Welcome to the Covid Economy, CNBC Make It’s deep dive into how the coronavirus pandemic is impacting all areas of our lives, from food to housing, health care to small business. We’re focusing on North Carolina, a swing state that has seen rapid economic growth — and growing inequality — since the last recession to learn how residents are weathering the economic consequences of this once-in-a-lifetime health crisis.
Cassandra Brooks isn’t sure that she’ll be able to make the payroll for her 17 employees this month.
“[The pandemic] has been a disaster for me,” says Brooks, who owns Little Believers Academy, a day-care business with two locations in the Raleigh, North Carolina, suburbs.
Little Believers remained open during the state’s stay-at-home mandate, caring for the children of first responders. But after fully reopening to all families at the end of May, the centers have been plagued by three positive cases of Covid-19.
“People are frightened to come back after that,” Brooks says. “We’re trying to build that trust back with families, to say, Hey, we are a safe place.” But it’s an uphill struggle.
With each positive case, the center had to shut down for about two weeks. Brooks hired outside professionals to perform full sanitization and deep clean procedures that cost $2,000 a pop. And that’s after Brooks spent her savings installing air purifiers and a system that disinfects using UV light, as well as springing for costly upgrades to the buildings’ HVAC systems after securing a PPP loan.
Cassandra Brooks owns of Little Believer’s Academy, a day-care business with two locations in the Raleigh, North Carolina suburbs.
Source: Cassandra Brooks
Enrollment remains stubbornly sluggish. Prior to the pandemic, Little Believers was at 95% capacity, with about 120 children enrolled between both locations. Today, enrollment levels sit at 40% at one location and right at 50% at the other — far below the revenue needed for Brooks to break even with her expenses.
“You’re not really sure what’s going to happen from day to day,” Brooks says, admitting that she’s currently operating her business at a loss. “Child care was barely making it anyway. Throw Covid on top of it, and it’s suffocating.”
Covid-19 has some parents opting out
Before the coronavirus pandemic hit in March, there were nearly 12 million children under the age of 5 enrolled in some type of child care nationwide, according to a Congressional report released late last month. The pandemic, however, forced about half of providers to shut down at some point during the last seven months and has left 1 in 5 child-care employees, about 214,000 people, out of work as of August.
Among child-care providers, enrollment continues to be down 67% on average across the country, according to a July survey by the National Association for the Education of Young Children, the latest data available. And yet about 90% of day cares and child-care centers are spending more on sanitation supplies and personal protective equipment.
Those precautions are not enough to quell some parents’ fears, so they’re keeping their children at home. Nearly 13% of parents report they were forced to quit their jobs or reduce their work hours due to a lack of child care, losing an average of one full work day a week.
That’s the case for Durham-based Jessica Hope Murrell Berryman, who’s father died from Covid-19 in April. The experience of losing her father took a huge emotional and mental toll on her and changed her family’s outlook on the seriousness of the virus. “We just are not ready to put our children at risk,” she says, adding that she’d rather take the financial hit. “Money won’t replace my children.”
The mother of three — a 12-year-old daughter, 6-year-old daughter and 14-month-old son — is currently balancing her job at a hospital system with remote schooling and child care. Berryman and her husband have no plans to send their children back to school or day care in-person until there’s a viable vaccine.
“Are we feeling the pinch and the pain of actually being at home with our children? Yes, we are. It is super difficult,” Berryman says.
So how are they making it work? “Lots of wine. That sounds so bad, but it’s so honest,” Berryman says. While Berryman is able to work from home a few days a week, it’s her husband who’s taken on the bulk of the child-care responsibilities.
But Berryman thinks her husband might have been laid off from his job at a New York-based start-up in part because of those child-care duties. “He was let go from that job for a variety of reasons, but I think one of those reasons was performance,” she says, adding the company required their sales team to hit call quotas, even though her husband was still getting deals done.
Still, Berryman says the family is getting by. “We’re very fortunate to be in the situation that we’re in,” she says.
Day-care enrollment is rebounding…slightly
Other parents are not able, or willing, to keep their children at home. For Sarah Caldwell, 33, and her husband, balancing time for work and kids during the spring months while their child-care center was closed proved a major challenge.
“At some point, you start to feel like, I need to be doing more at work, but I need to be doing more with my kids,” says Caldwell, who works as the development director for Raleigh-based nonprofit Note in the Pocket, which supplies clothing to children in need. “It was just really an emotional and mental pendulum swinging back and forth.”
Caldwell says it came to the point where she felt they needed to start using day care again or one parent would have to quit their job, at least temporarily, and become a stay-at-home teacher. And Caldwell says she felt it would have fallen to her to stay home.
As soon as their Bright Horizons child-care center reopened in June, Caldwell and her husband made the decision to send their 3-year-old daughter and 5-year-old son. “We felt comfortable with the safety procedures that they had in place,” Caldwell says. Their Bright Horizon center was open during the pandemic serving the children of essential workers and had developed good protocols.
Sarah Caldwell and her husband juggled work responsibilities and child care for several months before sending their kids back to day care and summer camps over the summer.
