A Crisis of Care: The good and bad about two key models of childcare

It’s expensive. There’s not enough space for more kids. Waitlists are mounting.

We can keep going.

And whether they’re operating out of a center or a private home, care providers face similar issues.

Center-based care

Teddy Bear Daycare & Preschool in Traverse City serves 150 families with about 30 people working among three locations. Each has varying capacity levels.

Lately, the center has been doing a delicate dance with its budget, recently raising rates at each location to adjust for inflation.

The center charges $1,600 per month for kids under 2 years old. It’s a little cheaper for those over 2. And that’s in line with industry norms, according to local, state and national studies.

Still, Molly Porter, a multisite coordinator for Teddy Bear said they only heard from about three families that said they couldn’t afford it the price hike.

“I think the rest of them kind of just assumed they would be getting an increase or unfortunately don’t have anywhere else to go," Porter said. "That’s the really hard part. Because there is such a need; I’m sure they kind of feel stuck too. But it’s kind of what we have to do with our business.”

When Teddy Bear Daycare began about 40 years ago, it charged families $40 a week. Adjusted for inflation, that’s $122 a week, or just shy of $500 per month.

“Over the last two years, looking at the climb and cost ... the whole focus has gone away from the children, where it should be,” she said.

Multisite coordinator Anna Fryer said they need to keep the cost up to stay in business.

“It is high, but that’s how our operating budget needs to be to in order to maintain wages and cost of living, so to speak, with food and everything," she said. "And after talking to our bookkeeper, if we start increasing wages based on what we charge right now, which is pretty high, we’ll wage ourselves out of business.”

Teddy Bear’s starting wage is right around $17 to $19 an hour, depending on experience, which is above average. In Michigan, childcare workers make $13.50 on average according to the Bureau of Labor Statistics.

Fryer said they can’t keep up with larger companies in the area that can offer more.

She points to the state's has a strict provider-to-child ratio as one reason why.

Unlike other businesses, which can try to bring in more customers to boost sales, a childcare center like Teddy Bear can’t simply add more kids to make more money without also adding staff.

“We’re really backed into a corner when people say ‘Hey, I need care’ cause (the state) is going to say sorry, can’t operate if you don’t have (the right ratio),” Fryer said.

And those are not the only rules they have to follow. There are strict safety rules and adding more centers can cost thousands of dollars in just the inspections alone.

Home-based care

Chelsea Tarvainen owns and operates Chelsea's Childcare from her home near Petoskey. She has a degree in early childhood development.

“I’ve been open about a year and a half now," she said. "I opened when I had my second child for the same reason why I think a lot of people open. There are no childcare options in the area.”

Here, the rules aren't nearly as strict as they are for non-home-based childcare centers.

The family lives in an A-Frame in a quiet part of town. Their property features beautiful trees, a playground and a chicken coop for eggs.

Inside are some play rooms and coat hangers, each individually named for the six kids she watches, two of whom are her own.

The licensing process is not as expensive compared to a center, but it’s still pretty extensive. There’s a six-month approval timeline that includes inspections of the house, water, sewer and more.

“The initial startup cost was kind of hard to swallow," she said. "You need so much to make licensing; everything up to standard. So the startup cost was high but there were grant opportunities during COVID that helped me with that but i know it’s not the case for a lot of people”

She wouldn’t disclose what she paid in total, but did receive a $750 start up grant that covered some of it.

That includes:

• Cots
• A Computer
• Fingerprinting
• Radon testing
• Fire extinguishers
• Safety gates
• Health and safety training; medical exams and TB tests.
• Inspections: furnace ;hot water heater; smoke detectors; carbon monoxide detectors; safety locks; Pack n' Plays.

Tarvainen paid for everything else out of pocket, slowly. She did have some toys from her two kids which eased some of that cost. But still she says it’s cheaper than opening a care center.

“But the cost of care compared to running at least a full center doesn’t quite match up. A home daycare is easier to manage,” she said.

Tarvainen gets help from a food program and only has six kids to feed compared to the 150 children at Teddy Bear Daycare’s three locations. She also uses eggs from the chicken coop to cook for the kids.

She does get calls about space for kids, but state rules say she can’t take on any more children. Still, within two years of opening, she’s now making a profit.

“You just always have to treat it as a business in order to make a profit in the end, to be able to use this as a career and not a hobby," she said. "Which is hard when children are in the mix — the people you’re friends with and the children you take care of.”

But home based care isn’t a profit generator for all. One home care provider told North Central Michigan College in a recent survey they net about $500 in a single year.

Tarvainen would like to see subsidies apply to more people — not limited based on income.

"I think that’s what scares a lot of people just getting started is all out of pocket money," she said.

At Teddy Bear Daycare in Traverse City, administrators like Anna Fryer would like to see eligibility for food programs expanded.

“I think if we did that we could help take care of a lot of this issue," Fryer said. "People would be able to afford it. We could charge, instead of $75 day, maybe $55 a day.”

Fryer said the center spends about $800 per week on food.

She also calls for sustained investment and legislation to help childcare providers in perpetuity.

Teddy Bear’s multisite coordinator Molly Porter, said maybe in a perfect world, the community would get more involved to help childcare centers thrive.

And there could be some kind of solution on the horizon — a hybrid model of care that combines home based care with facility based care, taps into those community resources with more funding from private and public sectors.

We'll learn about that in the next installment of this series.