‘It’s collapsing.’ Pandemic woes persist for struggling Bay Area childcare providers

Hundreds of childcare providers across the Bay Area shuttered their doors when the pandemic hit, and many never found a way to reopen. The shortage amid skyrocketing costs has made it tough on parents, creating a ripple effect across the economy.

In Santa Clara County, around 570 childcare businesses have closed since July 2020. Alameda County also lost nearly 300 of more than 1,800 providers between 2019 and 2021, according to Kidsdata.org.

As the industry continues to reel, the cost of full-time childcare at licensed pre-schools in Silicon Valley has nearly doubled since the end of the Great Recession, from about $11,100 a year in 2010 to $20,500 in 2022, according to Joint Venture Silicon Valley’s 2023 Silicon Valley Index report.

“We’ve seen a trend toward Silicon Valley becoming a less conducive environment to start and raise a family,” said Rachel Massaro, vice president and director of research at Joint Venture, a San Jose-based economic think tank.

A yellow Victorian-era two-story dwelling located in the heart of San Jose’s Little Italy had been the home of Theresa Sabatino’s Heartworks Family Center for 13 years. Better known as Little Italy Kids, Sabatino had to make the difficult decision to close her doors in December 2021 as she struggled to keep pace with the city’s rapidly rising rents.

“It’s collapsing,” Sabatino said of the current state of the childcare system. “Early childhood has never really been valued and appreciated by our society, and I think because of that, we haven’t put enough thought or money into it and, unfortunately, the pandemic has shown us that’s true.”

Many parents face a difficult choice — take the financial hit or figure out a way to keep their kids at home.

Santa Clara resident Monique Gallegos obtained subsidized childcare through Choices for Children, a local program. The mother of two said she receives about $1,400 a month, but even that doesn’t cover the entire bill for her younger son.

“It was really hard to make a decision to start working again or to stay home with him,” she said. “I had to weigh what I’d be paying or whether he should just stay home for free.”

The high cost of childcare was a key reason that Gallegos decided to become a Montessori-certified teacher — so she could take her children with her to work and receive a reduced rate for childcare.

The shrinking access to childcare in the Bay Area is creating a domino effect on the economy, Santa Clara County Supervisor Susan Ellenberg said. When parents don’t have childcare, they can’t work. And if they can’t work, they have less disposable income. It’s why she said more people are starting to see that “publicly funded childcare really serves the public good.”

“Childcare historically and paternalistically has been viewed as an individual parent’s challenge: You chose to have children, so you are responsible for their care, and that perspective is true to a large extent,” Ellenberg said. “It is absolutely in the public interest for that parent to be a contributing member of our society, and in order to do that in the vast majority of cases, that parent needs to work.”

Earlier this year, Ellenberg and the rest of the board of supervisors allocated $20 million in American Rescue Plan Act pandemic funds to early childhood education-related issues. A workforce program partnership with FIRST 5 — an initiative that provides services for families with children ages 0 to 5 — will receive $5 million, while the other $15 million will go toward infrastructure grants for childcare, which includes helping previously closed businesses — such as Sabatino’s — reopen.

Sarah Duffy, chief children’s officer at the county’s Office of Children and Families Policy, said the childcare sector often operates on an extremely thin profit margin, which is what made childcare providers so vulnerable to closures during the early days of the pandemic. When those businesses closed, many of those in that field moved on to other jobs, she said.

However, apprenticeship programs such as the one run by FIRST 5, in conjunction with Mission and De Anza community colleges, are expected to help a new cohort interested in early learning.

“We’re bringing in a new workforce and a new certification to bring new providers into the field or get them into a teacher credential track where they can earn higher wages,” Duffy said.

Rosie Ramirez still gets chills thinking about the day Bay Area health officials announced a shelter-in-place in March 2020. For the last 16 years, she’s run Giving Tree Family Childcare in San Jose, an all-day daycare for infants to 13-year-olds. The last several years have impacted her life, her family and her business.

Although she’s been able to bounce back, she said every childcare center — including her many family and friends that have their own businesses — handled the pandemic differently.