By Sachin Shivaram, CEO, Wisconsin Aluminum Foundry
Last summer, I was chatting with an employee in the parking lot of our plant in Manitowoc as he was about to begin his evening shift at work. I noticed a pink child seat in his car amidst a sea of hamburger wrappers and Mountain Dew bottles. I asked what he does for child care. As a single dad, he said, he takes his 3-year-old daughter to different friends’ homes each night and picks her up in the morning after work.
Imagining this child sleepily shuffling from house to house with blanket and toothbrush in tow is heartbreaking. This family’s make-do solution powerfully illuminates the complexity and gravity of the child care conundrum.
At its core, the problem is that the type of child care that young children need is simply not affordable for most Americans.
There is a clear lack of availability of child care. Child care capacity in Wisconsin is short by 120,000 spots. Even when available, existing options often do not offer the flexibility working parents require, especially for off-shift and irregular work.
Wages in the child care industry are low, averaging $12 to $13 per hour here in Northeast Wisconsin. The job is complex and challenging. No wonder, then, that the industry’s workforce has shrunk by 10% in the past two years. But when working parents are already spending as much on child care as they do on their mortgages, they are in no position to absorb the cost of higher caregiver wages.
Quality of care is critically important. Many child care providers, especially when informal, do little in the way of education. Early childhood learning increases lifelong earnings, reduces participation in crime, and improves health outcomes. A child who has unreliable and second-rate care early in life has a much harder path ahead.
Without a child care solution, we have no hope for resolving the national labor shortage. Millions of parents cannot work, and mothers in particular are leaving the workforce in droves.
At our company, we took the problem into our own hands. We reimburse employees $400 per month for care expenses at a licensed child care provider, with the goal of helping them better afford quality care. But, frustratingly, many have found there is no availability.
Even more frustrating is the realization that piecemeal efforts like what our company is doing will not move us toward a broader solution. Until we expand child care capacity in the Manitowoc community, any progress that we make for our employees in terms of helping them afford care will be zero-sum for those around us.
So, we set out to build our own child care center. Our aspirations were lofty. Employees would pay only $100 per week, and we would subsidize the rest. This would be a place staffed with degreed caregivers who earn decent wages, boasting a low teacher-to-child ratio, and placing heavy emphasis on learning — in other words, the type of early childhood care center that rich families in big cities have.
Not surprisingly, we found out that quality child care is expensive. Tallying up the costs, we expected to spend $40,000 per child per year, which is equivalent to two-thirds of the average household income in Northeast Wisconsin.
Therein lies the conundrum. We know what working parents and their children need, but few of us can afford it. Experts estimate the overall affordability gap at $700 billion.
Realizing that our company cannot tackle this giant problem on our own, we banded together with a consortium of 30 other like-minded businesses and community organizations in Manitowoc County. These businesses committed to offering an early child care benefit to their employees.
Last month, our child care consortium applied for a grant through the Wisconsin Economic Development Corp.’s Workforce Innovation Grant program. Our plan is to use grant money to fund capital investments at various child care centers in Manitowoc County to increase capacity, as opposed to building from scratch — helping reduce the cost and improving the sustainability of new capacity. We also will use grant money initially to subsidize care costs. The support will reduce gradually over six years to help wean employers and employees from the subsidy.
If we do not get the grant, we will find some other way forward. We are determined to chart a different path for our community.
Solving the child care conundrum is a matter of national vitality. Our company’s journey toward a community solution has had twists and turns, and we are still searching for success.
Businesses need more workers, and parents are one of the last remaining pockets of untapped labor capacity. More importantly, children need good care early in their lives. Nothing less than their ability to access the American dream is at stake.
Sachin Shivaram, a resident of De Pere, is CEO of Manitowoc-based Wisconsin Aluminum Foundry. He is also an elected Town Supervisor for Ledgeview; teaches at St. Norbert College; and serves on various boards, including Lawrence University and New North, Inc. He and his wife, Lipi, are the parents of two young boys.
