The COVID-19 pandemic has underscored the nation’s reliance on care workers and demonstrated the fragility of the childcare industry. The Center for American Progress estimates that 4.5 million childcare slots are at risk of disappearing during the pandemic unless they receive adequate federal support, and that more than 200,000 employed in the industry have already lost their jobs this year. Childcare centers owned by people of color are especially hard hit, with over 50 percent of surveyed providers anticipating they will permanently shut their doors.
Even before the pandemic, the childcare sector faced significant infrastructure challenges—including safety, facilities, and personnel—that are rarely discussed. For example, in 2013 and 2014, the US Department of Health and Human Services’ inspector general found that 96 percent of childcare programs in 10 states had a potentially hazardous condition such as broken or unlocked gates, water damage, knives accessible to children, or exposed nails on the playground. And in many communities, a lack of available facilities prevents high-quality programs from expanding, most notably in low-income neighborhoods and communities of color.
Coupled with persistent low wages, a lack of professional development opportunities for caregivers, and significant racial gaps in wages, these challenges have contributed to a reality in which less than 10 percent of the country’s early care and education programs are considered high quality.
Most childcare workers are women, often Black and brown, earning well below a living wage. Yet they are on the frontlines of the future, providing necessary care and promoting the healthy development of our youngest citizens. The median pay for childcare workers is $24,230 a year, and reportedly nearly half are eligible for some form of government assistance.
Federal pandemic stimulus funds have provided some relief. But once the industry is stabilized, more must be done to ensure high-quality care for the youngest Americans and good, resilient jobs for those working in the industry.
Empowering Childcare Workers with Co-ops
One way to do this is by adopting more worker ownership in the childcare industry through worker cooperatives (co-ops). Co-ops provide a viable, time-tested path to expanding opportunity and dignity for workers, stabilizing the childcare industry during a moment of great peril, and growing economic democracy.
Childcare co-ops put some of society’s most important essential workers in charge of their futures. As businesses owned and governed by members instead of by sole proprietors or stockholders, worker co-ops are driven by member values rather than profit alone. Worker-members share in the profits, participate in oversight and, often, management of the business, using democratic principles.
Because worker-owned co-ops function differently from other businesses, they build equity and ownership for care workers, who have been historically marginalized in an extractive economy. It is vital that workers taking care of young children have a greater voice in their businesses. Money alone does not affirm the dignity of this work. Voice, power, and participation, along with money, do. Taken together, they provide what political philosopher Michael Sandel has called “redistributed esteem.”
Worker co-ops create good jobs and pathways to wealth, says Esteban Kelly, executive director of the United States Federation of Worker Cooperatives. Co-ops have a much higher success rate at weathering those critical first five years of business and surviving beyond. They also pay a lot better for entry-level positions. Whereas the typical entry level job pays close to minimum wage, “in worker co-ops it’s closer to almost $20 an hour, depending on the industry,” he says.
Kelly adds, “The pay ratio in worker co-ops is about 2:1 from the highest paid to the lowest paid. In a traditional corporation, it’s 278:1, not to mention, in worker co-ops folks have more opportunities to rise to higher levels of worker ownership, maybe even becoming board members.”
Some examples of US-based worker-owned childcare co-ops include the following:
- In Philadelphia, Childspace was founded in 1988 as a worker co-op that recognized that quality jobs for childcare workers were an essential, but often overlooked, building block for centers seeking to provide the highest quality of care.
- The Rose Garden in Buffalo transitioned to employee ownership in 2017 and employee-owners serve on the board, set organizational policy, and participate in community events to help grow the business.
- Beyond Care Childcare Cooperative was launched in Sunset Park, Brooklyn, in June 2008 by 17 immigrant women and founding members who came together to design, plan, and launch a membership co-op business. It now has 38 members who have completed business development and nanny training and are earning a living wage.
The Childcare Co-op Ecosystem
To increase the quantity and success of new co-ops, an enabling environment—or ecosystem—must be in place to allow owners to create, grow, and thrive. Development and growth can come through creating new co-ops, expanding existing co-ops, or converting existing businesses to a shared ownership model.
Key elements of a well-functioning, enabling ecosystem:
Creating and convening a community. As Project Equity and the Democracy at Work Initiative outline in their joint Cooperative Growth Ecosystem report, one key step to creating an ecosystem is to “develop a ‘guiding coalition,’ analyze the ecosystem, and create a strategic vision.” This will help identify gaps, strengths, and opportunities and outline potential roles of the various actors. The ecosystem convenes other co-ops and supporting institutions to share best practices and support effective co-op development.
Understanding, creating, and facilitating investment opportunities. Many childcare co-ops will require both traditional and nontraditional investments, including access to new capital to convert existing childcare businesses to worker ownership, create new co-ops, and buy or lease facilities. A co-op ecosystem can also catalyze opportunities for impact investing; incubation hubs; and direct government, nonprofit, and foundation investment.
Providing implementation and technical assistance. Many co-op owners lack the skills and knowledge of running a business and require support in these areas, especially during initial development. Support in implementing business and hiring plans and securing space, for example, can help co-ops navigate the initial hurdles to opening a childcare center. Shared service opportunities for personnel issues, technical systems, and purchasing can ease the administrative burdens of running a co-op. There is a robust existing network of co-op development centers, but they have not yet served the childcare sector.
Creating an ecosystem is one step. Equally crucial is the federal role in helping worker co-ops meet the goal of creating more and more sustainable childcare businesses.
