why is it impossible to get a spot in an infant daycare?
part 1 of a series on solving the childcare shortage in america
If you have friends with young children, chances are you've heard them mention daycare waitlists.
A 2018 study by the Center for American Progress revealed that approximately half of America faces a shortage of licensed childcare options. This initially puzzled me, as I recalled the basic supply-demand curve from college economics: excess demand should prompt a rise in supply, right?
Turns out, this mechanism doesn't hold true for childcare.
In 2019, I founded Tinycare, a company that operates over 35 daycares in California and Arizona with an innovative micro daycare model that increases the availability of quality childcare. During the pandemic, 34% of Bay Area daycares permanently closed, while Tinycare expanded tenfold. Over the past five years, I've become intimately familiar with the reasons behind this limited supply. This post is the first in a series on addressing the childcare shortage in America.
Let's first examine where the undersupply exists. Daycare caters to children aged 3 months to 5 years, split into three age groups:
Infant (3 months - ~18 months)
Toddler (~18 months - 3 years)
Preschool (3 years - 5 years)
Contrary to popular belief, daycare waitlists aren't long for all age groups. Preschool spots are relatively abundant, while infant spots are incredibly scarce.
For example, in 2017, I volunteered as a preschool teacher at Telegraph Hill Neighborhood Center (Tel-Hi) in San Francisco. Tel-Hi had one infant room with 8 babies, one toddler room with 12 toddlers, and two preschool rooms with 24 preschoolers each. The infant room had a waitlist exceeding two years. Considering the demand for infant care, why didn't Tel-Hi allocate more space for infant rooms?
The primary reason is that infant rooms are far less profitable than preschool rooms. The top two operating cost drivers in daycare are teacher salaries and real estate. Infant classrooms are more expensive than preschool classrooms on a per-child basis due to a lower teacher-to-child ratio and a greater need for indoor space.
1/ Infants require more teachers
An average infant room has one teacher for every 3-4 children, compared to a preschool room with one teacher for every 12 children. While libertarians will blame state regulations that mandate a 1:4 teacher-to-infant ratio, even without these rules, there's a natural constraint: one person can only care for a limited number of babies without resorting to neglect (babies strapped in high chairs in front of a tv, anyone?). The 1:3-4 teacher-to-infant ratio is unavoidable. And despite advancements in large language models, we won’t have AI nannies anytime soon, or ever…
2/ Infants require more space
Surprisingly, infants need more space than preschoolers. Although babies have limited mobility, they require separate play and nap rooms due to their personalized schedules and multiple daily naps. Conversely, older toddlers and preschoolers follow a shared daily routine, needing only one large space for all activities, including napping.
play room in an infant Tinycare
nap room with cribs in an infant Tinycare
the same large space for play & napping for older toddlers & preschoolers
Consequently, infant rooms are significantly more expensive to operate. A simple pro forma comparison of infant and preschool room margins in San Francisco reveals that the profit from an infant room is almost a third of that from a preschool room. When factoring in customer acquisition cost, teacher turnover costs, and G&A, infant rooms may barely break even or even generate a loss.
play with the assumptions in this link.
In the above model, the infant room is less profitable even with its $2,400/month tuition, which is almost twice the preschool tuition. Given demand outpacing supply, why not keep raising infant prices?
The issue lies in the affordability of childcare for families. At $2,400 per month, or $28,800 per year pre-tax, one infant daycare spot would already consume 29.1% of a median San Francisco household's post-tax income. Add to this the city's notoriously high rent, and the financial burden becomes overwhelming. And this is an American problem, not just a San Francisco one.
Families stuck on multi-year infant care waitlists often have limited options: one parent may stay at home, they might pay double the cost of daycare (over $52,000 per year) for a private nanny, arrange childcare through a patchwork of au pairs and in-laws, or compromise on quality by choosing unlicensed care.
Considering that 85% of a child's brain volume develops by age three, our current childcare system is failing our youngest children.