Published Date: 04/20/20
As the coronavirus (COVID-19) pandemic has wreaked havoc across the world, many parents are now working from home while others have lost their jobs completely. Once Stay at Home orders have been lifted across the country, nobody can truly predict how long it will take the economy to recover. While some workers will return to their previous jobs or take new ones in similar roles, how those jobs - and specifically where those jobs - are performed may be forever impacted.
Before COVID-19 took hold, many companies prevented employees from working from home, instead requiring their presence on-site most, if not all, of the time. Companies have been forced to be flexible and the question looms as to whether or not that flexibility is here to stay. And if so, what does that mean for childcare providers?
Companies like Apple have very specific policies in place when employees work from home. Reportedly at Apple, during non-pandemic times, children are not permitted to be present during business hours while the employee is working from home. While these rules have been relaxed out of necessity to accommodate school and daycare closures, presumably they will resume once children can return to care.
Other companies do not have such stringent policies in place. Some early childhood educators have expressed concern that once the COVID-19 outbreak is controlled, parents will forego care, preferring to balance working from home, possibly utilizing nontraditional hours, and keep children at home with them. Certainly, that possibility exists for some, but for the majority of people, working from home with children present long-term is not feasible.
While we cannot predict exactly what will happen to the workforce we can anticipate changes and prepare for different scenarios.
Scenario 1 - There are fewer families who need care in your area
A decrease in demand may happen for a number of reasons and you should anticipate why that might happen. Much will have to do with the types of jobs in your area. Certain industries are relatively stable and won’t see significant job loss, while others will be greatly impacted long-term.
As of now, job losses due to COVID-19 have hit women harder than men. Sixty percent of jobs lost have been by women. This differs from The Great Recession, where 74% of jobs lost were by men, though in the period following, men recovered jobs quicker than women. The travel and leisure industry has been the hardest industry hit by COVID-19. In the past, after viral outbreaks, such as SARS or recessionary events, the industry has taken four to seven months to recover. However, with the COVID-19 pandemic, industry experts are predicting a slower recovery, since gathering in large groups enables rapid viral spread. Los Angeles’ mayor Eric Garcetti has said it’s probable that sporting events and concerts will not resume until 2021, and Facebook has already canceled all large events through June of 2021. Workers have adapted to replacing in-person meetings with videoconferences, which means business travel may be kept to only essential meetings for the foreseeable. Not only does it help keep people healthy, it save corporations significant amounts of money.
If your market has more small businesses than big box stores and chain restaurants, you’re more likely to see significant job loss. As most childcare providers are small businesses, you likely know firsthand the struggles associated with staying in business during and after the COVID-19 pandemic, especially if you’re unable to provider services. The CARES Act provided small relief for some, but many other businesses were shut out from the Paycheck Protection Program (PPP) and Emergency Injury Disaster Loans (EIDL). While waiting for the second phase of the economic stimulus, small businesses are likely to shutter for good. Within the small business sector, some industries are more likely to suffer permanent losses. Restaurants have significant costs to reopen that other businesses don’t. They have to cover initial food costs for inventory and many will have to hire entirely new staffs and layout associated hiring and training dollars. Other industries, like retail shops, have minimal costs to reopen and are more likely to survive, though their long-term success will be predicated on whether or not people return to shopping.
As of now, Hawaii, Michigan, Rhode Island, Pennsylvania, and Nevada have the highest unemployment claims as percent of the labor force, whereas South Dakota, West Virginia, Florida, Utah, and Connecticut have the lowest. It’s notable that South Dakota and Utah do not have stay at home orders currently, so that contributes to job retention.
What you should do
If you’re in an area that sees significant job loss, you’ll need to adapt, and quickly. First, review your programs to see what, if any, changes you should make. A reduction in demand means that you need to be flexible in the short-term. That may mean changing your schedule, offering part-day or part-week programs, if you don’t already, and adding drop-in care. Drop-in care can be a fantastic way to provide incremental revenue when you have available spots. Not only that, it allows you to build relationships with families who you can convert to part-time or full-time care when they need it.
Scenario 2 - There are fewer spots available than families who need care
Like the first scenario, this will largely depend on your market and if a shortage of care already existed. No doubt there will be childcare providers who sadly close their doors permanently in the wake of COVID-19 and this will leave some families scrambling for daycare and preschool. In addition, public preschool is likely to remain shut down as long as the local school district is closed. You may find you’re permitted to reopen before public schools do.
What you should do
While nobody wants to see businesses close in their market, obviously, a shortage of childcare spots is the best case scenario for you. Most providers are adjusting their contracts to be prepared if stay at home orders are lifted and then repeated, or to prepare for future scenarios, including viral outbreaks, when care cannot be provided. Stay tuned for a blog post coming soon that includes the language your contract needs and our recommendations on how to handle families in this scenario.
Scenario 3 - There’s lower enrollment now, but a winter baby boom
Experts don’t always agree on whether or not situations like natural disasters produce baby booms. Currently, predictions are for a ‘baby blip’ from December of 2020 through February of 2021, with the U.S. seeing a 2% increase in babies born during that time. While 2% may not seem like much, you can use that info to make your own predictions and forecast your growth for the coming years.
What you should do
If you don’t provide infant care currently, you might want to consider it for the future and take necessary steps now to get licensed. No doubt you’ll be closely following the COVID-19 pandemic in your area and economic recovery is largely dependent on controlling it. In short, the longer it takes to control the virus the longer the economic recovery will take. If the COVID-19 pandemic is not brought to a head rapidly, you can expect that economic recovery will take several years…which may coincide with the children born during the baby blip becoming preschool age.
In addition, a second wave of the virus, as they may be seeing in China and Japan, could mean additional stay at home orders and a second baby blip, so keep that on your radar.
In all scenarios
Regardless of which scenario you find yourself in, there’s one thing you can and should do immediately - start advertising now. Advertising space is cheaper than ever because fewer brands are investing in it. Famously, Kellog’s launched Rice Krispies during the Great Depression, increased their advertising budget by 30%, while their main competitor, Post, decreased theirs. They were neck and neck going into the Depression but Kellogg’s saw profits increase by 30% by 1933, and has been the dominant player ever since. Think of this as a time to maximize brand awareness rather than utilize a “Now enrolling” message, since most childcare providers are unclear as to when they’ll be able to reopen. This is a great opportunity to showcase your program. Write a blog post that lives on your website with easy activities that parents can do at home right now. Many parents are desperate for ways to keep their little ones engaged during the COVID-19 outbreak and this is a fantastic way to get your name in front of them.
Another powerful marketing message currently is one that focuses on cleanliness and safety. While those are always at the forefront of parents’ minds when choosing a childcare facility, it’s never been more important than now. Consider a callout on your website that talks about your cleaning procedures, or simply says, “We sanitize hourly” or something to that effect to reassure parents that you’re doing your part to keep their little ones healthy. Whatever your approach, your claim must be truthful and believable.
The Bottom Line
This is the time to be analytical and strategic about your business. While there are many uncertainties right now, formulating a plan based on what’s most likely to happen in your area can set you up for future success. Investing in advertising while costs are low and there’s less noise in the market can help get you the brand awareness you need so your daycare or preschool can thrive in the coming months and years.
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