“There are many factors at play, including the unfavorable economics of running a child care business, keeping many potential providers from opening or expanding.”

When families do not have access to safe, reliable, and affordable childcare, it keeps parents from participating in the workforce. In 2022, the city estimated that about 375,000 parents (two-thirds of them women) had chosen to leave their jobs or downshift their careers because of the combined impact of COVID-19 and a lack of affordable child care.

More recent research from Robin Hood suggests that more than half of all working mothers in New York City have experienced a work disruption in the last year—including leaving their job and choosing not to look for a new one—because of child care challenges. This collectively has a clear negative impact on our city’s economy; in 2022 alone, the city is estimated to have lost $23 billion dollars in economic activity as a result of parents leaving the workforce or downshifting careers to meet these needs.

There are many factors at play, including the unfavorable economics of running a child care business, keeping many potential providers from opening or expanding. Their ability to raise revenue is limited, with parents already paying the maximum they can possibly afford for care. Child care providers operate on very tight margins, with over 70 percent of costs going toward personnel and the remainder to facilities, insurance, and basic supplies. The city’s very strict facilities requirements and regulations are part of this equation—they drive up the cost of operations beyond what providers can reasonably sustain. It’s no wonder that 1,400 child care providers in New York City have closed since 2015. 

Childcare is a heavily regulated industry, and for good reason—the health and safety of children should be the top priority for any care provider. Child care providers must go through a lengthy and bureaucratic process to open, following a complex set of city and state requirements and then gaining approval from multiple agencies. Once a provider is open for business, city and state agencies charged with inspecting child care sites can close them or force them to take corrective action when there are dangerous findings. While there have been devastating incidents in day care programs, many child care programs flagged by regulatory agencies are able to address red flags and continue serving children and families. 

However, well-intentioned regulations and their enforcement can also leave families and providers in the lurch. In a recent first-person article in New York Magazine, journalist Atossa Araxia Abrahamian described how her sons’ child care program closed for months because of a licensing issue, which nearly drove the provider out of business and led parents to embrace a very makeshift arrangement in the interim. When a day care program is forced to close, parents often do not have another option because the city’s childcare capacity is so limited. 

Earlier this year, the Better Child Care Coalition, a broad coalition of business associations, labor leaders, community groups and providers (of which REBNY and the 5BORO Institute are members) launched to advocate for the kinds of common-sense solutions that will help create more child care capacity in the city. 

The Coalition’s policy agenda includes: 

• Fixing the NYC Child Care Property Tax Credit: Under a new city new tax program, property owners who create a new child care site or increase the number of seats at an existing site may be eligible for an abatement covering up to $225,000 of construction costs. Since the program launched in 2023, the city has approved projects covering just 3,100 new child care slots—a fraction of the 11,000 projected with the launch of this abatement. The Better Child Care Coalition believes that the state should enable the city to increase the value of each tax credit, which will help create thousands more child care seats. This policy change would not require any additional subsidy.
• Lifting outdated restrictions while ensuring safety: City law only allows infant and toddler child care on the ground floor of buildings, which significantly reduces child care seats. Ground floor leases typically cost 27 percent more than the second floor, which further cuts into providers’ operating margins. Policymakers can amend this law to allow centers above and below ground floors, while ensuring that such centers continue to operate safely.
• Streamlining the permitting process: Even when child care centers are built, it takes far too long to get them online due to an unnecessarily complicated permitting process that requires three different city agencies. Policymakers can solve this problem by consolidating the process within a single agency and creating a fast track for child care permit approvals. The city has shown it is possible to do this—when Pre-K for All launched in 2014, city leaders came together and expedited the approval of new child care permits at hundreds of sites across the five boroughs. 

Given the gaps in our child care infrastructure, our city’s leaders should be laser focused on maintaining and growing child care supply in the city. This will require assessing our regulatory rules to understand which requirements are most critical and which may be less directly relevant to the health and safety of children, providing technical assistance and incentives to get new sites open, and working with providers to expeditiously address issues and safely reopen sites when they are forced to close.

The bottom line is that New York City does not have enough child care options, and it’s hurting families and stifling our economic growth. These measures alone will not solve all the challenges facing New York City’s child care sector, but they’re a critical piece of the equation to creating more capacity and greater access to benefits for all New Yorkers.

Maya Kurien is vice president of advocacy at the Real Estate Board of New York. Grace Rauh is the executive director of the 5BORO Institute.