Alongside the best interests of children, one of the driving motivations of a high quality universal child care system is to advance women’s choices and opportunities, including the opportunity for women to become entrepreneurs.[1]
However, as this article describes, enabling and relying on child care entrepreneurs to build out BC’s universal child care system is problematic – including for children, women, families, educators, taxpayers and the general public – and inconsistent with decades of well-established research and evidence. We therefore recommend that existing child care entrepreneurs and businesses be supported with an improved unified operating funding model, and that the BC government take immediate steps to ensure future expansion is dominated by public and non-profit providers.
The past: a failed market-based approach
Until recently, child care businesses in BC were typically owned by individuals, usually a home-based provider or an ECE with one or two centres. These owner/operator programs have always been part of communities. Owner/operators expect to earn a reasonable income while providing a critical service to families and children.
For years, like the rest of the child care sector, these small business owners struggled to achieve their goals. Despite promotion of women’s entrepreneurship in child care as a path to gender equity, child care business owners often learned the hard way that the longstanding market-based approach to child care was actually unfair to women.[2]
In order to earn a return on their investment, child care entrepreneurs were forced to choose between paying the women [3] who work for them low wages and/or charging the mothers who use their services high fees. Or, by trying to keep fees lower and wages higher, child care entrepreneurs could not pay themselves fairly. This dilemma was even more challenging when entrepreneurs were carrying a significant mortgage on their facility or making rent/lease payments at market rates.
The necessity to rely on some combination of high parent fees and/or low wages/self-employment income meant that BC’s previous market-based approach to child care was never capable of transforming women’s entrepreneurial spirit into a high-quality, affordable and equitable system for themselves, families, and educators (there is no example in the world where this approach has worked).
The present: a commitment to universal child care
Starting in 2018, BC and then Canada committed to move away from the failed system of the past to a new system where “all families in Canada have access to high-quality, affordable, flexible and inclusive early learning and child care no matter where they live.” In a phrase, BC and Canada have committed to achieve high-quality, universal child care. This requires significant public funding, which has started to flow.
A constant source of tension
Fueled by new injections of public funding, BC has experienced a rapid growth of child care businesses that are different from typical operations of the past.[4] Larger corporate entities with multiple programs – including national and international chains, franchises, private-equity firms, and anonymous numbered companies – have now entered the sector. Some of this growth also includes women entrepreneurs. These larger child care businesses are designed and expected to generate profits for individual owners, franchisees and/or shareholders.
Significant new public funding, along with the growth of for-profit child care businesses, heightens a perennial source of tension in the sector: namely, how much of the system should be financed, planned, and operated by public entities (like school boards and municipalities), not-for-profits, or for-profits. And regardless of auspice, how can we ensure accountability for public funds: are we achieving the desired outcomes, are we spending taxpayers’ money efficiently and effectively?
Through the lens of child care entrepreneurship, another way to frame this perennial tension is via two discrete questions: (a) how should BC’s existing child care entrepreneurs (for-profit business owners) be integrated into the evolving child care system; and (b) to what extent should government policy enable or rely on for-profit child care businesses to expand the system?
