Child Care Centers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 61,500 child care centers in the US provide care for infants and children, and offer services out of dedicated facilities (private centers) or residences (home-based centers). Most child care centers are small, independent operations – 79% have a single location and 78% employ less than 20 workers.
Potential for Liability
Providing care for children is a high stakes operation, where even small accidents and errors can have severe consequences.
High Turnover
Finding and retaining permanent staff is a problem for the child care industry due to low wages, lack of benefits, long hours, and challenging work.
Industry size & Structure
A typical child care center operates out of a single location, employs 17 workers, and generates about $927,000 annually.
- The child care center industry consists of about 61,500 companies, employs about 1,040,000 workers and generates about $57 billion annually.
- Child care centers include nursery schools and pre-schools.
- Most child care centers are small, independent operations - 79% have a single location and 78% employ less than 20 workers.
- Pre-school age children of working parents average 36 hours of care from child care providers per week.
- Unlike other educational service providers, accreditation is not critical to operations: Less than 10% of child care centers are accredited.
- Large companies include KinderCare Education, Learning Care Group (La Petite Academy, Childtime, Tutor Time, Montessori Unlimited, The Children's Courtyard), and Bright Horizons Family Solutions.
Industry Forecast
Child Care Centers Industry Growth
Recent Developments
Jul 16, 2024 - Labor Costs Increase
- Child care industry employment and average wages for nonsupervisory employees increased slightly during the first five months of 2024, according to the US Bureau of Labor Statistics. Child care industry revenue increased 8.2% year over year and 3.8% quarter over quarter during the fourth quarter of 2023, according to the US Census Bureau. Child care center sales are forecast to grow at a 4.88% compounded annual rate from 2024 to 2028, faster than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.
- North Carolina is the 12th state to allocate funding for child care to replace expired federal funding programs created during the coronavirus pandemic. Advocates had asked lawmakers to extend federal funds provided during the coronavirus pandemic that allowed centers to pay employees, cover rent and mortgage costs, and subsidize child care costs for some families. Many of North Carolina child care centers were expected to shut down or raise tuition at the end of June. The state funding is expected to extend stabilization grant funding through the end of 2024.
- Eleven states and the District of Columbia have allocated funding for child care since almost $53 billion in one-time federal funding for the industry expired in September 2023 but long-standing challenges like low wages and high operating costs still threaten the viability of some facilities, according to The National Association for the Education of Young Children (NAEYC). The loss of federal funds has led to "staff shortages, program closures, and rising family tuition rates,” said Michelle Kang, CEO of NAEYC. More than half of early childhood educators (ECE) from all states and settings — including centers, family child care homes, faith-based programs, Head Start, and public preschool programs — who responded to a January 2024 NAEYC survey indicated that their programs are under-enrolled relative to the capacity of their facilities, reducing the overall availability of child care. The top reason given for this trend was staffing shortages (89%). “We have a very long waitlist but cannot get to it because we don’t have enough staff to fill the classrooms,” one North Carolina administrator/director told NAEYC. “We don’t bring in enough in tuition to meet salary," an Oregon ECE noted. Increasing operating costs, particularly rent and insurance, result in higher tuition costs for families in the absence of additional public funds, but there are limits to tuition increases, according to the NAEYC. "Increasing tuition would be a huge hardship on parents," the Oregon ECE added.
- Child care costs have increased at nearly twice the rate of inflation since 1990, according to audit firm KPMG. Child care costs increased 263% between 1990 and April 2024. The consumer price index, a parameter utilized for measuring inflation increased 133% during the period. “The childcare crisis, which was simmering prior to the pandemic, has come to a boil,” the KPMG researchers said.
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