Day Care Service Industry is one of the Fastest Growing Industries in the US

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Significant Underwriting Points

• Day care service industry is one of the fasted growing industries in the US.
• Preschool teachers, teacher assistants, and child care workers account for almost 8 out of 10 wage and salary jobs in this industry class.
• About 42 percent of all child care workers have a high school degree or less, reflecting the minimal training requirements for most jobs.
• More than a quarter of all employees work part time, and nearly 18 percent of full-time industry employees work more than 40 hours per week.
• Job openings should be numerous because dissatisfaction with benefits, pay, and stressful working conditions causes many to leave the industry.
• There are fewer day care centers in rural areas (in relation to the population).
• Nearly half of all members of this industry work in centers with less than 20 employees.
• About 37 percent of all workers in this industry are self-employed or unpaid family workers.

Nature of the Industry

Obtaining affordable, quality child day care, especially for children under five, is a major concern for many parents, particularly in recent years with the rise in families with two working parents. As the need for child day care has increased in the last decade, the child day care services industry stepped in to fill the need and become one of the fastest growing industries in the US.

Goods and Services: The industry consists of establishments that provide paid care for infants, toddlers and preschool children. Older children may also be cared for in before- and after-school programs.

Industry Organization: Two main types of child care make up the child day care services industry: center-based care and family child care. Formal child day care centers include preschools, child care centers and Head Start centers. Family child care providers care for children in their home for a fee and are the majority of self-employed workers in this industry.

For-profit centers may operate independently or as part of a local or national company. The number of for-profit establishments has grown rapidly in response to demand for child care services. Nonprofit child day care organizations may provide services in religious institutions, YMCA’s and other social and recreation centers. Within the nonprofit sector, there has been strong growth in Head Start, the federally funded child care program designed to provide disadvantaged children with social, educational, and health services.

Working Conditions

Hours: The hours of child day care workers vary. Many centers are open 12 or more hours a day and cannot close until all of the children are picked up by their parents or guardians. Unscheduled overtime, traffic jams, and other types of emergencies can cause parents or guardians to be late. Nearly 18 percent of full-time employees in the child day care services industry work more than 40 hours per week. Self-employed workers tend to work longer hours than do their salaried counterparts. The industry also offers many opportunities for part-time work. More than 26 percent of all employees worked part time in 2006.

Work Environment: The work is sometimes routine. Child care can be physically and emotionally taxing, as workers constantly stand, walk, bend, stoop, and lift to attend to each child’s needs, interests, and problems. Child care workers must be constantly alert, anticipate and prevent trouble, deal effectively with disruptive children and provide discipline.

Many child day care workers become dissatisfied with their jobs’ stressful conditions, low pay, and lack of benefits and eventually leave.

Employment

Child day care services provided about 807,000 wage and salary jobs in 2006. There were an additional 467,000 self-employed and unpaid family workers in the industry, most of whom were family child care providers, although some were self-employed managers of child care centers.

Operations vary in size, from the self-employed person caring for a few children in a private home to the large corporate-sponsored center employing a sizable staff. Almost half of all wage and salary jobs in 2006 were located in establishments with fewer than 20 employees. Nearly all establishments have fewer than 50 workers.

Opportunities for self-employment in this industry are among the best in the economy. About 37 percent of all workers in the industry are self-employed or unpaid family workers, compared with only 8 percent in all industries. This disparity reflects the ease of entering the child day care business.

The median age of child day care providers is 38, compared with 44 for all workers. About 21 percent of all care providers are 24 years or younger as opposed to about 14 percent for all industries. About 6 percent of these workers are below the age of 20, reflecting the minimal training requirements for many child day care positions.

Occupations in the Industry

Jobs in the child day care services industry are concentrated in a smaller number of occupations than in most other industries. Three occupations – preschool teachers, teacher assistants, and child care workers – account for 77 percent of all wage and salary jobs.

Professional Occupations: Preschool teachers make up the largest occupation in the child day care industry, accounting for about 32 percent of wage and salary jobs. Teacher assistants account for about 14 percent of industry employment.

Service Occupations: Child care workers account for about 31 percent of wage and salary jobs, as well as a large proportion of the self-employed who care for children in their homes, also known as family child care providers. Regardless of the setting, these workers feed, diaper, comfort, and play with infants. When dealing with older children, they attend to the children’s basic needs and organize activities that stimulate physical, emotional, intellectual, and social development.

Management, Business and Financial Occupations: About 4 percent of the industry’s wage and salary workers are education administrators, preschool and child care center/program. They establish overall objectives and standards for their centers, provide day-to-day supervision of their staffs, and bear overall responsibility for program development, as well as for marketing, budgeting, staffing and all other administrative tasks.

Child day care centers also employ a variety of office and administrative support workers, building cleaning workers, cooks and bus drivers.

Regulations

Most states do not regulate family child care providers who care for just a few children, typically between ages 2 and 5. Providers who care for more children are required to be licensed and, in a few states, have some minimal training. Once a provider joins the industry, most state laws require the worker to complete a number of hours of training per year. Nearly all states’ licensing regulations require criminal record checks for all child day care staff. This screening requirement protects children from abuse and reduces liability risks, making insurance more readily available and affordable.

Local governmental jurisdictions often regulate family child care providers not regulated by the state. Home safety inspections and criminal background checks are usually required of an applicant under local jurisdiction control.

Child care centers must meet staffing requirements imposed on them by states and insurers. Although requirements vary, in most cases teachers must be at older than 18; and directors or officers must be at least 21. In some states, assistants may work at age 16 – in others as young as 14.

Most states have established minimum educational or training requirements. Training requirements are most stringent for directors, less so for teachers, and minimal for child care workers and teacher assistants. In many centers, directors must have a college degree, often with experience in child day care and specific training in early childhood development. Teachers must have a high school diploma and, in many cases, a combination of college education and experience. Assistants and child care workers usually need a high school diploma, but that is not always a requirement. Many states also mandate other types of training for staff members, such as on health and first aid, fire safety and child abuse detection and prevention. Some employers prefer to hire workers who have received credentials from a nationally recognized child day care organization.

State governments also have established requirements for workers who provide services associated with child care – those involved in food preparation, child transportation and providers of medical and other services. Most states mandate minimum staff-to-child ratios; these ratios vary by state and the age of the children involved.

Outlook

Demographic trends are driving the growth of this industry. The number of children under five is expected to increase at a faster rate than in the past; and many of them live in households with two working parents or a single working parent. Furthermore, growing numbers of parents will hold jobs that require abnormal work schedules (weekends, evenings and late nights). These combine to increase demand for this service. In addition, school-aged children, who generally require child care only before and after school, increasingly are being cared for in centers.

Center-based day care should continue to expand its share of the industry because an increasing number of parents prefer its more formal setting. Demand for child care centers and preschool teachers to staff them could increase even further if more states implement preschool programs for 3- and 4-year-old children, which some have begun and others are planning to start. In addition, subsidies for children from low-income families attending child day care programs also could result in more children being served in centers, as could the increasing involvement of employers in funding and operating day care centers. Legislation requiring more welfare recipients to work also could contribute to growing demand for child day care services.

Sources of Additional Information

National Association for the Education of Young Children
Center for the Child Care Workforce
National Child Care Information Center
National Resource Center for Health and Safety in Child Care and Early Education
Council for Professional Recognition

Bureau of Labor Statistics Child Care Services Information

NAICS Code: 6244

Source: Bureau of Labor Statistics

Other Underwriting Articles in this Series

1. Insuring the Construction Industry
2. Insuring the Hospitality Industry
3. Insuring Restaurants


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