Ask A Researcher

October 2024

What does it take to care for our kids? The costs associated with providing childcare in North Dakota

 

Avram Slone, MA, is a research specialist at the Center for Social Research at North Dakota State University (NDSU). He has recently been involved in research projects studying the impact of COVID-19, childcare availability, and the economic impact of the agriculture industry on the North Dakota economy. Before coming to NDSU, Avram worked as a research professional at the Alaska Justice Information Center housed at the University of Alaska Anchorage, and as a statistical analyst intern at the United States Census Bureau’s International Programs Center.

Acknowledgements

This article features information regarding costs of providing licensed childcare in North Dakota, which was obtained from the survey of all licensed childcare providers in the state. This project was overseen by and completed on behalf of the North Dakota Department of Health and Human Services Child Care Assistance Program. For more information on the Child Care Assistance Program see https://www.hhs.nd.gov/applyforhelp/ccap

Introduction: The Burden May Go Beyond Families

Childcare has increasingly become a financial burden to many families across the United States. Adjusted to 2022 dollars to account for inflation, annual childcare costs for a single child equate to between 8 and 19 percent of the national median family income per child depending on the type and location of care (U.S. Department of Labor, 2023). Childcare in North Dakota is one of the largest expenses families face. As of 2020, the average annual cost for infant care was $9,091 and the average annual cost for a 4-year-old was $8,221 in North Dakota. To put the childcare costs into perspective, for both age groups, childcare in North Dakota costs more annually than in-state tuition at the four-year public universities and was only marginally less expensive than the average annual cost of rent (Economic Policy Institute, 2020).

While the price of childcare is undoubtedly a hurdle for many North Dakota families, licensed childcare facilities across the state are similarly burdened by the cost of providing care to those children. In 2014 the United States government enacted the Child Care and Development Block Grant Act, which attempts to alleviate the financial burden that paying for childcare can have on low-income families by reimbursing licensed providers with the cost of care for children in those low-income families. To access the funds made available by the Child Care and Development Block Grant Act, states must administer a survey of all licensed childcare providers to evaluate the cost of licensed care and ensure that providers are being reimbursed fairly. To support their objectives, the North Dakota Department of Health and Human Services contracted the Center for Social Research at NDSU to conduct this survey in 2023. This article provides information on an assessment of the cost of providing licensed childcare in North Dakota, which is only a small amount of data that was collected from the study. If you are interested in more information, please see the full North Dakota Child Care report.

Staffing Licensed Childcare Facilities
Although it is technically possible to run a licensed childcare facility without employing any full-time staff, few do. Of the 543 licensed childcare providers who provided at least some staffing information during data collection, 93 percent employed at least one full-time staff member. On average, licensed childcare providers employed 5.18 full-time staff members, and 15 percent employed 11 or more full-time staff members. Additionally, licensed childcare facilities employed an average of 2.79 part-time staff members. Overall, licensed childcare providers in North Dakota who reported staff counts indicated that they employed 8 total staff members on average (Table 1). The most frequently reported staffing types were teachers, classrooms assistants, and administrative staff.

Teachers were the most commonly employed full-time staff type. More than 6 in 10 licensed childcare facilities that employed full-time staff reported that they employed full-time teachers (61 percent). More than one-third of those facilities also reported that they employed full-time classroom assistants (36 percent) and also full-time administrative staff (33.7 percent). Amongst licensed childcare facilities that employed part-time staff, classroom assistants were most frequently employed at more than 6 in 10 of those facilities (60.2 percent). Part-time teachers were employed at more than one-third of facilities that employed part-time staff (34.4 percent).

On average, licensed childcare providers employed 4.53 full-time teachers and 1.08 part-time teachers overall. The average hourly wage of a full-time teacher was $16.81, and the average hourly wage of a part-time teacher was $14.94 (Tables 2 and 3). Facilities employed an average of 2.89 full-time classroom assistants and 4.11 part-time classroom assistants, at an average wage of $15.34 and $13.68, respectively. Facilities employed an average of 1.55 full-time administrative staffers at an average hourly wage of $19.79. Only 6 percent of facilities employed part-time administrative staff, at an average hourly wage of $15.89.

Enrollment Revenues Versus Costs at Homebased and Center-Based Facilities

There was wide variation in the difference between enrollment revenue and total expenditures at licensed North Dakota childcare facilities, ranging from a net negative of -$1,264,213 to a net positive of $1,214,777. On average, however, the difference between enrollment revenues and total expenditures was $47,392 (Table 4). Homebased providers had statistically significantly lower enrollment revenues and annual expenditures on average than center-based facilities, and also had lower overall enrollment. Homebased providers came much closer to breaking even, with an annual difference between enrollment revenues and expenditures of $6,098 compared to the difference of $68,636 for center-based facilities’ enrollment revenues and expenditures (Table 5).

On an overall per-facility basis, neither homebased nor center-based facilities operated at a loss on average. However, when costs and enrollment revenues were evaluated on a per-child basis, costs exceeded revenues for homebased providers at an average rate of -$1,964 per child (Table 6). On the other hand, center-based providers operated at an average annual per-child profit of $1,052. This discrepancy is likely due to the varying cost of providing childcare to different age groups, as well as the inclusion of both full-time and part-time students. As such, facilities operating at a per-child loss may still be operating at a per-facility profit.

Conclusions

Paying for childcare is a burdensome endeavor for many North Dakota families. However, the high cost of childcare compared to median household income has not necessarily translated to massive profits for licensed childcare facilities. Although both homebased and center-based childcare facilities operate at a profit on average, those profits, particularly those of homebased facilities, are relatively small. On a per-child basis, homebased childcare facilities operate at an average annual loss of nearly $2,000 per child.

References

Economic Policy Institute. (2020, October). Child care costs in the United States. The cost of child care in North Dakota. https://www.epi.org/child-care-costs-in-the-united-states/#/ND

Child care remains out of financial reach for many families, US Department of Labor data shows. (2023, January 24). Department of Labor. Retrieved September 25, 2024, from https://www.dol.gov/newsroom/releases/wb/wb20230124.

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