Overview of the Daycare Industry - Analysis and Trends

The daycare or 'child care' industry generally refers to the care of children by non-family members outside of the home on a regular basis. The industry is quite broad and includes everything from small home-operated daycares right through to large pre-school centers that take on an educational role as well as caring for the physical needs of children.

The industry is huge in the US with over 130,000 businesses classifying themselves as being a part of the child care sector. Below we have put together an analysis of the daycare industry in the US, the present state of the market and some industry trends.

Different Daycare Business Concepts

Daycare can be divided into two main categories. These include center-based care and family child care. Center based daycare refers to preschools, kindergartens and child care centers. Family child care refers to daycare providers that care for children in their own home on a regular basis.

Some daycare businesses focus on children of a certain age. Infant care centers look after babies and children younger than two and 'before' and 'after' school care centers cater mainly to older children up until their teenage years. The main sector of the market though is generally comprised of children under six who have not started school yet.

Daycare providers can be divided into those that are commercial businesses and those that are non-profit. There are some federally funded daycare programs for disadvantaged children and some organizations like churches also run their own daycare programs. Some employers will also subsidize daycare costs for their employees or even offer them the use of onsite daycare facilities.

Franchises have not been as effective in gaining a foothold in the daycare industry compared to other industries. Most daycares are still independently owned and this can make it tough for customers as there are few strong brands in the market that they can choose from based on their reputation.

Industry Growth Trends

Daycare is a multi-billion dollar industry in the US and it has shown phenomenal growth over the past three decades. This trend has been spurred on by the fact that more women are choosing to work instead of remaining at home with their children. Working women would traditionally leave children with relatives but now it is common for aunts and even grandparents to also be employed.

Higher divorce rates have also meant that women are sometimes unable to take care of their children at home and have no choice but to work to support themselves financially.

The industry shows no signs of slowing down and this growth trend looks set to continue over the next decade. Daycare has proven itself to be surprisingly resilient to recessions in the past.

A Changing Market

Parents are becoming more selective about the kind of environment that they want to leave their children in. Most parents now understand that the first four or five years of a child's life are so important as they highly influence the way that a child will learn and interact with others and their environment as they get older. Daycare has become much more than babysitting as parents have realized that it is important that their children are in an environment that stimulates mental and physical development. There is definitely a trend in the industry towards quality in this respect and standards are slowly rising.

Daycare Workers

The daycare industry is one of the most female dominated industries in the US. The industry also offers some of the worst rates of employee compensation with many daycare workers earning little above minimum wage.

While many people think that working with children is a dream come true they often discover that it can be more stressful than they originally thought. Staff turnover rates are therefore generally higher than other industries. Demand for daycare workers has been growing at a rate faster than that for workers in most other industries in recent years. 

Training requirements are still quite minimal for daycare workers with some states only requiring certification that can be achieved with less than 100 hours of study.

Attitudes Towards Daycare

Even though more parents are using daycare services it doesn't necessarily mean that they are happy about it. Many parents feel guilty about having to drop off their infants or toddlers every day to be cared for by a stranger. Some studies have shown that daycare is inferior on average to the care that parents can give. However other studies have shown that there are not really a lot of differences and that children benefit from the extra income that a working mother can bring in. After two years of age children can benefit greatly from the interaction that they get with other young ones in daycare.

Reasons to Start a Daycare

Many people are drawn into the industry as it offers good opportunities for smaller sized businesses and it generally has low barriers to entry in terms of startup costs. Another attraction is the potential to operate from a residential home giving 'stay at home' mothers a great small business opportunity.

The top reason that attracts people into daycare though would be a love of children. Daycare professionals work with children for most of the day and have a great chance to contribute to their growth and development.

The future of the daycare industry looks bright. Savvy entrepreneurs who are able to balance a love of children with some good business sense should be well rewarded for their efforts.

Additional Articles

Daycare Success Factors

Reasons to Start a Daycare Business