Source: Sarah Caldwell
As of the end of August, 90% of private child-care providers were open in North Carolina, says Michele Rivest, policy director at the NC Early Education Coalition. Yet despite parents like the Caldwells sending their children back, demand for child care across the state is still low, with providers reporting only about a 57% attendance rate on average.
Church Childcare, based just outside Winston-Salem, has seen its attendance bounce back to about 65% between its two locations this month, according to owner Theressa Stephens. But that’s boosted slightly because the center supervises about 30 school-aged children who are participating in remote learning.
“We have been working very hard to build our enrollment back up,” Stephens says. Prior to the pandemic, Church Childcare was at 85% capacity, but the business closed for two weeks in April amid stay-at-home orders and then was only allowed to provide care to children of essential workers.
Theressa Stephens, left, is the owner of North Carolina-based Church Childcare and has implemented daily temperature screenings at her two child-care centers.
Source: Theressa Stephens
Stephens says she made it work by getting a six-month deferral on her mortgage and also securing a PPP loan. “That was at least one relief for me because the funds that we do receive can all go toward our revenue and our utilities,” she says. “Mind you, we have not been able to purchase any new equipment or replace mulch on the playground or those basic things because we’ve all been focused on at least paying our staff their salary and making sure that we have utilities and things of that nature in place.”
Stephens says the enrollment numbers still need to keep rising in order to get the business back on track and rebuild her emergency savings, which she’s had to dip into during the pandemic. “If our enrollment does not continue to increase and get back where it was, if we’re not able to build those savings reserves back up, I’m not sure how that’s going to affect our company,” she says.
The future remains hazy
The start of school, however, threw a new curveball at parents, teachers and child-care providers alike. Although North Carolina Governor Roy Cooper announced in July that schools around the state could open for in-person classes, most districts opted to start the year using remote learning.
Wake County, where Caldwell’s son was set to start kindergarten, was among those districts that decided to go remote. At first, Caldwell and a group of friends and neighbors planned to hire a tutor and rotate houses with a group of kids.
But right before school started, Bright Horizons emailed parents offering supervised classes for remote school-aged children, which was more convenient. So Caldwell and her husband opted to send their son back there for now.
“I keep saying it’s like a little WeWork for kindergartners because you see a picture of them and there they are on their laptop with their headphones doing their work,” Caldwell says.
About 44% of parents say they are paying more for child care since the pandemic began, according to a recent Care.com survey. And 69% of parents say they’ve invested in additional help to support online learning this fall.
In Caldwell’s case, the family currently pays about $2,500 a month for child care, an expense she was hoping to trim once her son entered kindergarten. “We were very excited to be done with one day-care payment,” Caldwell says.
“But it’s either we pay Bright Horizons, or we would have paid a nanny or a tutor to come to the house, or we would have to keep him home,” Caldwell explains.
And more uncertainty is on the horizon: The the school district voted to bring students back in-person on a rotating basis starting this month. If all goes well, some students could return to in-person classes full-time as early as November.
“Now it’s changing,” Caldwell says, adding that even once the children are back in-person, the school district is planning to have one day a week of remote learning. But Caldwell says Bright Horizons has already told parents it will not offer classes for her son during that one day of remote learning each week. “Now the child-care struggle continues and we have to rearrange schedules and coordinate care,” she says.
It doesn’t look like federal help is coming anytime soon. Although the U.S. House of Representatives passed legislation in July that would have provided over $50 billion in funding, the bill has not been taken up in the Senate. Meanwhile, Democrats and Republicans have yet to reach an agreement on another stimulus package.
North Carolina plans to provide some relief to its residents. Governor Roy Cooper announced last week that the state’s Department of Health and Human Services will provide $35 million in operational grants to help child-care programs. The state previously provided over $80 million in monthly operational grants for child-care programs from April through July.
“I think states always find a way to invest in what’s essential,” Rivest says. “Child care is essential. And we need to invest in child care like we do our public schools — it just needs to become part of the infrastructure.”
Teachers at Little Believers Academy in North Carolina help students complete their remote learning assignments.
Source: Cassandra Brooks
But some providers, like Brooks, are still worried. The shift back to in-person learning has providers especially nervous, since that could mean lower enrollment rates. Brooks says her attendance rate has been bolstered this month and last because she offers to supervise remote learners. What happens once they’re back at school?
“You’re so stressed you can’t sleep at night,” Brooks says. “I pray that I can make it to next month, or even this month.”
October has an extra payday in it for her staff, and that’s worrying Brooks. “It’s scary for me and a lot of owners that are still open because you have more payroll to pay out, and you’re still taking in less money,” she says. “It might not balance out. It probably will not balance out,” she admits.
Taking on more loans to avoid a cash crunch isn’t a route Brooks wants to take. “You don’t want to take on too many loans because if your business fails, due to no fault of your own, you’re still to hook for those loans,” she says. The whole situation, she says, makes her rethink whether she wants to stay in child care.
“I’ve been thinking, maybe I need to think about something else because it might not work out,” Brooks says.
CNBC Make It will be publishing more stories in this series each week in October. If you’re interested in sharing your experiences related to the pandemic, please email senior reporter Megan Leonhardt at [email protected].
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