The Daily. Friday, April 26, 2002

Childcare services industry

The childcare services industry has been transformed over the past two decades, expanding to accommodate higher demand resulting from changes in society and the labour force.

In 1999, the domestic consumer market for childcare services surpassed $3.5 billion. More than two-thirds of this household spending on childcare services was in Ontario and Quebec.

At the national level, about 13% of households, or about one in eight, paid for childcare services at some point in 1999. The average client household spent $2,428, 16% more in real terms than in 1986.

Several factors have boosted demand during the past two decades - foremost is the increased participation of women in the paid labour force. From 1979 to 1999, the proportion of mothers who were employed and had children under the age of 16 more than doubled to a record 69%.

Women employed during pregnancy are also likely to return to work soon after giving birth. In the years 1993 to 1996, about 60% of women returned to paid work within six months of childbirth, according to data from the Survey of Labour and Income Dynamics. Almost 90% returned within one year.

Although some fathers remain at home with their children, their numbers are relatively low. As well, single-parent families have become more prevalent, accounting for 14% of all Canadian families in 1996.

Childcare services spending as a proportion of household budgets

Childcare expenses accounted for 4.6% of the overall budget of those households that did spend on childcare in 1999, up from 3.5% in 1986. Daycare centres were by far the most expensive childcare category. They cost households $2,515 on average in 1999, almost twice the average of $1,306 spent on childcare in the home.

Ontario households that bought childcare services in 1999 paid an average annual household bill of $3,110, the highest in the country. This is partly because Ontario had the highest median monthly fees for full-time, centre-based care.

Note to readers This release is based on an analytical article in the quarterly publication Services indicators, available today. This article examines the childcare services industry in Canada, and is divided into three parts. The first analyses the demand for childcare services, including the $3.5 billion that households spent on these services. Part two examines the financial characteristics of the industry and the roles played by the non-profit sector and government fee-subsidy and grant programs. The final section looks at characteristics of the childcare workforce. Data came from a variety of sources, including the Survey of Household Spending and the Labour Force Survey.

After adjusting for inflation, total childcare expenditures by client households rose 15.7% from 1986 to 1999. The highest growth was recorded in the latter part of the period, likely for two reasons.

First, demand for formal childcare services, which is generally more expensive than informal childcare provided by friends and relatives, fell during the recession of the early 1990s, when the participation rate for women in the paid labour force declined. Second, during the late 1990s households increasingly relied on formal childcare as women returned to the labour force, driving up the demand for formal services.

Fees for full-time daycare increased throughout the 1990s. From 1991 to 1998, for example, the average cost rose 12.5% for infant care, 20.3% for toddler care and 18.9% for pre-schooler care.

Revenues and expenses

In 1999, formal childcare services providers earned revenues of about $1.8 billion. Of this amount, just over $1.7 billion went to paying expenses, leaving almost $96 million in profits. The industry's profit margin, a measure of profits against earned revenues, was 5.3%.

Salaries, wages and benefits to employees were the largest expense incurred by the industry in 1999, accounting for about 69% of all expenses. This was largely because children, especially the youngest ones, have many physical, educational, and emotional needs, and must be under constant supervision.

Non-labour operating expenses totalled $534 million in 1999. These accounted for 31% of the industry's total expenses and include depreciation, rents and mortgages, advertising, utilities, supplies, and other operating expenses.

Women predominate in workforce

Despite gains in the late 1990s, the average childcare services employee earned $20,600 in 2000, well below the $34,000 average in the rest of the economy.

Although it is difficult to pinpoint the exact size of the childcare services workforce, almost all the workforce is made up of women. According to the 1996 Census, 226,680 individuals - 10,160 men and 216,520 women - were employed in childcare services.

However, this total likely excludes many people who informally provide childcare. As well, some services are offered for free, especially by relatives or friends.

The 1988 National Child Care Survey found that almost one-third of all children had sitters that provided their services for free. About two in five children in sitter care were looked after by a relative, frequently a grandparent. Since some childcare arrangements are informal, official employment estimates are dampened.

For example, after including informal childcare providers, Human Resources Development Canada estimated the number of caregivers at closer to 333,000 in 1994/95.

The article "A profile of the childcare services industry" is now available in the fourth quarter 2001 issue of Services indicators (63-016-XIB, $26/$87; 63-016-XPB, $35/$116).

For more information about this article, contact Janine Stafford (613-951-7243; janine.stafford@statcan.gc.ca), Service Industries Division.

For more information on Services indicators, or to enquire about the concepts, methods or data quality of this release, contact Don Little (613-951-6739; don.little@statcan.gc.ca), Service Industries Division.