Issues with for-profit child care
Our answer to both questions, above, is informed by the fact that unlike e.g. manufacturing or technology, there is little opportunity in child care for the profit motive to yield significant “efficiencies” or “innovation” without compromising quality. Research from Canada and around the world reinforces the finding that for-profit child care is associated with a broad range of risks (e.g. lower overall quality, less qualified staff, less stability, higher cost to families and/or taxpayers) and no clear benefits… except its ability to rapidly expand via business models that extract private return on investment from public capital.[5] Even “choice” has been shown to deteriorate in corporatized, for-profit dominated systems.[6]
Support existing businesses, but look to public and non-profit models for expansion
Even though for-profit child care models are associated with these well-known risks, the fact is BC’s current child care system is more than 50% for-profit,[7] and the province cannot afford to lose these spaces. As such, we’re recommending that BC’s existing for-profit child care businesses continue to be supported with public operating funding, but through an improved funding model that guarantees affordability for all parents, guarantees fair compensation for all staff, compensates business owners fairly for their time, pays for mortgage, leasing and facility improvement costs (with guardrails), keeps child care programs sustainable and supports quality, and restricts excess surpluses/profits (e.g. via something like the current 3-5% annual surplus/profit limit set out in BC’s $10aDay funding models).[8]
While existing for-profit operators who accept the funding conditions should be supported with public funding (to avoid loss of spaces), the most accountable and sustainable path to system expansion is through public and non-profit child care. This is because (a) even with improved guardrails, the profit motive – by definition – will drive efforts to circumvent accountability for public funds, and (b) for-profit child care will always be less stable, tied as it is to the circumstances and desires of individual owners and investors. In other words, expanding for-profit child care expands the scale of these difficult-to-manage risks. This is why we’re recommending BC continue to exclude for-profit operators from public capital funding for new spaces, and why we’re also recommending new programs not be guaranteed public operating funding once a unified operating funding model has been in place for a set time (a government-established cut off date).[9]
The key with this approach is to speed up public and non-profit child care expansion, which has not kept pace with demand.
Speeding up public and non-profit expansion
In order to meet the urgent demand for high-quality child care facilities across BC, while maximizing economies of scale and accountability for public funding, strong provincial planning and implementation frameworks – and requisite capital budgets – must be in place for non-profit and public child care providers.
This is why we are calling on the provincial government to create a publicly owned child care expansion model (a planning and administrative framework for child care expansion) that resembles its frameworks for school and hospital expansion, and why we’re calling on the federal government to encourage the creation of this expansion model with new federal investments.
Conclusion
British Columbians can be grateful for the hard work and dedication of many women child care entrepreneurs over the years who often faced impossible choices in trying to provide a much-needed service. We should support these existing businesses with sustainable operating funding that solves the problems of the past (high fees, low wages/income), with improved guardrails (e.g. limits on excess profits, including real estate profits). When it comes to expanding BC’s child care system, we need to avoid the known risks associated with for-profit child care businesses by accelerating the expansion of public and non-profit child care.[10]
[1] Entrepreneur: someone who makes money by starting their own business, especially when this involves seeing a new opportunity and taking risks.
[2] By “market-based approach” we mean an approach where individual families provide the majority of revenue for the system through parent fees, where system planning (e.g. new spaces, continuity of existing spaces) is largely left up to individual market actors, and where programs are largely operated by market actors on a day-to-day basis. Here, “market actors” include both for-profit and not-for-profit entities.
[3] The vast majority of educators identify as women.
[4] For example, 84% of all new full-day centre spaces created between 2021 and 2023 in BC were for-profit. Source: Martha Friendly et al., Early childhood education and care in Canada 2023, Childcare Resource and Research Unit, 2024 (pg. 93).
[5] Martha Friendly et al., Risky Business: Child care ownership in Canada past, present and future, Childcare Resource and Research Unit, 2021.
[7] In 2023, for-profit programs accounted for 67% of full-day spaces and 51% of all spaces. Source: Martha Friendly et al., Early childhood education and care in Canada 2023, 2024 (pg. 97).
[8] Eric Swanson, “Bringing BC’s for-profit child care operators into a $10aDay model: Technical recommendations for child care policy makers and the sector,” CCCABC and ECEBC, 2024.
[9] After the cutoff date, new programs would have to apply to be included (with criteria including alignment with publicly-coordinated expansion plans, etc.).
[10] As described in Alternative Federal Budget 2025: A Platform for the Future, From the Ground Up, Canadian Centre of Policy Alternatives, 2024 (pp. 54-60). The publicly owned child care expansion model would integrate, interact with or otherwise support Indigenous-led child care, e.g. as guided by the “First tripartite memorandum of understanding signed on early learning and child care for First Nations.”