Caught in the middle: Alaska needs more child care to aid economic recovery, but facilities are pinched

In Alaska, child care has long been expensive and in high demand. But pandemic-driven complications, including a shortage of labor, have made the problem worse.

That’s led to a negative feedback loop: Both economists and people in the industry say limited child care in Alaska is hampering economic recovery statewide.

“Child care is a sector that allows all other sectors to work,” said Stephanie Berglund, CEO of thread, a nonprofit that works around Alaska to increase child care access.

There needs to be adequate child care for the state to grow economically, said Sara Teel, a labor economist with the Department of Labor and Workforce Development, who authored an article on the issue in the Alaska Economic Trends report this month.

Parents in Alaska are still having to stay home or cut their hours to take care of children, meaning they aren’t working or looking for work, Teel said. According to a survey conducted in March by the U.S. Census Bureau and the Alaska Department of Labor and Workforce Development, nearly 13% of Alaska parents surveyed with children under age 5 had cut their work hours to care for children.

The state’s economy has lost some $165 million a year due to child care issues, a report from the U.S. Chamber of Commerce Foundation estimated late last year. Those costs stem from lost wages and lost productivity when parents miss work to care for children or have to leave the workforce entirely, as well as a loss in tax revenues, according to the report.

And the work disruptions aren’t always felt equally.

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“High-income households were the least likely to experience a significant change in work due to child care, and women were more likely than men to experience a significant change,” the report said.

That same report said Alaska families pay on average $982 a month for child care, though it varies significantly.

Child care can’t get much more expensive for families, said Berglund, with thread.

At the same time, the cost of operating child care facilities exceeds what parents can pay, meaning the programs run on “razor-thin margins,” she said. That tends to work best when programs have complete enrollment and collect full tuition.

But the pandemic ruptured that model. When it started, businesses closed and people stayed home. Families pulled their kids out of child care programs. As parents made alternative care arrangements and schools remained online, Berglund said demand sank, decreasing revenue for child care operators.

And while revenue decreased, costs increased for child care businesses, she said. Group sizes had to get smaller to accommodate safety concerns, and staff and materials costs also increased.

Berglund said she has been told by many programs that federal, state and local stimulus has allowed them to survive. Still, there have been both permanent and temporary closures among licensed early childhood education programs statewide.

Shawnda O’Brien, director of the state’s Division of Public Assistance, said 85 licensed child care facilities in the state have closed since March 2020 for various reasons, including retirements, family reasons and a lack of enrollment. Of those, roughly 45 to 50 were sold and reopened under new ownership.

Melanie Hooper, the chief operations officer at Camp Fire, a large youth development organization that offers before- and after-school programs in Anchorage, said that some enrollment recovered in the last year. Now, the organization’s most significant pinch point is a shortage of workers.

While they’ve reopened 15 facilities, another 15 remain temporarily closed. Before the pandemic, the group served 1,100 kids and now serves around 400.

“That is 100% due to workforce shortages,” Hooper said. “If we had more workforce, we would be opening those facilities.”

Hooper said families are desperate for care — rearranging schedules or even changing a student’s school so they can be somewhere with a Camp Fire program.

“It’s creating tremendous stress on families,” Hooper said. “It’s creating a lot of stress for us internally; we like to meet family need and community need. That’s something we’re known for, and that’s hard to not have the workforce to fully do that right now.”

The labor shortage also means some facilities are having to raise wages to retain staff, but that’s driving up costs in other areas.

Branwen Collier runs three locations of her business, Early Learning for Everyone, a child care center that has a separate department with services for children with autism who receive one-on-one care support but are part of the rest of the classroom.

Collier said she’s raised staff wages so much to stay competitive that some classrooms are losing money, but she can sustain operations given the intensive therapy program, which has a different income stream billed through insurance.

“You can only charge parents so much. There definitely are programs that charge quite a bit more, but I wasn’t trying to run a program, like, just for rich kids,” Collier said. “We didn’t want to price out middle-income parents.”

But you can only pay staff so much, she said, while also trying to keep staff-to-child ratios low.

“There’s just not a lot of wiggle room in terms of being successful,” she said.

Before the pandemic, Collier said she already had a long waitlist for her programs, and they even opened a new location that was filled almost immediately. But now the waitlist is even longer. Her staff spends quite a bit of time fielding calls from people asking where they are on the waitlist and how long it is.

To be sure, it’s a good thing that child care staff are making more money — it’s hard work, and they deserve it, she said. It just becomes an issue of math, with costs shifting to parents and providers.

She said they have yet to raise tuition rates, and gave out wage increases based on the knowledge that there would be COVID-19 grant money coming in. While she’s depended on those funds to fill the gap, Collier said they will have to raise tuition rates in the future.

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Collier said some of the staff they’re hiring right now don’t have other child care options. So at her facility, employees go to the top of the waitlist and receive a 40% discount off tuition.

The site administrator at one of the program’s locations, Judith Morales, said having child care offered was essential and made the job a good opportunity.

Without having that offer, she wouldn’t be able to work, or would have to leave her son, Liam, 4, somewhere else, which isn’t ideal, mainly because of long waitlists at other places.

Several parents working at the facility have children enrolled there, which Morales said isn’t always common.

Collier “understands the problem with child care, so she makes it a priority that the employees also have a spot for their children here,” she said. “That’s why there’s a lot of parents’ kids here.”

Other Alaska businesses outside the child care sector are making changes to deal with the issue.

For example, according to the Chamber report, Credit Union 1 is planning to have its child care center at its Anchorage headquarters for employees.

The Chamber’s report acknowledged that not all employers could start up their own child care programs or pay for child care on behalf of their employees. But short of that, there are other things employers can do to help parents who work, it said. The report suggested offering flexibility around hours and days to working parents, plus the ability to work from home if possible.

Berglund, in a recent opinion piece in the Daily News, advocated for legislation included in the Build Back Better Act that would lower costs and help ensure living wages for child care program staff.

“Alaska’s families, children and early educators deserve a system that works,” she wrote.