Our proposal is a $30 million Child Care Cooperative Development Grant Program to catalyze development of new childcare businesses and the creation of new and better childcare jobs in urban and rural communities across the country. The program is modeled on the highly effective Rural Cooperative Development Grant program, which, with its budget of less than $10 million, generated or saved nearly 15,000 jobs, incorporated over 1,000 businesses, and created more than 4,000 co-op housing units across rural America between 2008 and 2017.
The Child Care Cooperative Development Grant Program would focus on both developing new childcare worker co-ops and converting existing businesses to worker co-ops. Administered by the Women’s Bureau, an agency within the US Department of Labor, the grant program would help potential worker-owners acquire the knowledge, skills, and tools to transform their organizations into co-ops. The program would target institutions that could leverage the grants, including the 40-plus existing co-op development centers, higher education institutions, community development financial institutions, and other nonprofit organizations. The grants would support feasibility studies, transaction structuring, and technical assistance.
The $30 million appropriation would be split evenly between co-op development and co-op conversions, and 35 percent of appropriations would go toward development of businesses with majority ownership by Blacks, Latinxs, and Native Americans. The maximum grant amount would be $500,000 and would require matching funds of at least 25 percent.
Co-ops have a long history in the US and around the globe, yet only the tiniest footprint in childcare. The Child Care Cooperative Development Grant Program would set a path forward to develop broader systemic approaches that can provide children the care they need while empowering the workforce.
Taking this approach to scale would help deliver high-quality, smartly regulated services to children and families, expand economic democracy, build assets in marginalized neighborhoods and communities, and create resilient local employment. By putting workers and families at the center of childcare, co-ops could also address issues of systemic racism and gender inequity in the field.
The Biden Plan
Expanding the role of childcare co-ops also fits with the spirit and goals of President-elect Joe Biden’s 10-year, $775 billion plan for universal preschool, childcare, and eldercare. The Biden plan addresses some of the economic and employment realities that are creating tensions related to caregiving, and it gives voice to the value of caregiving in society.
As a first step, the plan proposes to “immediately provide states, tribal, and local governments with the fiscal relief they need to keep workers employed and keep vital public services running, including direct care and childcare services.”
Beyond the immediate crisis, the plan would invest heavily in the future of childcare—creating tax credits and subsidies to ensure that families earning less than 150 percent of the median income in their state would pay no more than seven percent of their income on childcare. It would also:
- Ensure access to high-quality, affordable childcare and offer universal preschool to three-and four-year-old children through greater investment, expanded tax credits, and sliding-scale subsidies.
- Build safe, energy-efficient, developmentally appropriate childcare facilities, including in workplaces.
- Treat caregivers and early childhood educators with respect and dignity, and give them the pay and benefits they deserve, training and career ladders to higher-paying jobs, the choice to join a union and bargain collectively, and other fundamental work-related rights and protections.
Policymakers can also look to other countries for successful co-op structures that power affordable childcare for families and expanding opportunity and dignity for workers.
Many advocates point to Italy, which has a long history of cultural and social support for shared ownership co-ops, along with strong government backing. The Italian constitution recognizes the strategic role of co-ops and guarantees state support; several laws provide financial, tax, and other incentives or protections. Italy has more co-ops than any other country—in the Emilia Romagna region, two out of every three citizens are members of a co-op and a third of the GDP is produced from co-ops. And nearly all children attend co-op kindergartens.
Italian entrepreneurs did not simply band together to form these co-ops and figure out, on their own, how to make them work. They joined forces with government. Italian co-ops work at scale because of this government involvement.
The Quebec childcare model, established in 1996, takes a multi-stakeholder approach that includes workers, parents, and supporters with shared social and economic objectives. It provides parental leave, monthly cash benefits families can use for their children, and a heavily subsidized childcare system for which families pay about $6 per day.
Over 95 percent of all home care co-ops in Quebec are solidarity co-ops (another name for multi-stakeholder co-ops), according to Margaret Lund, author of Solidarity as a Business Model: A Multi-Stakeholder Cooperatives Manual, who adds that “the soil of Quebec is truly fertile ground for cooperative development.”
And at a time when US women are leaving the workforce at four times the rate of men, the Quebec childcare model has led to a spike in the employment rate of mothers of young kids. Since beginning the program more than two decades ago, Quebec has seen the labor force participation rate of women ages 26 to 44 reach 85 percent, the highest in the world.
How multi-stakeholder co-ops would work in the childcare setting in the US is an open question. While joint ownership between parents and workers or another class of members is feasible, it may be difficult to maintain over generations, given that parents would leave the membership once their kids age up and out. What might be more successful is a multi-stakeholder co-op of businesses looking to ensure that their employees’ children have access to high-quality care and childcare workers.
The democratic, shared ownership and governance structure of co-ops is designed to advance the social, cultural, and economic interests of their members. At a time when democracy is seemingly in peril around the world, more democracy in everyday life, particularly in our workplaces, could help us all strengthen the habits of self-government that are so vital to ensuring an equitable future for all.
Childcare is often patronizingly thought of as “babysitting.” Worker co-ops provide a way to give the childcare workforce the dignity it deserves while also stabilizing the industry as a whole. A relatively small federal investment in childcare co-op development could go a long way towards those goals.
Joe Waters is co-founder and CEO of Capita, a nonpartisan ideas lab working to positively change the future for children and families.