A New Trend in ECE: Under-Enrollment

A new trend is emerging in the early childhood education (ECE) industry. It is a problem that flies in the face of what for-profit and non-profit care providers have experienced for decades. And it is throwing many of us for a loop.  

The problem is under-enrollment.  

BACKGROUND 

Many, not all, early childhood businesses across Montana are now trying to figure out what happened to their wait lists. 

Some providers call me absolutely dumbfounded, wondering why — when just a year or two ago they had more demand than they could meet — are they suddenly trying to figure out how to operate at 30% to 60% of their licensed capacity.   

PROBLEMS 

To understand the problem, and ultimately create actionable solutions, we must understand the true root of the problem.

This will require sincere introspection and analysis for every single business out there. But I urge those reading this not to jump to conclusions about solutions. I regularly advise against businesses spending thousands of dollars on advertising as a solution to the enrollment problem.  

As an economic developer, I decided to take a big step back to understand the broader environment. I asked myself the first question: Why do parents need child care?  The answer is simple, because they go to work.  

• The key element there is parents working. However, that is only one side of the coin. What if parents in your community are not working?  Every month, the United States Department of Labor Statistics (USDLS) releases new data about the labor force. Labor Force Participation Rates (LFPR), not to be confused with the Unemployment Rate, vary by county, city, and town. But the bottom line is that as of January 2024 Montana is still below 63% LFPR.  In short, there are fewer people actively participating in the workforce.  In fact, LFPR hasn’t been this bad for this long since the 1970s when household income was largely from one breadwinner.  

• The second cause of the problem is triggered by growth in the ECE industry. Amy Watson, State Economist for the Montana Department of Labor and Industry, reports that total licensed child care spots grew by 8% in 2023. That is great data.  But when we look at those two data points together, the problem starts to become clear. Parents figured out what to do with their kids a long time ago while we were all working to increase capacity.The former happened quickly. Some parents subtracted from the workforce and household budgets adjusted in real time. The latter took time to accomplish. But now there is increasing capacity, there are fewer kids.  
• The third cause of this problem relates to compensation in the ECE workforce.  The most current data we have on wages in the early childhood industry is May of 2022. This data, also from the USDLS, tells us that the median wage for a child care worker in Montana is under $13 per hour. Couple that with the cost of living and inflation of as high as 9.1% in 2023, we must assume that $13 per hour is not enough to live. 
  What would you do if you weren’t making ends meet? You’d go find a job that paid more.  ECEs are now competing for talent (aka: teachers) with K-12 schools, retailers, food purveyors, and even banks. Many of those are also historically low-paying jobs, but those businesses and entities have adjusted more quickly to increase compensation and benefits.  

• The fourth cause of this problem I’m seeing is related to a historic lack of quality in ECE programs branding and marketing efforts.  Because ECEs have had waiting lists for so long, they haven’t had to sell their service, promote themselves, or consider more nuanced marketing concepts like brand management, website search engine optimization, public relations messaging, or content marketing. But now things have shifted, and they shifted quickly.  

SOLUTIONS 

To dig back out of this new hole, I am recommending three things to our clients.  

1. First, increase the quality of your promotional strategies. And I use the term promotional strategies purposefully to comprehensively include sales, messaging, and traditional and new media.  This does not mean go buy a bunch of ads on social media. I mean, create a strategic marketing plan that says the right words to the right people at the right time. This requires you to know your target audiences extremely well, says what they want to hear, and says it to them in places they are having these conversations already.  This will require proactive salesmanship. Targeted outreach, events, and communication with their employers.  Check out our resources: Types of Marketing webinar & one-pager.
2. Second, don’t forget that in a service industry like ECE, without service providers we can’t provide the service. Compensation, culture, and benefits (in that order) are of priority. So, if your wages aren’t between $18-20 per hour, forget about everything else.  Think differently about how you recruit. Recruit directly out of academic programs, participate in the pre-apprenticeship and apprenticeship programs, think about your staffing pattern critically to open up opportunities for younger, older, and different types of people, and make sure your job postings are everywhere possible.  Check out our resource on posting a job.
3. Lastly, and this one is gaining traction, engage with other non-ECE employers in your area to help them solve their workforce shortage problems. For us to bring workers back into the workforce and increase LFPR, other employers in other industries are thinking critically about their benefits packages. Many employers now include child care benefits. By partnering with employers, ECEs can fill slots by having them owned, controlled, contracted, and dedicated to partner businesses. 
   
   

CONCLUSION 

ECE is ultimately the workforce behind the workforce and is critical economic infrastructure to local economies. This will require ECE providers to step outside their bubble. It will require a shift in mindset from providers saying, ‘that can’t be done’ to ‘let’s get creative to figure it out.’ 

Just remember, hiring a high-priced marketing consultant who promises to drive enrollment might not be the most effective way to solve your under-enrollment problem. Create a plan. Know your audience. Be strategic and comprehensive. Money spent isn’t always good money spent.