Your Story: Daycare economics

Some people are in a really good position to spot economic trends, even if they aren’t economists. Michelle Riley Thomas is one of these people. She runs a childcare center in metro Detroit. She takes note of how prices, policies, or tough times impact families. And she is also busy running a business in a tough industry with slim profit margins.

Riley-Thomas’ center is not expensive for a childcare center. But her center can still cost over $20,000 a year to care for two kids, keeping it out reach for many families.

About 20 percent of the families at Riley-Thomas’ center receive some sort of child care subsidy from the state, including a few of her workers who wouldn’t be able to pay for childcare at the center themselves without it. The subsidy defrays some, but not all the cost. Childcare is so expensive that if a parent loses a job, it might make more economic sense for them to stay home with the children than going back to work.

“If one of two parent families is out of work we lose the children from our center because it’s no longer cost effective. We’ve also had a lot of families leave the state looking for work.”

Childcare centers all over the country were hit hard by the economic downturn. Riley-Thomas was working at The St. Joseph Mercy Hospital childcare center in Ann Arbor, when the hospital shut it down to save money in 2009.

“I was out of work for 10 months myself, so I do sympathize with a lot of the families and the employees in in our industry that are going through that,” Riley-Thomas said.

Riley-Thomas says things have gotten better lately. But her center, licensed for 120 children, only has 60 enrolled right now. She’s had to lay off people herself, and she says when she does have a job opening, she has so many resumes it’s hard to get through them all.

An economic trend Riley-Thomas thinks isn’t getting enough attention is the rising cost of fuel, food, and utilities. These costs are putting a lot of strain on her budget and leading her to cut things like field trips.She knows the families she cares for are facing this type of pressure too. While she worries plenty about the effect true economic hardship and job loss may have on the families she cares for, she also thinks the smaller effects of a long recession take their toll.

“I know that a lot of families are struggling. They can’t afford to take a vacation this year,” said Riley-Thomas. “Which, in a sad way helps our center because it increases our revenue. But it’s sad for the families, because they really need that time together.”

The economic indicator Riley-Thomas watches most closely is her enrollment numbers. These are giving her cause for optimism. “No matter how hard things are, economically, families seem to find a way to make it work,” She said. “We are beginning to see an increase in enrollment, so that makes me think that perhaps people are starting to go back to work and perhaps the economy is starting to turn around for metro Detroit, because boy does it need to.”

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