Meet Bernice, a dedicated child care provider in Rapid City who pours her heart into creating a nurturing environment for the children in her care. Despite her passion and commitment, Bernice faces a harsh reality in the child care industry: The current market prices for child care services are far below the actual cost of providing quality care.

In 2022, according to the SD State Market Rate Report, Bernice and 75% of providers in the county charged as little as $4.06 per hour for infants and toddlers (ages 0-3) and $4.40 per hour for preschoolers (ages 4-5). These rates translate to $704 and $624 per month, respectively.

However, Bernice, like many providers, grapples with a significant financial setback.

The accompanying graph vividly illustrates that, for infants and toddlers, Bernice faces a loss ranging from $1.15 to $1.22 per hour or $119 to $212 per month. The only glimmer of profit comes from preschool enrollment, where lower teacher-to-child ratios offer a modest gain of $0.80 per hour or $138 per month. Despite these challenges, Bernice remains committed to providing quality child care, emphasizing the urgent need for increased investment and support in the child care industry.

Bernice's dedication to child care goes beyond the walls of her facility; it delves into the complex web of challenges that both parents and providers face in the industry. Take John and Emily, a young couple in their late-twenties, with a three-year-old daughter attending Bernice's child care. John and Emily are caught in the dilemma of child care costs. As parents with a young child, they navigate a stage in life where their financial security and flexibility are limited. Juggling demanding jobs without the pay of seasoned professionals, they find themselves shouldering the most expensive years of their child's life from their own pockets.

The financial strain on families like John and Emily's is profound, even with Bernice taking a financial loss on their child’s care. Nationally, families end up spending over $10,000 per child per year on child care, equivalent to a year of in-state tuition at a 4-year college. The average annual cost of center-based child care in the United States has surged by nearly 220% over the last three decades, far outpacing the increase in other essential family expenses.

Child care, however, is not a lucrative business model for providers like Bernice, and it presents a challenging career path. Fixed costs, driven by state-mandated teacher-to-child ratio requirements ensuring child safety, leave around 71% of the child care budget allocated to staffing and compensation. In South Dakota, child care workers earn an annual average of $25,490, equivalent to $12.26 per hour, among the lowest wages in the state and yet providers can still barely afford to keep them employed.

The consequences of these challenges extend beyond individual families to impact the wider community and businesses. In Rapid City, where 75% of children under 6 have all available parents working full-time, child care challenges result in an estimated $150 million annual loss in productivity for South Dakota employers. A staggering 86% of primary caregivers of infants and toddlers report that child care issues have a detrimental impact on their work commitments.

As Bernice continues to provide vital child care services, the urgent need for increased investment, support, and innovative solutions in the child care industry becomes increasingly evident. The delicate dance between providers and parents, like John and Emily, highlights the critical importance of addressing the financial challenges and ensuring affordable child care for families in the community.

We all play a role in finding solutions.

Solutions require collective efforts. The analysis of the finances and prospects for this fictional, albeit it realistic, Rapid City child care provider highlights that the current child care business model is flawed. To address this issue, it's clear that substantial new investment from the government, businesses, and other groups that benefit from child care services is not just justified but essential. The John T. Vucurevich Foundation is committed to finding innovative solutions to this crisis alongside child care providers, families, and the business community.

This story, though fictionalized, represents real data and scenarios shared by Rapid City child care providers in the latest child care report, produced by the John T. Vucurevich Foundation with their trusted partners at the Low-Income Investment Fund. This report peels back the curtain on the local child care economy, bringing together invaluable insights from local child care providers and the comprehensive 2022 Child Care Market Rate and Cost of Care reports for South Dakota. Readers will uncover the vivid tapestry of the local child care economy, revealing vital trends and urgent needs.

The John T. Vucurevich Foundation believes that child care is vital community infrastructure.

Ready for more! 

• Download the Report on the JTVF website: https://jtvf.org/jtvf-releases-local-child-care-report
• Opt-In for updates on exciting JTVF Child Care Pilot Programs
• Download the SD Child Care Business Collaborative Solutions Document
• Request a presentation of the findings by contacting Callie Tysdal, Communications Director  at 605-343-3141 or ctysdal@jtvf.org

CLICK HERE TO READ THE OTHER STORIES IN THE DECEMBER ISSUE OF ELEVATE!