After what was an incredibly long, often exhausting layoff for parents all around the world, the new academic school year has finally begun in earnest.
Unfortunately, the complete lack of Federal guidance has meant that state and local education authorities were essentially left on their own to lay out both remote learning options and re-opening protocols.
While the argument can certainly be made that’s as it should be from a governmental perspective, the harsh reality is that precisely zero educators, local school board members, or state superintendents are also experts in virology, epidemiology, public health, technology, supply chain logistics, or even the inherent infrastructure limitations of their own schools.
And essentially, that means everyone’s experience has been completely different, depending on their location and socioeconomic status.
Now, we’ve all known since the dawn of time that increased means lead to better educational outcomes.
While the 1986 Rodney Dangerfield movie Back to School may have intended to deliver the message that money can’t buy an education, it clearly demonstrates that it can buy assistance… though results may vary.
It also happened to show – by dint of my all-time favorite cost analysis – that a lack of awareness outside one’s own area of expertise can have consequences.
And regarding our own children’s return to the classroom, the deficiency in school officials’ public health expertise is causing a “Triple Lindy” of worries amongst US parents: that the virus will spread, that their employment will be affected, and their child care will once again be taken away.
Let’s Talk About Class
While it has been an awfully long time since I was required to hold a classroom’s attention, I do have substantial direct experience. And I remember very well how difficult it is to maintain order under normal circumstances.
Throw in a whole bunch of new rules, regulations and guidelines to enforce about social distancing, wearing masks, and accommodating remote learners, and that job becomes damn near impossible.
And the breakdown of how US school districts have decided to reopen probably tells that story better than I could.
Moreover, US schools were already short-staffed and underfunded before the pandemic. And given the strain to state and local tax revenues that COVID-19 has caused, it has unsurprisingly worsened.
A reduction in staff necessarily means that class sizes will be larger than they otherwise would be, so for those states listed as “in-person only” below, that means that a whole lot of kids – and their teachers – will spend a whole lot of time in the same small room, breathing the same air, struggling to keep any required face covering on, and occasionally acting out.
Source: State-level officials, Fatherly
We’ve already seen the results of such disparate policy response at the collegiate level, and it’s not good. Over 150 colleges in the US have reported at least 100 cases since the new semester started.
given that the incubation period for the virus tends to be around 2 weeks, we’re likely to see that trend extend down to the secondary and elementary school levels very soon.
Now, I don’t think it is likely the US takes a similar lockdown path this time around. For starters, there’s a chance that they are ultimately ruled unconstitutional.
But more so, it’s because the newer mutations of COVID have evolved into a more contagious, but less deadly form. And in addition, physicians have learned so much about treating COVID over the last six months – pushing a combination of steroids, slight dehydration , stomach positioning, and CPAP in lieu of ventilators – that overall stress on the hospital system now appears manageable.
The only remaining problem is that at some point, for safety purposes… we might have no class.
The Legitimate Business World
Several colleges – including my home state’s West Virginia University – have already cancelled most in-person classes, and are playing football in front of nobody.
For communities like Morgantown that depend heavily on the massive revenue generated by sports, that impact goes far beyond the football stadium and into the pockets of local restaurants, bars, coffee shops, and hotels that make up a huge part of local employment.
Although some of those types of jobs have returned as US economies have re-opened, it has been incredibly slow.
In fact, job postings are still down 19% versus 2019 – which I should note was in turn down from the year before.
That bottom line is already under enough strain, with average small business revenues still down as much as 20% year-on-year. As such, any kind of additional shutdown – colleges, high schools, elementary schools, whatever – is going to hurt.
And as challenging as that is for employers, it’s even more so for employees – even those fortunate enough to lie outside the 29.6 million people still on some sort of unemployment assistance.
Because if you happen to be an employed parent, a shutdown of schools without a simultaneous closing of the economy means that you are left without a service so vital, it could jeopardize your own employment.
I’m talking, of course, about child care.
A Little Something For the Kids
As I alluded to in the introduction, those who have the means – or who happen to know generous people – are generally going to have better educational outcomes.
That said, remote learning has tremendous challenges – poor connections, kids zoning out, and a constant barrage of links, passwords, apps, and external software.
I can personally attest to those frustrations, as I’m just one day removed from assisting my own daughter’s remote learning pod.
But frustrations can eventually be solved through compromise.
And as unemployment continued to weigh on families this summer, the number that couldn’t feed their children enough dramatically increased.
Source: Census Bureau, Wall Street Journal
For those families, in-person school is essential not just from a food security perspective, but also in terms of social mobility.
After all, if it’s hard to be taken seriously when your kids crash your on-air interview, imagine the impact on seeking a new or better job.
In addition, some businesses are beginning to pull employees back into the office full-time. And therefore any kind of further disruption in schooling means that parents – primarily working mothers – may have to choose between income stability and their child’s educational stability.
There’s No “Good Answer”…But There May Be Alternatives
Sadly, there just aren’t any great options available to parents… all of us are just going to have to do what we can to look after our kids in both the financial and the literal sense.
But there is an option available to employers other than “work from home,” and that’s to provide child care benefits to employees.
Although it can add to costs, part of that is offset by the working parent. And in addition, it could incentivize more parents to stay on the job for longer, which would in turn help keep the US economy moving.
Moreover, it’s not widely available at the moment – just 4% of companies were offering some level of coverage prior to the pandemic – so any change in trend here is going to be meaningful from an industry-wide perspective.
The company – like all other childcare providers – was forced to close many of its operations in March, which in turn significantly affected both their Q2 revenue and their stock price.
However, as of the company’s earnings call last month, roughly 65% of their facilities have re-opened, and they’re projected to rise up to 85% capacity by the end of this month.
And although the stock price has already doubled from its March lows, it just broke above its previous resistance level in trading today and there is still room to run, with roughly 25% to return to pre-pandemic highs.
Moreover, analysts are projecting revenues to return to approximately 80% of pre-COVID levels by the end of the year. And with the operational strides the company has made since the initial outbreak – their backup dependent care segment doubled revenues during the last quarter and reported no major health issues – there is a very good chance those projections will hold.
With a cash burn rate of just US$28 million in their worst-ever quarter versus a cash position of US$270 million and an untapped US$400 million credit facility, there’s plenty of near-term cushion, and picking up a ¼ stake in BFAM here makes some sense.
Because at the end of the day, although employer-provided child care isn’t a “good answer” in comparison to kids being in school, it’s likely the best alternative we have.
And in fact, it just may just wind up being the saving grace that allows parents and investors alike to “Not Go Gentle Into That Good Night.”
All the best,