Private Equity Will Trigger a Child Care Crisis

Making predictions can be an exercise in futility but here goes anyway: The US will experience a child care crisis within the next 10 years. The trigger will be the collapse of a large, debt-laden, for-profit provider of child care. At the prospect of seeing thousands of locations suddenly shuttered, jeopardizing the many families who rely on such help while the parents work, the government will be forced to provide financial support while arranging a sale or takeover the provider.

What’s frightening about this prediction is how plausible it is given the obvious risks and how little anyone in a position of authority is doing to prevent it from happening. Consider that Wall Street private equity firms have rapidly expanded into the business of providing child care in the US with no guardrails. Some 775,000 child care spots, which think tank Capita estimates to be 10% of the market share, is held by investor-backed, for-profit chains, according to an annual report on for-profit childcare prepared by the industry journal Exchange.