Many people wonder why childcare costs are so high when early care teachers earn so little. It’s a valid question and a recent study by Prenatal to Five Fiscal Strategies sheds light on this issue by examining the true cost of childcare in South Carolina.

In total, the average childcare center needs to charge about $4,864.09 per child annually just to break even. To stay profitable, a business typically needs to have a profit margin of 7-10% (Investopedia).

To make this challenge even more difficult for childcare centers, the study highlights the gap between the actual cost of childcare and what Child Care Scholarships cover. In short, centers that accept these payments are losing money. This leads to lower wages for educators and higher staff turnover, affecting both the quality of care and the stability of childcare centers.

The breakdown of costs to run a childcare center, based on an average ABC Quality, medium-sized center, can be seen below:

• Program Management/Administration includes office supplies, telephone, internet, insurance, legal and professional fees, permits, fundraising, memberships, admin fees.
  
• Occupancy includes rent/lease/mortgage, real estate taxes, maintenance, janitorial, repairs, other occupancy related costs. 
  
• Education/Program includes food/food related, classroom/child supplies, medical supplies, postage, advertising, field trips, family transportation and child assessment materials for children. This also includes professional consultants, training, professional development, conferences and travel for staff.

If you’re interested in exploring your own childcare cost scenario, you can access fiscal modeling tools here.

Additional key takeaways from the study include:

• The younger the child, the higher the cost of care.
• South Carolina Child Care Scholarship rates aren’t enough to cover the cost of care in most cases.
• Gaps between the cost of care and the payment rates vary depending on the child’s age and the region.
• Family child care homes are disproportionately impacted by insufficient funding.
• Many providers try to make up the difference by charging families more.
• Providers in rural areas are hit especially hard by regional funding differences.
• The cost of meeting ABC Quality standards is higher than the increased scholarship rate for many providers.

Why do these numbers matter to the business community? At the Chamber, we believe in free market solutions. However, when the market falls short, we support targeted government interventions.

South Carolina must address the true cost of childcare if we want to ensure sustainable, high-quality care for our children.

If you are interested in getting involved with the Chamber’s childcare advocacy work, please feel free to email me at bvincett@charlestonchamber.org