Billion dollar day care

Aug 27, 2014

    

Zsanay Duran lives at the end of a cul-de-sac in her neighborhood in Springfield, Mo. Inside her house looks less like a home and more like a daycare center.

Duran began providing unlicensed home daycare sort of by accident. Last fall when she was looking for work for her teenage son, she came across a posting on Craigslist from a mother who was desperate for childcare. The woman had an 8 month old baby and worked the 5am shift at a local fast-food chain. She could only afford $12 a day for childcare. Duran said her story really hit home.

“I was a single mom and I needed help in order to get on my feet and that’s why someone did for me,” Duran said. “And if I can help someone else get on their feet, why not?”

Most formal, licensed care would not have worked for this single mom. If it weren’t for unlicensed or “informal” care, a parent with these kinds of special circumstances might not have any options. There are parents like these and providers like Duran all over the country. But unlike formal care, the informal childcare sector remains undocumented, and its size and value is something economists and policy makers are only beginning to understand.  

Dr. Thomas Johnson, Professor of Agriculture and Applied Economics at the University of Missouri, is co-author of a recent study that for the first time estimates the value of the informal childcare sector in the state of Kansas using data from 2005.

"We know how many children there are, we know things about their households, whether their parents work, we know a lot about the formal reported childcare sector,” Johnson said. “And that leaves a gap , a number of children who clearly are not being cared for through the formal sector.”

Informal childcare in this case is any form of unlicensed childcare given by a neighbor or family member, or even a kind stranger on Craigslist.

“We always knew that the informal sector was large but we were surprised that about 61 percent of total childcare economics can be accounted for by the informal sector,” Johnson said. “It’s quite a bit larger than the formal sector in the state of Kansas.”

Johnson said the reason the informal sector was so large was because Kansas is a largely rural state and, in this study, rural areas were more dependent on the informal sector than urban areas. Johnson said this could be true of lots of states with large rural populations, like Missouri, where access to formal care is more limited.

“And so as a result we were missing in the state of Kansas about a billion dollars in GDP was being overlooked.”

That means that parents using informal childcare in Kansas would be willing to trade a billion dollars in other things for that service.

“Even though they didn’t have to pay [a billion], or in some cases they pay part of it but it was in a sense a gift on the part of the provider to them,” Johnson said. “And that’s value.”

But Dr. Carol Scott, CEO of Child Care Aware of Missouri, says the problem with informal care is that the quality is mostly unknown.

“Just as there is poor care in the licensed childcare sector there could be great care in the unlicensed childcare sector,” Scott said. “And the problem is we just don’t have any information because no one ever sees those facilities.”

Duran worries if she gets licensed she’ll have to charge more and the families who really need care, especially the mom paying $12 a day, will be left behind again.

“I can see how much it means to the parent,” Duran said. “If she can’t pay it that doesn’t mean that child should have a bad day.”