New Data Shows Childcare Staff Pay Rates Are on the Rise, Accounting for More Than Half of All Tuition Dollars

News provided by

Jul 15, 2024, 09:00 ET

HINGE Early Education Advisors' 2024 Childcare Staff Costs Survey highlights the need for government and outside employer support to keep high-quality programs operating sustainably

GREENVILLE, S.C., July 15, 2024 /PRNewswire/ -- As part of an ongoing study of financially stable childcare providers, HINGE Early Education Advisors — the nation's leading expert in growing and selling childcare businesses — has released new industry data in its 2024 Childcare Staff Costs Survey. This research summarizes input from 173 leaders of privately owned small and mid-sized childcare centers across the United States.

"Since 1990, we have been studying the financial practices that enable childcare providers to serve communities long term," says Kathy Ligon, Founder & CEO of HINGE Advisors. "We speak with hundreds of childcare owners annually, and over the past several years the challenge of balancing large increases in staff pay and the limits of what parents can afford to pay for tuition has put many providers in a spot where the business model simply doesn't work."

HINGE Advisors' 2024 Childcare Staff Costs Survey reveals:

Approximately 60% of respondents report spending more than 50% of all tuition dollars on staff pay. This does not include other significant costs like payroll taxes, benefits, training, and recruiting. In a normalized environment, HINGE's historical data shows childcare staff pay on average comprises 42-48% of all tuition dollars paid.
Staff pay rates have increased 21-50% since 2020/COVID at more than two-thirds of childcare centers.
Childcare leaders primarily manage staff costs by monitoring hours (46%), allowing staff to go home early when they are not needed in the classroom (25%), monitoring pay rates (19%), and using other strategies (10%).
Additional strategies for managing staff costs include using floaters, using assistant team members effectively, providing more support for Directors, and limiting management teams in the classroom.

According to HINGE Advisors' industry benchmarks, beyond staff costs, the complete expense load for childcare owners also includes approximately:

12-15% of all tuition dollars paid going to program costs such as food, supplies, advertising, vehicles, and dues and licenses
22-25% of all tuition dollars paid going to facility costs such as rent or mortgage, repairs and maintenance, janitorial, security, insurance, property taxes, and utilities
3-5% of all tuition dollars paid going to administrative costs such as bank and ACH or credit card fees, billing systems, office supplies, travel, and Internet

"These costs don't account for reinvesting in the business, which is essential for running a sustainable program," says Ligon. "We all want managers, teachers, and support staff to be paid well, have excellent benefits, have fun work environments with advancement opportunities and love coming to work. We also want parents to be comfortable financially and for children to receive the high-quality care and learning they deserve. But if the childcare business model breaks down, there is no care or opportunity for anyone."

Echoing the call of many childcare advocates, Ligon says this data points to the need for additional assistance for the childcare industry — such as government subsidies, tax incentives, and support from outside employers — in order to meet the demands for high-quality childcare.

Read the full report at www.hingeadvisors.com/blog/2024-childcare-staff-costs-survey.

About HINGE Early Education Advisors
HINGE Early Education Advisors is the nation's leading expert in growing and selling childcare businesses. The HINGE team — comprised of former childcare business owners, financial experts, and commercial and real estate brokers — has more than 300 years of combined industry experience and has closed more school transactions than any advisor in the nation. Learn more at hingeadvisors.com.

Media Contact:
Pamela Caruolo
For HINGE Advisors
[email protected]
484.574.2946

SOURCE HINGE Advisors