It Doesn't Add Up
The idea of providing fine child care, helping working parents, and paying living wages is one worth building a company around. It is also unattainable
In 1986 my wife, Linda Mason, and I started Bright Horizons Children's Centers with the conviction that we could dramatically improve the quality of child care available to working parents. At the same time we hoped to nurture careers by offering well-paying jobs and career-development paths to child-care teachers. Our plan was fairly straightforward: we would persuade corporations and hospitals to subsidize work-site centers, and we would charge premium tuition to parents. Thus, we could pay teachers reasonable salaries and offer excellent benefits, a combination that would allow us, we hoped, to provide high-quality care. But we have discovered that a marginal improvement over mainstream child-care salaries is not good enough, and we are struggling to find ways to dramatically improve teacher compensation. At the moment, we have no formula.
According to the U.S. Department of Labor Statistics, child-care centers in the United States pay about $5.53 an hour and experience employee turnover of at least 50% a year on average. At Bright Horizons we do better. We pay around 30% more than the national average, and our turnover is usually in the 20%- to-25% range. But speaking as a parent of two children who have spent several years in one of our centers in Cambridge, Mass., I would like to see a turnover rate of no more than 5% and teachers' salaries that at least compete with those of public-school teachers.
I recently spent nine weeks riding a bicycle from our newest child-care center, in Atlanta, which is sponsored by IBM, to the UNUM Insurance Center in Portland, Maine, visiting our schools along the way. The point of the trip was to immerse myself in the lives of our teachers and see the mosaic of child-care programs we have created, without the usual distractions of typical visits (such as trying to figure out why playgrounds don't drain properly or why utility costs are $2,000 over budget). At each school I gave a state-of-the-company presentation to the faculty, which was followed by a question-and-answer session.
At those meetings I found it impossible to tell a teacher with a four-year degree from one of the best schools of early childhood education that a starting salary of $17,000 reflected the real value of her or his work. Nor could I say that current child-care salaries were fair compensation judged by the standard of almost any other profession. I discovered that probably one-third of our teachers are living with their parents to help make ends meet. Many have student loans to pay for the education required to be a teacher. I heard a number of stories about how hard teachers are struggling to stay in the profession because they love their work and stories of college reunions at which less talented classmates say they make double the salary of our teachers or former roommates raise their eyebrows at the mention of "teaching" two-year-olds. I was heartened to meet such a caring, talented, dedicated group of teachers and resolved to further advocate for better compensation for those professionals.
A cynic might say that we could easily increase compensation -- just write bigger payroll checks. But last year our average revenue for each employee was about $20,666. That revenue pays for educational supplies, food, and insurance as well as for salaries and benefits. The answer then must involve other creative approaches, or we will not be able to write paychecks month after month.
As one approach, we are asking parents to pay more and are passing the increased revenue along to the faculty in higher salaries. Yet we are limited in what we can reasonably ask parents to pay. At the moment our tuitions go as high as $14,000 a year for infants in the urban Northeast. (That rate decreases as the child grows older.) Eventually, however, it becomes more cost-effective for parents to stay home or to hire a full-time nanny than to send their children to our centers. Can parents, our customers, really pay much more?
Our most successful approach has been to ask our corporate sponsors for more significant subsidies. In fact, in the past three years we have created a few programs in which the subsidy is great enough to allow us to compete with public-school salaries. Most of our programs receive subsidies in the range of $1,000 to $2,000 per child per year, but we have corporate clients that pay in the $6,000-to-$10,000 range as well. Can large corporations beset by competitive pressures bear the cost? Certainly, few growing companies can afford to support their employees to that extent.
I believe that the responsibility of educating young children should be borne, at least in part, by the public sector. Wouldn't we as a society be wise to give a voucher or a significant tax credit of several thousand dollars each year to help parents obtain good educational care for their young children? Of course, many of us question the ability of the public sector to deliver services effectively, and I would be the first to argue against a publicly managed child-care system. Instead, I advocate a system that would help finance the form of care parents choose. I have seen what good child care can do for homeless children, very poor children, children with special needs, and the children of the millions of dual-career households like my own. If the public sector has any role in a society, seeing that young children are educated and nurtured must surely be part of that mission.
We know from research and our own common sense that the first five years of a child's life are of critical importance. Why then do we invest almost none of our public resources in that time period? Twenty-year-olds in college receive a higher level of subsidy than two-year-olds in child care.
Would I encourage my son and daughter when they are grown to join Bright Horizons as teachers? For the experience of helping children grow and develop, I absolutely would. Caring for children is truly an opportunity to change the world. I think the insights into human behavior that are gained by working with children would make my son and daughter better parents and better people. However, as a career choice, child care still falls short because it's hard to live and raise a family on a teacher's salary. I hope that by the time my children face those decisions, Bright Horizons and our society will have a better answer.* * *
Roger Brown is the CEO of Bright Horizons Children's Centers, which operates 80 child-care centers. Its clients include New York Hospital, Mattel Toys, Duke Power Co., and Du Pont.
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