Donald W. Reynolds National Center For Business Journalism

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Heat is on for parents lining up affordable kid care

March 26, 2014

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Camping is about learning skills, developing character and making friends. And giving kids something to do. Photo: Camp Pinewood YMCA

Some of us still are bracing for snowstorms as winter clings to spring with icy fingers — but for some working parents, the balmy days of June and beyond loom uncomfortably close.  That’s because vacation time for school-age children brings up the need for supervising and entertaining kids too young to hang out alone, and it’s none too soon to take a look at the business and personal finance implications of the summer camp and day care industries.

From the parents’ POV

This is a huge personal finance story that encompasses out-of-pocket spending, potential tax credits for care costs, the opportunity costs of using vacation time to cover kids’ free time and issues created in the workplace by parents scrambling to make sure their children aren’t left unsupervised.  This annual report from Child Care Aware, while not directly addressing seasonal child care needs, provides a lot of benchmark cost information.

This timely Boston Globe article, “Sticker-shocked parents plan now for children’s summer activities,” is a great one to localize.  It says care and activities can cost $500 per kid per week, or abut $6,000 per child for a full summer.  And the logistics of piecing together a summer’s worth of supervision — between parents’ vacation, grandparents’ visits, camps, summer school or tutoring and so on — are even more daunting.   Why not do a roundup of offerings from various for-profit and non-profit activity centers in your area, as well as a look at rates and regulations at traditional day care operators.

Here’s an About.com article, “Everything you know about sumer camp planning,” that offers some story germs from the parental point of view.  You might also look for creative solutions for cash-strapped parents; perhaps teaming up with another family to share a sitter or swap responsibilities when one parent or the other is on vacation.

The New York Times reported last year on an American Express spending survey that figured the cost of kids’ summer activities at $856 per child (and that’s the average; the affluent cohort spends considerably more.  The Amex Survey measures things like day camps, educational activities, parties and more, in addition (apparently) to day-to-day child care costs.

Climate Camp, England
Physical challenges can be a healthy part of summer camp. Photo: Manos Simonides

Don’t overlook the tax implications.  For starters, over the course of a summer it’s quite possible for parents to exceed the threshold that requires them to pay the “nanny tax” to household workers, as this CBS News report points out. Enlist an area accountant to explain how this works, perhaps connect you with clients who pay the tax in summer and advise on ways to avoid the hassle (like hiring a different type of business to care for the child.)  On the other hand, parents may find that certain types of summer activities qualify for the dependent care credit of up to 35 percent of expenses; here’s a brief from the Internal Revenue Service and a primer from TurboTax.

And how about workplace policies; do parents of vacationing kids get dibs on prime time off, or perks like leaving early, telecommuting, etc.?  Here’s a U.S. News & World Report piece that discusses who “gets the shaft” at work; that’s a can of worms you might address with area unions, HR reps and business owners.

As a business and jobs opportunity

The market research firm IBISWorld reported last fall that day care is a $46.6 billion industry, with non-employers making up 90 percent of players.  That means small independent care providers dominate; what opportunities and niches exist in your area for providing licensed summer child care?  Who’s doing it and what do they earn?  Here’s an interactive map of state child are licensing regulations for easy access.

What other opportunities exist for enterprising tutors, nannies, mentors and others who can fill this niche?  What about opportunities for hourly workers; Snag A Job.com is listing many summer child care jobs. How about camp counselors, health care workers for camps and activity centers, security providers and so on?   What about services for special needs children, or for single parents and those who have fewer resources?

Note  that transportation is a factor in addition to activities and supervision, as well as backup planning in case Plan A falls through.  Those needs offer business opportunities to entrepreneurs; check out this All Student Shuttle Service from Texas, which will zip children around to extracurricular and summer activities or even home from school if they feel ill; it’s already urging parents to “register for summer camp/summer school transportation.”  What an interesting business model that both families and prospective business operators would like to read about.  What costs are involved for operators and what about liability for drivers and owners?  What sort of online scheduling services, apps and security features are state of the art in the student transportation business?

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