conservative end of these estimates suggests

00:09:05.980 that relaxing the staff child ratio by one child across the board in Mississippi and DC could

00:09:11.240 reduce the average child care prices by $466 and that's roughly $2,000 could reduce average child

00:09:19.220 care prices between $466 to $2,078 per year respectively. And by the way, I'll give you more numbers here.

00:09:25.500 The average infant child care cost per week for child, nanny is $766. That's 2023. For daycare

00:09:32.360 is $321. For family care centers, $230. Now toddler child care per week, nanny again, $755 for one,

00:09:39.320 $293, $219. If you go to the bottom, babysitter cost per week, one child for an afterschool

00:09:44.060 sitter is $292. For babysitter is $192. And again, parents are feeling this. It's not like this is

00:09:49.300 something we're talking about that parents are not feeling post-COVID. Look at this one here. Nearly a

00:09:53.160 majority of parents responded. 47% of them spend more than $1,500 a month on child care expenses

00:09:59.240 in 2023. 49% of them plan to spend the same in 2024. This adds up to $18,000 per year. Aside from

00:10:07.240 that, 20% of respondents reported spending more than $36,000 per year on child care in 2023, in

00:10:13.920 which 23% anticipate doing so in 2024. And while they're saying all of these, I'm like, why is

00:10:19.540 child care increasing? The number one reason they said was inflation, 55%. Number two was child care

00:10:24.200 centers have increased rates, 53%. Number three was child care providers were already impacted by

00:10:29.280 child care CLIP, which is a number we talked about earlier, 39%. And when it comes on to these parents

00:10:33.840 tapping into their savings, look at these numbers here. More than one third, 35% of parents who

00:10:37.860 respond to report tapping into their source, their savings, on average spending up to nearly half of

00:10:42.720 their savings, 42%. On child care and 25% using more than two thirds of their savings. When asked

00:10:48.740 how long their savings could hold out, a staggering 68% of respondents said that they only have six

00:10:54.780 months or less until their savings are depleted. Six months or less, 68% of them? That's a scary

00:11:01.520 thought. By the way, the CEO of this article that I'm giving you, I'm going to put it below for parents

00:11:05.000 that you want to read. There's a bunch of great stats and numbers for you to read into resources.

00:11:08.520 The CEO of this company, Brad Wilson said, within the first five years of their child's life,

00:11:13.040 parents are being forced into a financial hole that is nearly impossible to climb out of. I agree.

00:11:19.040 Here's some data to show you on why this is taking place. Because of COVID, if you look at this chart,

00:11:23.820 employment within the U.S. child care industry is below its pre-pandemic trends. So if you look at

00:11:29.460 this, look at the actual employment from 2015. It's climbing 2016, climbing 2017, climbing 2018,

00:11:36.040 2019, 2019, what happens? COVID. Look at the drop-off. It goes from 1,050,000 employees to less

00:11:43.720 than 700,000, gradually comes back up. And today, now that the pandemic is over with, guess what?

00:11:49.220 It's still 153,000 fewer jobs than it was pre-pandemic at regular levels. Why? Because a pandemic

00:11:56.860 forced a lot of parents to stay home and do homeschooling. And they're sitting there saying,

00:12:01.240 I don't need child care, babe. I'm just going to raise my kids from home. And some companies are

00:12:04.740 allowing parents to work from home. And they're saying, we don't need a daycare anymore. We're

00:12:07.940 just going to raise our kids from home. Which means a lot of people that are working from home 1.00

00:12:10.940 are also not fully working from home. They're also taking care of their kids. They're doing child care

00:12:14.540 while working from home. But this is catastrophic for this industry. And God knows we need more people

00:12:19.160 in this industry. And again, more stats to validate this. The slowest recovering industry sector

00:12:24.880 in America is U.S. child sector recovering after pandemic. Take a look at this chart. Pandemic happens,

00:12:30.560 as they drop off. Other industries were worse than child care, like hospitality, restaurants,

00:12:35.560 other industries. But they've recovered. And child care is the lowest to recover from COVID. Meanwhile,

00:12:41.380 which makes sense, they have the highest level of job postings, if you look at this. Why? Because

00:12:44.780 there are 16,000 fewer centers to work at. So they're looking for jobs. Imagine you went to school.

00:12:50.420 This is what you love kids. You love taking care of kids. Well, guess what? There's no job for you.

00:12:54.380 You have to change your career path. You're submitting your application, but they don't need that many

00:12:58.080 people because there's not facilities. People are staying home and figuring out different ways to

00:13:01.440 have to make this work. And by the way, all the salaries during COVID pretty much went up except

00:13:05.720 for one industry. And that's child care workers. Imagine you're like every year, 36 grand a year,

00:13:09.940 37, 5, 38, 9, 39, 3, 41, 2, 43. Child care. Boom, boom, boom. Kind of weird. Why? It's just not a lot

00:13:17.700 of margins and companies can't pay because we got to make profit. This is all we can afford to pay. And we

00:13:21.640 have to be penny pinching because if we pay you too much, we're going out of business and we're shutting down.

00:13:25.160 Can you work for only 13 bucks an hour, 11 bucks an hour, 14 bucks an hour while inflation, lifestyle,

00:13:30.420 everything is going up. Cost of living is going up. No, no. Your job is lower by 4% child care

00:13:36.380 workers. How weird is that? That the salary for that is also gradually declined on some of the

00:13:41.920 stats that you're looking at. And when you look at what they actually make for a living, it's not a

00:13:45.400 lot of money. In the highest city state, DC, it's 17 bucks an hour to the lowest is nine bucks an hour

00:13:51.440 in Mississippi. This is not a high paying job, yet it's a very important job. Final thoughts.

