Report Argues for Improving the Quality of For-Profit Child Care Programs

Here at Early Ed Watch, we write a lot about publicly funded early childhood programs, including state funded pre-K and federally funded child care, special education and Head Start. In many cases, these programs are run by non-profit organizations. But for-profit childcare is a $20 billion industry that plays a significant role in providing care for the nearly 11 million U.S. children under five in child care.

A new report from Todd Grindal of Harvard University for the American Enterprise Institute (AEI), “Unequal Access: Hidden Barriers to Achieving Both Quality and Profit in Early Care and Education,” examines issues of quality in for-profit childcare and provides some recommendations for improvement.

The for-profit sector is a crucial one. Low-income families eligible for federal Child Care and Development Fund subsidies receive vouchers through which they can receive child care from any legal provider, including for-profits. As we have written, though, research shows subsidy recipients, many of whom may be in non-profit or public programs, don’t always receive the highest quality care either. Additionally, many middle- or higher-income families are ineligible for income-tested, publicly-funded pre-K or Head Start, and instead are left to make their own judgment calls regarding child care. But because the quality of programs can be difficult for parents to assess, and state and federal child care regulations are often lax both for non-profit and for-profit programs, those children may wind up with low-quality care that can leave them at an academic disadvantage years down the line.

The AEI report cites a number of innovations that for-profit child care companies can bring to the table. They can help states build capacity, as with Florida’s Voluntary Pre-Kindergarten program, and may provide the kinds of flexible child care options well-suited to working parents’ schedules and needs that some non-profit providers can’t offer.

 Still, the limited research in the field suggests there are some questions as to whether for-profit providers consistently offer the high-quality settings children need to advance their mental and socio-emotional development. A survey from the National Institute of Child Health and Development used data from the 1990s to review and compare for-profit child care programs with non-profit programs. The non-profits tended to have more markers of quality – for example, higher pay for teachers, smaller class sizes and more positive interactions between caregivers and children – than the for-profit chains.

Moreover, other surveys cited in the report suggest that because parents tend to be more concerned with superficial quality in selecting a child care center, for-profit companies place more focus on establishing centers that outwardly appear high quality, rather than on more important (but harder to evaluate) factors like academic content and communication between caregivers and parents.

Given the challenges parents face in identifying the best child care, the AEI report recommends releasing and marketing information about the quality of various programs. If families were armed with deeper data and assessments of quality as they select programs for their children, for-profit centers would see disincentives to emphasizing superficial quality metrics, and might instead compete by improving the actual quality of care.

The report’s second recommendation asks states and the federal government to level the playing field for all providers. According to Grindal, states often decline to regulate small home-based family care settings, which allows those providers to spend less and charge less, skewing the market in their favor. Early Ed Watch wrote about that lack of regulation earlier this year, highlighting that those programs may offer lower-quality care as a result. Additionally, the AEI report says, the U.S. should provide higher childcare subsidies, and ones that match the higher costs of caring for infants than for toddlers or young children. That would allow providers to improve wages (which hover around the poverty level) and give families the opportunity to afford higher-quality care.

In learning more about the for-profit child care industry, parents and policymakers are at a disadvantage because less information is available. For-profit providers sometimes provide lower-quality care (as do some non-profit providers), but it is also apparent that for-profit care plays a critical role in educating and caring for the millions of American children who spend the work week in child care, but operate outside of publicly-funded and regulated settings. States, as well as the federal government, have an imperative to improve those programs for the sake of the children they serve.

CORRECTION 8/1: The original headline on this post was misleading. It should not have used the word ‘private’ as a substitute for for-profit organizations, since non-profit organizations are also private entities. 

CLARIFICATION 8/1: Some of the wording in this post has been changed to make clear that questions related to quality can pertain to both for-profit and non-profit programs.