Child Care Providers Struggle to Afford Rising Minimum Wage

If you’ve got kids, or are expecting one, you’ve probably been warned a million times: Child care is expensive. But just how expensive is it here in the Bay Area?

About $1,800 a month and up for an infant, according to Kim Kruckel with the Child Care Law Center in San Francisco.

The price might come down a bit once your kid is walking or out of diapers, but not by much. It means that monthly expense is more than rent or a mortgage payment for most people. So why does child care cost so much?

Nancy Mackey, who’s spent the last 14 years turning the ground floor of her West Oakland house into a well-respected child care center, Lil Nancy's Primary Schoolhouse, says building her business hasn’t come cheap. Walking through colorful rooms filled with small children, Mackey points out a children's kitchen set that cost $300 and small tables that cost $200 apiece.

But one of the biggest costs for Mackey is labor. For the 12 kids enrolled at Miss Nancy's, as it's known, she has three assistants every day in order to comply with state-mandated staffing ratios. And she has to pay her employees at least $12.55 an hour because of a minimum wage increase that Oakland voters approved in 2014.

“My staff deserves to get paid well. I pay them the best I can," says Mackey, who supported the ballot initiative. "... And I pay them based upon how the parents are able to pay us."

But passing that increase on to parents made for a tough discussion. Mackey called a meeting with parents after the minimum wage went into effect to talk about how daily rates would increase.

"It was gonna be kind of sudden,” said Erin McNerney, whose 2-year-old daughter comes to Mackey's home every day.

“It’s not something I thought about at all when we voted for the minimum wage in Oakland,” McNerney added.

Business Owners Want a Cost of Living Adjustment, Too

Those rising labor costs also mean that as a business owner, Mackey takes home less herself. So she and others like her are trying to ride the momentum of the Fight for 15, the movement for a $15 minimum wage. After spending the last couple of years supporting a wage increase for their employees, they don’t want to be left behind, and are advocating for themselves.

Katina Richardson, who runs a day care center out of her home in Hayward, was one of a group of early childhood educators marching through downtown Oakland in April, calling for increased state child care subsidies.

“They’re setting us up for failure and we need more," said Richardson, who routinely works 12-hour days and estimates she ends up with less than $6 an hour.

“We don’t have benefits. We don’t have retirement set up. At the end of the day, I’m working every day not knowing if I’ll ever be able to retire,” Richardson added.

Many of Richardson’s families receive state subsidies to help pay for child care, but the state doesn’t pay much -- providers may end up receiving as little as $4 or $5 an hour per child. And as the minimum wage has been rising, that subsidy rate hasn’t gone up with it.

Plus, there’s a huge waiting list for those benefits — advocates say an estimated 300,000 people at last count. There are no official numbers, because in 2011 the state eliminated funding to track the waiting list.

Vanessa Harlan, who lives in San Francisco’s Bayview neighborhood with her four children, says she's been on the waiting list for 11 years.

"My children never got child care. My parents actually helped me keep my children while me and my husband went to work," said Harlan. If her parents weren't around, Harlan says the family would probably move to Texas.

State Sen. Hannah-Beth Jackson says the Legislative Women’s Caucus requested $800 million from this year’s budget for early child care and education. They want the money to pay, in part, for an increase to reimbursement rates, and to move thousands of children off the waiting list.

“The whole child care system in California has never been properly funded. Never,” said Jackson. “This is probably the most universally agreed to priority within the Legislature.”

However, Gov. Jerry Brown has indicated it’s not on his list of priorities. Lawmakers are negotiating with the governor over how much, if any, will be included in the final budget, which must be passed by June 15. Jackson admits that whatever they get would only be a drop in the bucket. It would take billions to provide affordable child care to everyone in the state.

Meanwhile, the minimum wage across the state continue to rise. On July 1, it will hit $13 an hour in San Francisco and Emeryville. California’s minimum wage is scheduled to rise every year, and reach $15 an hour in 2022.