Childcare centers in North Carolina, which’ve struggled with a workforce shortage for years, now grapple with major financial fallout from the pandemic — despite remaining open for much of the past year.

What’s happening: Across the state, nearly one-third of child care centers reported revenue losses of $45,000 or more stemming from the pandemic, according to a new survey from the North Carolina Child Care Resource & Referral Council. Without additional financial support, 20% of respondents say they are at risk of closing within the next six months.

Why it matters: The childcare industry is the “workforce behind the workforce,” says Kristen Idacavage, director of Kids ‘R’ Kids of Charlotte, which operates multiple facilities locally. Parents need affordable childcare if they are to return to work.

• “There is a shortage of spaces and openings (in high quality settings) for Charlotte families that I have not seen in the 18 years that our school has been in operation,” Idacavage said, citing a common complaint among Charlotte parents stuck on long waiting lists. “The pandemic has only shed more light on the struggles of the childcare industry.”

State of play: Several factors are exacerbating their dire financial situation. For one, operational costs (such as enhanced sanitation) rose as revenue fell amid a drop in enrollment, says Janet Singerman, president and CEO Child Care Resources Inc.

• CCRI is a nonprofit organization that provides resources and education to childcare facilities in Mecklenburg and surrounding counties.

What’s more, daycare facilities nationwide were already facing a worker shortage going into 2020, largely because wages have lagged significantly, says Singerman. Most area facilities pay teachers around $11-$15 an hour.

“(Hourly wages) don’t recognize the level of expertise and education a person needs to have to provide childcare,” Singerman says.

The big picture: All sorts of companies have raised their hourly pay recently — in many cases in an effort to bring in workers. Among them: Costco, Walmart, McDonalds and Bank of America, as Insider recently noted.

• But it’s difficult for many local daycares to compete with employers who pay more than they do, Singerman adds.

The financial health of early childhood education centers was already precarious before the pandemic, says Peter Blair, who spent years in early childhood education before becoming CEO of the Jewish Community Center in Charlotte. Also before the pandemic, demand for spots far outpaced supply.

• That’s why so many families spend months on waitlists for their children.
• Closure of facilities as a result of the pandemic will only exacerbate the supply/demand problem in the industry, he adds. And that’s despite the fact that tuition is high at many local centers.

“Early childhood centers run on a very, very small margin as a business,” Blair says. “That’s why you don’t see folks opening early childhood education centers.”

By the numbers: In February 2020, Mecklenburg County had 480 licensed childcare programs, per Singerman. As of June 30, there are 461.

• In the survey, 52% of respondents applied for PPP and 42% received it.
• County-wide enrollment in childcare stood at 23,738 in February 2020. At the end of June, it fell to 12,209 — a 49% decline.

The enrollment decline worsened amid concerns over the spread of the virus. As parents lost their jobs, they also pulled children from daycare.

At local YMCA facilities, childcare enrollment is half of what it was pre-pandemic, says Adrianne Hobbs, vice president of youth development for the YMCA of Greater Charlotte.

Revenue at the Y daycare centers, too, has been cut in half. (The organization has received grant funding to help offset costs for families in need, according to Hobbs.)

• Also, attracting qualified candidates to staff the centers has proven difficult, Hobbs adds. The Y has had to advertise more and increase starting wages in some circumstances.

Zoom out: Daycare providers in Charlotte aren’t alone in their financial struggles. Operators from Los Angeles to Sarasota told Time recently they’re buckling under the weight of decreased enrollment and increased spending on sanitation and legal fees.

In North Carolina, industry leaders say they’re hopeful that state lawmakers include ample funding for daycare facilities statewide. “Childcare is necessary for the recovery of our nation and our community,” Singerman says.