New Study Examines Private Equity's Role in Childcare Market
A new study by researchers Jessica Brown of the University of South Carolina and Chris Herbst of Arizona State University explores private equity’s influence on U.S. childcare, finding that PE-backed providers account for about 10% of the workforce but are heavily concentrated in a small number of counties—75% operate within just 5%. While no evidence was found linking private equity to overall unaffordability, these operators tend to cluster in areas with tight child-care markets and looser staffing regulations. The study adds nuance to ongoing political scrutiny, including an investigation by U.S. Senator Jeff Merkley into whether PE-owned chains prioritize profits over community well-being. The research also highlights that private equity-backed centers operate at similar price levels as other large providers but are more likely to hold top quality ratings and less likely to accept government subsidies—70% versus 78%. This suggests a focus on high-quality care in profitable markets, potentially limiting accessibility for lower-income families. The findings underscore broader concerns about profit-driven models in essential services like childcare. The study comes amid increased regulatory attention following short reports from entities such as Hunterbrook Media and its unit The Bear Cave, which have raised alarms over safety issues at major PE-backed operators.
Topics: childcare industry labor regulations market concentration private equity