00:13:55.860 Obviously COVID disrupted this entire industry and many other industries have gone through

00:13:59.380 disruption. So there's nothing you can do about it. That's kind of what took place. Question,

00:14:02.500 Pat, what do I do? I can't afford to have five kids. I want to have five kids. So what do I do

00:14:05.820 if it's 40 grand a kid? You know, if it's 20 grand a kid and that's after tax money. It's not like

00:14:09.780 you're giving this money and it's a write-off. You get what I'm saying? So if you live in the state

00:14:12.760 of California and this is 20K a year, let's just say, so you're paying all the taxes. Maybe you have to make

00:14:18.260 30 to pay 20. So if you got four kids, the 30 is really what? 120. You pay your 10K, 20 left for

00:14:24.840 your four kids. So just 120 a year, one to childcare. How do you expect me to go through this?

00:14:29.460 This is how I process this. The people that are really being affected by this is low income people

00:14:33.260 versus high income people. Quite frankly, low income people shouldn't be having too many kids

00:14:38.060 if you can't afford it because one, you're putting yourself in a bad situation. Two, you're putting your

00:14:42.060 kids in a bad situation and you're putting taxpayers in a bad situation. Some of the laws we have

00:14:45.720 right now in America that 40% of kids being born are born to a single mother. It used to be 4%. Maybe

00:14:51.300 single mothers need to stop having kids. Kind of pump the brakes. Use condoms. Be a little bit 1.00

00:14:55.960 more protective. You can't afford it. And why should we pay for it? Our incentive program we have is

00:15:00.860 completely out of whack where taxpayers have to pay for you having unprotected sex. Why am I paying for 0.66

00:15:06.640 your enjoyment of sex? I didn't enjoy that sex. You did. And you didn't use a condom I got to pay for. 0.99

00:15:10.580 That's a level of frustration on a lot of taxpayers that are paying for that. And more and more,

00:15:15.060 yeah, the way we say this, another entitlement program, another entitlement program, another

00:15:18.940 entitlement program. First, let's change the entitlement programs that we have. Incentives

00:15:22.900 must change. Number two, I think this is also a great opportunity for companies to see an additional

00:15:28.280 benefit to offer as an employer. You know, when I ran a sales office in 2005, 2006, I realized my top

00:15:34.920 performers were all married couples with kids. So guess what I did? My most common complaint when I would

00:15:40.060 train at night at 6.30, 7.30, they would say, Pat, I don't have a place to bring my kids. So I created

00:15:44.400 one room where I put toys, soft, pillow, movie, cartoons, and we would have a couple of our guys

00:15:50.200 that would, their responsibility was being in the daycare, taking care of the kids. And then at the

00:15:53.800 same time, kids would come there and they would play, they would do things. But there was an outlet

00:15:57.300 for parents to say, I'm going to bring my kids. They're no problem. They had other friends that

00:16:00.860 were playing. They were having a good time. I think this is an opportunity to use this as a way of being

00:16:05.060 creative. But to me, one can say, Pat, what do you expect me to do? If you can't afford it, don't do it

00:16:09.900 yet. Go increase your market value, make more money, or figure out what's important to you.

00:16:14.500 But some of this stuff is leveraging family, leveraging parents. Maybe you go back to using

00:16:17.900 some of the old school methods where family values, principles, people living together,

00:16:22.820 co-pooling, co-babysitting, co-childcare, somebody in the family that's willing to do that. I think

00:16:28.060 it's going to require a lot of creative ways of doing this. It's definitely not easy, and it's going

00:16:32.920 to be tough for a few years, especially the first five years. And then at the same time, I think

00:16:36.540 you can talk to your state and send emails saying, hey, why can't we increase our rates? Go actually

00:16:40.560 do the study. Look up the article that we're going to put below, and go look it up. Why do we have

00:16:44.280 one per four? Why can't we increase it one out of five? You know, one teacher for five kids, or one

00:16:49.220 to four, increase it from three to four. If more and more people ask these questions of your congressmen,

00:16:54.540 your local political leaders, your senators, if you're asking these questions, they're going to have

00:16:59.320 to pay attention to it. And then eventually, maybe that helps a little bit with the margins. They make a

00:17:03.600 little bit more money. You pay a little bit less. It works out for everybody. But those are my thoughts

00:17:07.620 on this issue. If you're a parent, and you have kids, and you're doing your job, you're working,

00:17:11.700 your husband's working, you're going through it, but it's still tough to make it. I salute you. I

00:17:15.060 applaud you. I respect you for it. I recommend you increase your market value, but at the same time,

00:17:19.160 those are some of my thoughts for people that are going through this. If you got value out of this

00:17:22.320 video, give it a thumbs up. Subscribe to the channel. I got two videos for you to watch. One of them is

00:17:25.980 the statistic on so many women that are wanting to be childless today, okay? I don't recommend it,

00:17:30.360 but if you want to see some of the stats, click here to watch that. The other one is

00:17:33.800 a video we did on the welfare program, and now the incentives got people to have kids

00:17:40.420 by mothers who are single mothers without a father in the picture. 40% used to be 4%.

00:17:46.100 What the hell is that all about? If you want to know the history,

00:17:49.040 click here to watch that. Take care, everybody. Bye-bye, bye-bye, bye-bye.

Valuetainment - February 22, 2024

The Childcare Crisis - Why Parents Are Going Broke Raising Their Kids

Episode Stats

Summary

Transcript