New Playbook Provides Solutions to Stop Private Equity Takeover of the Child Care Industry
Washington, DC – The Open Markets Institute alongside Community Change/Action, National Women’s Law Center, and Americans for Financial Reform Education Fund released The Children Before Profits State Playbook, which equips state and local organizers, advocates, and policymakers with practical tools to address the risks posed by the growing role of private equity in U.S. child care markets.
Eight of the 10 largest child care companies in the U.S. are currently owned by private equity investors. Left unchecked, corporate child care will continue to threaten our vulnerable child care system in the same way private equity has weakened healthcare, home care, and housing industries. Examples of some of these threats include:
Financially vulnerable local child care providers have reported receiving buyout offers from private equity investors
Glitzy new programs have drawn families away from local providers, only to charge them additional fees for basic services like field trips
Parent chat groups are filled with complaints about increasing care worker turnover, while care workers report negative workplace conditions that are driving them out of the sector
Sudden bankruptcies of rapidly growing chains have left families, workers, and communities unexpectedly without care or jobs
This report describes opportunities for state and local action that can:
Strengthen guardrails that protect families and workers;
Maintain fair and competitive child care markets;
Equitably increase the supply of child care by supporting alternatives to private equity; and
Build public power to ensure greater corporate accountability.
The Playbook also includes examples of successful public interventions from states like California, where Parent Voices Oakland organized families to push back against deteriorating quality at private-equity owned La Petite Academy programs. And New Mexico, where Olé is working to strengthen guardrails around their permanent child care funding to ensure the needs of kids come before profit-maximizing corporate providers.
“Child care investments are meant to support children’s development and the workers who care for them—not to generate profits for Wall Street,” Industrial Policy Program Manager Audrey Stienon at the Open Markets Institute said. “Our report and Playbook provide state and local policymakers with concrete steps they can take to build a thriving child care industry centered on the needs of families and communities.”
“Private equity's profit-first model poses a serious threat to the child care industry, which is already struggling after decades of underinvestment," said Amy Matsui, vice president for child care and income security at the National Women's Law Center. "This playbook is a one-stop shop for state lawmakers and advocates seeking to rein in the power of private equity, helping ensure that public funds go toward expanding access to care and raising wages for early educators — not lining the pockets of private equity investors.”
“More public funding for child care is critical, but safeguards from corporate private equity firms as a condition for that public funding is just as important to ensure our providers are well paid and can sustain their small businesses, parents can afford care, and children get the care they deserve,” State and Local Policy Director Nina Dastur at Community Change said.
“Even if private equity-owned companies only control a relatively small share of the national market, they can very easily become dominant providers in a particular local market and undercut other small business – largely Black, Brown, and women owned – providers in those markets,” Research Analyst Hibba Meraay from Americans for Financial Reform Education Fund said. “That takes away parent choice and prioritizes maximizing profits over supporting children, families, and workers.”
This playbook builds on a previous report, Children Before Profits: Private Equity in Child Care (2024), which was the first report of its kind to examine the role of private equity in child care.
###