The Childcare Crisis Limits Women Entrepreneurs’ Potential

For women, especially those of color, caregiving and entrepreneurship are intertwined. Many women who are starting and building businesses depend on childcare, but quality childcare can be out of their reach. Some leave the workforce to start businesses with flexible hours that allow them to care for their children. For others, childcare is their business, whether they operate a center or are an individual provider. Still, others and their employees use the services of caregivers.

The Coronavirus Pandemic Exacerbated The Childcare Crisis

Caregiving isn’t just a women’s issue. It’s an economic issue and key to an inclusive recovery. It is estimated that nearly 10% of economic activity won’t return if schools and day care remain closed. This is a major set back for women entrepreneurs, particularly those who are Black and Latina.

Thousands of childcare centers that closed temporarily because of lockdowns are at risk of shutting permanently. They tend to be low-margin businesses with low levels of cash reserves and may not be able to reopen due to the additional expense of buying personal protective equipment (PPE) and cleaning supplies. Reopening may also require social distancing measures, which mean fewer children and less revenue, perhaps driving the business into the red. 

Covid-19 Creates A Unique Set of Challenges

To understand the impact on the nearly 12 million children under age 5, their parents, and caregivers, the University of Oregon conducts weekly surveys of households with preschoolers. The project is called Rapid Assessment of Pandemic Impact on Development, or RAPID.

The inspiration for the project was the realization that there was insufficient scientific data to inform the federal government’s multi-trillion-dollar stimulus packages and other policies designed to help communities, commented Philip Fisher, chair and a professor in the department of psychology leading the project. Providing this data was a way they could help the recovery.

The research has found that the impact on families with preschoolers is profound:

• Of the 47% who lost childcare, 60% was center-based. Further reducing childcare options is the fact that for those who use older family members or individual caregivers, travel may put them at risk of exposure to the coronavirus, making it impossible for them to continue as caregivers.
• No surprise, of those who reported losing childcare, their stress and anxiety levels increased.

The research also found that children are becoming more fearful, fussy, and disruptive. Stressful early life experiences can lead to future learning difficulties and lifelong health problems such as obesity and heart disease. Children in low-income households are most at risk.

Caregivers are between a rock and a hard place:

•  22% are having difficulty paying for necessities.
• They are at risk of losing their children’s caregivers and not being able to go work.
• 68% report an increase in stress.

According to research conducted by BCG: 

• A majority of parents—60%—have not found alternative childcare.
• Parents have nearly doubled the amount of time they spend on chores, childcare, and education—adding 27 hours per week.
• While dads are increasingly taking on more responsibilities, moms spend 15 hours a week more than dads do on household tasks.

The burden is even more significant on single mothers, who are more likely to be Black and Latina. 

Entrepreneurship Is Not Living Up To Its Potential for Women Of Color

With higher unemployment rates and lower average earnings, entrepreneurship is a way Black women and Latinas can control their destiny. Last year, the majority of net new women-owned businesses were started by Black women (42%) and Latinas (31%), according to the American Express 2019 State of Women-Owned Businesses*. These numbers are well above the percentages they represent in the general population: 14% and 18% respectively. That’s the good news.

The bad news is that the disparity in the size of businesses owned by minority women compared to non-minority women and men-owned businesses is increasing. Projections of Census data shows the size of Black women and Latina owned businesses shrank after the Great Recession while other companies grew.** If action isn’t taken, it’s likely to shrink even more in the aftermath of the pandemic.

There are, of course, many reasons for this, but one is access to affordable childcare. Black women and Latinas are more likely than women in general to be sidepreneneurs. According to research commissioned by the National Women’s Business Council, entrepreneurship gives women the flexibility to accommodate childcare needs. Running part-time businesses—becoming sidepreneneurs—gives women greater flexibility. This pattern may accelerate as a result of the pandemic. 

Entrepreneurs who start a business out of necessity for flexibility to care for children are younger than high-growth entrepreneurs. The latter start their businesses in their 40s. Those who begin their businesses later in life have more experience, a more extensive and better-connected network, and more savings to invest in the business. As a result, they are more likely to grow successful businesses. 

Black women and Latinas can—the ones who start the majority of new businesses—spearhead an economic recovery if they have reliable, consistent childcare. 

Government Needs To Step Up

Government policies can help both entrepreneurs and those who work for others by ensuring:

• Paid family leave: For women entrepreneurs, paid leave makes entrepreneurship more viable. The reality is that many additional challenges exist for women entrepreneurs, including handling childcare reliably and cost-effectively. Knowing that their husbands, wives, and significant others have paid leave to share in the care of infants ensures that all women entrepreneurs—not just those with money—have the support and peace of mind they need after their child’s birth.
• Subsidized childcare: For 66% of mothers with children under 6 who work, childcare is a necessity. Quality childcare shouldn’t just be for those who can afford it. The economy depends on these women who are often essential workers—in foodservice, hospitality, transportation, and medical support staff. To ensure an educated, productive workforce 20 years from now, that childcare has got to be good.
• Raise childcare workers wages: Caregiving is a growing sector in which jobs can’t be automated. Good childcare is necessary for a thriving economy now and to provide the entrepreneurs of the future. We should pay caregivers what they are worth.

Without a focused public policy, many women—because they are the primary caregivers—will be unable to work or create jobs by building their businesses. That will slow down growth for every sector as families have less discretionary income.

By treating childcare as a valuable necessity, parents can contribute fully to the economy. Let’s make that happen.

How does childcare impact your business and employees?