Year-End 2021 Report: Child Care Emerges From the COVID Stress Test

2020 was the ultimate stress test for families and childcare businesses alike. By the end of 2021, the industry had survived — but the shape of it had permanently changed.

A near-collapse, then a reshuffling

The numbers from the depths of the pandemic were staggering. Roughly 60% of large-scale childcare centers closed at the peak of COVID-19, and by April 2020 average enrollment had fallen to just 13% of pre-pandemic levels nationwide. Child Care Aware estimated 9% of licensed programs closed permanently, while some reports put as much as 20% of national capacity offline.

Because local chains and single-site operators account for roughly 95% of providers, that contraction hit the small end of the market hardest — leaving the door open for national operators like The Learning Experience, KinderCare, Learning Care Group, and Bright Horizons to acquire closed or closing facilities and capture share.

Staffing and cost pressure became the new story

Even as demand recovered, the NAEYC reported that four in five centers were understaffed, with 78% of operators citing low wages as the primary cause — fueling turnover and higher hiring costs on top of record payroll expense.

Those costs flowed through to families as higher tuition. The ripple reached the broader economy: more than 300,000 women left the U.S. workforce in September 2021 alone, and an estimated 1.6 million mothers of children under 17 had dropped out — much of it tied to the cost and availability of care.

Policy and the case for scale

Childcare affordability was already a national issue: a 2019 study pegged the annual economic cost of the gap at $57 billion in lost earnings, productivity, and revenue. The U.S. contributes an average of roughly $500 per year toward pre-K care, against about $14,000 in other high-income countries. Proposals like the American Families Plan's $200 billion universal pre-K provision aimed to close that gap.

Our read at the time proved durable: well-funded national operators are better equipped to absorb operational and regulatory change, making it an opportune moment to consolidate share — and reinforcing the value of the existing, well-located real estate they operate from.