Early childcare and education cooperatives can help build economic power


An October 12, 2022 Washington Post editorial highlighted the most challenging issue facing the early childcare and education (ECE) industry—how to raise wages and benefits for the workers who are the backbone of the workforce.

When Covid-19 forced day care closures, underpaid ECE providers—mostly women, minorities, and immigrants—left an industry that was already in trouble. It is no surprise that many have not returned: with a median hourly wage of $13.22, the ECE profession pays less than animal care. The exodus of ECE workers has exacerbated a situation where half of Americans live in a childcare desert. With 60 percent of rural families and 55 percent of low-income families living in areas with scarce licensed providers, the workers most likely to be affected are rural and low-income women.

The U.S. Department of Agriculture (USDA)’s Rural Development has programs to help alleviate this untenable and inequitable situation. The Joint Resource Guide to Strengthen and Expand Child Care Facilities in Rural Communities that RD released along with Health and Human Services can help rural ECE providers get funding for facilities, equipment and technical assistance. To address the exit of ECE workers, RD has found through its Cooperative Development Center grantees that cooperatives can lift caregiver wages, give workers more power over their working conditions, and increase quality of care. How does this work? When workers are cooperative members, they control the business and can use net profits to augment wages. In contrast, management controls the typical ECE center and profits go to investors. Providers (including home-based ECE professionals) can further improve their finances by banding together in a purchasing cooperative to jointly buy supplies and services like marketing, human resources, bookkeeping, insurance, and training.

A cooperative is a business created, owned, used and democratically controlled by people with mutual needs. Cooperatives’ user-owners, called members, each get one vote and generally receive net profits from the cooperative based on the amount of business they do with the cooperative. Historically, most ECE cooperatives have been formed by parents who addressed their childcare needs by creating a cooperative and setting policies democratically in the governing documents and through election of a board of directors. Employer groups have created cooperatives to reduce employee absenteeism. With their mutual need for better wages, more flexible hours and control over the business, ECE workers have also (though more infrequently) also formed cooperatives. USDA RD and other cooperative experts have found that worker cooperatives and multistakeholder cooperatives can be particularly effective strategies for ECE professionals.

Individuals in worker cooperatives experience higher wages, less turnover, more sustainable jobs and higher job satisfaction. Workers set conditions including schedules, assignments, fees, wages, benefits and training. As they govern their business, workers build financial, communication and decision-making skills. They increase their wealth by gaining equity in the business. The largest U.S. worker cooperative, Cooperative Home Care Associates (CHCA), offers wages at double the market rate in an industry with similarities to the ECE industry. Turnover is 15 percent—a quarter as high as in the non-cooperative home care sector. Worker cooperatives like CHCA address inequality by increasing the financial stability and power of women of color. Childspace in Philadelphia and the Rose Garden Early Childhood Center in Buffalo, NY are ECE worker cooperatives.

ECE programs can also be organized as multistakeholder cooperatives that brings together the groups—parents and workers—that are most involved in children’s wellbeing. This model has the advantages of a worker cooperative and additionally can use financial strategies available to parents. While worker cooperatives are for-profit businesses, a multistakeholder cooperative can operate as a nonprofit, receive donations and grants, and avoid tax. Multistakeholder cooperative The Children’s Center of the Stanford Community has been in existence since 1969.

Home care ECE providers work long hours in isolation; cooperatives can provide them with sick and vacation leave, flexibility, streamlined operations and mutual support. Members can cover for each other when they need to take leave. They can also coordinate hours with some caregivers operating during the day, evening or weekends. A cooperative for home ECE workers called CoRise Cooperative markets to employers, accesses public funding, conducts joint purchasing and provides curriculum resources and healthy menus.

USDA RD’s Cooperative Services Branch and several of the agency’s Rural Cooperative Development Grant recipients, including the California Center for Cooperative Development and the North Dakota Association of Rural Electric Cooperatives can help form ECE cooperatives. USDA Rural Development also provides programs that can help fund cooperative startups, facilities and equipment. Secretary of Agriculture Tom Vilsack chairs the federal, state, local and private sector partners that make up the Interagency Working Group for Cooperative Development.

In October, Secretary Vilsack issued a proclamation recognizing the theme for the 2022 National Cooperative Month: “Co-ops Build Economic Power.” It’s time to use cooperatives more widely to build economic power in the childcare and education industry.

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