Boom in day care industry the result of many social changes

Monthly Labor Review, August, 1995 by William Goodman

Cost effects

The average hourly pay in 1994 for production or nonsupervisory employees was $ 11.12 for the private sector and $6.83 in the day care industry. From 1972 to 1994, average hourly pay of workers in the industry, excluding managers, adjusted for inflation, declined by 10 percent.(22) The cost of labor in day care centers is relatively inexpensive and has become less expensive over the years.

Despite the drop in real earnings of day care workers, the price of day care to consumers, as estimated in the consumer price index, rose more rapidly than general inflation in the last few years. An index of day care prices was first produced for a complete year in 1990. From 1990 to 1994, day care prices rose by 20 percent while overall consumer prices for all urban consumers rose by only 13 percent. Tax breaks and government and private day care programs, which deliver care at a below-market price as in Project Head Start, reduce costs to parents and partially account for the huge growth in day care use despite the relatively rapid inflation in the industry. The comparatively low cost of employing day care workers also helps explain the rapid growth of jobs in the industry.

Other surveys

As previously mentioned, estimates of employment from the monthly BLS survey of employers are used in this article as the primary measure of growth in employment. One advantage of this series of estimates is its relatively long history, starting in 1972 and continuing into mid-1995. Estimates from other relevant sources are available; in most cases, they differ in their scope and trend.

The Bureau of the Census estimates employment by industry, based on various Census Bureau sources.(23) Day care services were first estimated in this program in 1988, and estimates for the industry have been produced up to reference year 1992. Census Bureau estimates, like those from the BLS survey of employers, are based on the definition of a day care establishment quoted earlier and exclude Government establishments from the sector. Over the 4-year span, this series, like the BLS survey of employers, shows growth, but not as such growth. Over the 1988-92 period, the Census Bureau program indicates a gain of 55,000 employees, or 15 percent; the BLS series shows an increase of 27 percent.

The Current Population Survey (CPS)(24) of households also estimates employment in the child day care industry, beginning in 1983. However, the CPS (household survey) definition of child day care is broader than that of the two employer (establishment) surveys. The initial level of employment from he household survey was 418,000 in 1983, while the BLS establishment survey showed employment of 284,000.

The household survey apparently includes segments of the day care industry in which employment has grown even faster than in the segments included in the establishment surveys. From 1983 to 1993, the household survey measure of day care employment more than doubled, gaining 465,000 jobs, or 110 percent; the BLS establishment survey showed a gain of 67 percent during the period.