A new study offers a more nuanced picture of private equity’s role in U.S. child care, finding that PE-backed providers account for about 10% of the child-care workforce and are heavily concentrated in a small share of U.S. counties.
The researchers found no evidence that private equity is the primary reason child care is unaffordable, but they did find that PE-backed providers tend to cluster in counties with tight child-care markets and states with looser staffing rules.
Strategic Location and Relaxed Staffing Rules
The research, authored by Jessica Brown of the University of South Carolina and Chris Herbst of Arizona State University and reported by Vox, indicates that private equity’s share of the childcare workforce has hovered near 10% since 2010. However, 75% of PE-backed centers sit in just 5% of U.S. counties, with PE-backed providers tending to favor states with looser staffing regulations.
"Given what we see, private equity is not the reason that childcare is unaffordable," Brown told Vox. Co-author Herbst noted that while they jokingly considered calling their paper "‘Much Ado About Nothing,’" geography remains a major factor as PE chains consistently seek out tight markets and flexible labor laws.
