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Daycare costs face upward pressure from wage hikes

With the quick jump in the minimum wage this year to $14, daycares and childcare providers in the region are waiting to see what, if any, of the additional costs will be passed on to parents. In an effort to keep childcare rates from rising, the province has released “fee stabilization” funds to the municipalities, including the Region of Waterloo, which in turn will be distributing them to daycares to help absorb those higher wages.

“The province has provided new fee stabilization funding, and Waterloo Region received $473,000 for 2018 for the first quarter,” said Barb Cardow, director of children’s services with the region.

“This is in response to the new minimum wage. The funding has to be used to avoid increases in childcare fees by supporting staff earning less than $14 an hour.”

Applications for funding from the region would begin this week, with the money itself expected to follow “very quickly” to daycares in need, said Cardow.

While the province works to keep childcare affordable, prompted by a backlash to Bill 148, organizations in the townships are still grappling with the change to their balance sheets.

WeeWatch, a not-for-profit that licenses home-care providers in the townships and the province, noted that they had to increase fees because of the minimum wage increase.

“Unfortunately,” said Marcia Waddell, Kitchener-area supervisor for WeeWatch, of the fee increases. “We’re still some of the lowest for infant spaces though, so as long as I can keep it at that, then I’m happy.”

As a licensing agency, WeeWatch does not actually employ the homecare providers themselves but instead lends oversight and accountability. The care providers are self-employed, running their own home daycares, and are paid not by the hour but on a per-child basis.

“It’s not just a matter of people are now making $14 as minimum wage. The cost for everything else is going up, and we felt that our providers needed an increase as well,” said Waddell. “So the increase we implemented went completely to our providers. The office didn’t take any cut of that whatsoever.”

Fees for full-time care for infants (five days a week) were raised to $55 a day from $50, while part-time care costs were raised between 10 to 30 per cent. Full-time care for toddlers, though, was kept unchanged at $50. Waddell noted that they very likely would not have increased this year at all if it hadn’t been for the minimum wage hike.

“We probably would have stayed the same. The only reason that we increased it is we did a survey of our providers. They felt that with the cost of living and the increase and everybody else getting paid more, they thought they should [as well],” she explained.

By contrast, the Inspiring Minds Early Learning Centre in Wellesley, a not-for-profit offering childcare starting at 16 months, said the wage increase has had a “minimal effect.”

“It has not affected fees at this point,” said director Krista Schott.

“However, there could be more effects happening when we look at our budgets again for next fiscal year,” she said, which would be in September when fees are typically decided by the organization for the year. She noted the wage increase had impacted the organization’s salary expenses, which are a major part of their budget.

“The one thing that we strive to do as a not-for-profit organization is to keep our fees as affordable as we are able to,” she added. Fees for full-time toddler care at Inspiring Minds increased by 1.5 per cent for the 2017-2018 year, to $1,030 a month (or about $51.5 a day).

The announcement of fee stabilization efforts by the province is sure to be a relief to parents in the region, many of whom pay amongst the highest rates for care. In a survey conducted by Canadian Centre for Policy Alternatives of most cities in Ontario, as well as a few out of the province, Kitchener was ranked fifth highest in infant care rates.

According to the report, published in December, the median cost for full-time infant care in Kitchener was $1,325 a month, behind GTA cities Vaughan and Mississauga. In first was Toronto, with a median cost of $1,758 a month. While rural communities weren’t individually listed, the report discovered that their “fees tend to be similar to those in nearby cities.”


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