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Canada may be short up to 315,000 childcare spots.header
By Amy Grief
• Jun. 20, 2023
Senior Digital Content Writer
TD Stories
TD Bank Group

You have to look for a daycare spot even before you’re pregnant. Or at least that’s what it felt like to me as a new mom living in the Greater Toronto Area.

As a first-time mom, I didn’t really understand the scarcity of infant childcare spaces in Toronto before my daughter was born, and I wound up waiting until she was two months old before putting her on a list for one of the few spots that might become available in my neighbourhood.

As a result, when my maternity leave came to an end nine months later, I still had not secured a spot for her in my neighbourhood, and I didn't have anywhere to send her nearby when it came time to return to the office. Thankfully, I was eventually able to secure private childcare, but I know not everyone has that option.

I also know my experience is far from unique, and the data shows the situation is expected to remain dire for new parents for some time.

According to a new report from TD Economics entitled The Space Between Us: The Availability of Childcare will Define Canada's Workplace, even though all provinces and territories have agreed with the federal government's Multilateral Early Learning and Child Care Framework to provide $10 per day childcare across Canada by 2026, countrywide, Canada will still be short by as many as 243,000 to 315,000 daycare spots.

That's a daunting number for parents. So how did we get here?

More women with young children are entering the workforce

The pandemic was undoubtedly tough on parents, many of whom had to juggle work with virtual schooling or childcare (or both) during lockdown. On average, as the New York Times reports, moms take on more unpaid labour at home – like cooking, cleaning and child-rearing.

"But the data suggest the pandemic was a turning point for families with young children," Francis Fong, TD Economist and the lead author of the TD Economics report, told me.

"Better workplace flexibility allowed many mothers to better balance work and home, resulting in a lot of them having entered the workforce since 2020."

Between summer 2020 and April 2023, women with children under the age of six entered the workforce in droves. According to the TD Economics report, the participation rate among this group has increased 4 percentage points to 78.8%, double the pace of the previous three years and the equivalent of 111,000 more working moms.

There are two reasons for this: flexible and hybrid work models, and better access to affordable childcare in some provinces.

Flexibility matters

When I was planning my return to work, I knew that I would be returning to a hybrid role where I'd be in the office a few days a week and working from home the rest of the time. Friends without kids asked if I was planning on watching my daughter myself on the days that I worked from home. I laughed and explained my childcare plans. No, I wasn't going to try and balance working while looking after a one-year-old.

As we all saw during the pandemic, it's challenging to balance work and childcare. But it's also true that the hybrid or flexible work model does make it easier for many parents to find work-life harmony.

I know from experience that when I'm working from home, I don't need to rush as much at wakeup and bedtime. I sometimes even have time to fit in a workout or meal prep at lunch – things I would often put off to precious evening hours in the days when hybrid work setups weren't common.

According to the TD Economics report, industries that lend themselves well to remote work, such as finance and insurance, saw an increase in participation among mothers with young children. Whereas sectors like accommodation and retail saw the opposite. The report states there's a direct correlation between the availability of hybrid work in an industry and the participation of women with children under six.

"Industries that tend to offer more flexible arrangements, typically office work, now have a competitive advantage in the post-pandemic world in attracting this labour pool," Fong said.

The benefit of affordable childcare

According to the TD Economics report, across Canada, the availability of affordable childcare in a region typically leads to increased participation in the workforce for women with young kids. For instance, after the provincial governments in Alberta and British Columbia lowered childcare costs in 2017 and 2018 respectively, there was a noticeable uptick in participation rates among women with young children.

"Childcare costs and participation rates are very closely related. Cities with lower childcare costs tend to have more working moms with young children," Fong said.

According to the TD Economics report, in Toronto, where childcare can cost north of a prohibitive $2,000 per month, the participation rate among moms with young kids was lower than nearly every other major urban centre in Canada in 2021, except Kitchener, Edmonton, and Windsor.

There's an interesting story playing out near the country's capital, Fong said. Gatineau and Ottawa are neighbouring cities; the former is in Quebec and the latter, in Ontario.

In 2019, there was a 3.1 percentage point gap in the participation rates of women with young children in the workforce – Quebec introduced affordable childcare in 1997, while Ontario has had next to no policy measures to address childcare costs.

By 2021, when remote work was common, that gap narrowed to 1.9 percentage points. With Ontario introducing an affordable childcare plan in 2022 (with the goal of reaching $10/day daycare by 2025), TD Economics speculates that gap might shrink even further.

Simply put, the report illustrates how affordable childcare can lead to more working moms.

It's a case of supply and demand

This all sounds like a good news story with a confluence of factors making it easier for parents, and especially moms, to work. So why does TD Economics predict Canada will be short up to 315,000 childcare spots nationally by 2026?

"Based on available survey data, there are many families with young children at home that currently do not use paid childcare, but who have indicated that they would if they didn't face barriers related to cost and accessibility," Fong said.

"By provinces across the country pledging to remove the cost barrier on childcare, we're opening the flood gates for all of that unmet demand."

However, TD Economics forecasts that the availability of provincially funded childcare spots will not be able to keep up with the demand.

According to the report, it isn’t as simple as finding physical spaces or reducing costs. Rather, it's also about having enough early childhood educators (ECEs) to look after those kids. All provinces have regulations governing staff-to-child ratios. In Ontario, for example, infants under 18 months must have a 3-to-10 staff-to-children ratio, a maximum group size of 10 children, and one of those three staff members must be a registered ECE.

To fill those estimated 315,000 missing spots nationwide, Canada would need anywhere from 32,000 to 105,000 childcare workers, half of whom would have to be registered ECEs. While provincial governments do provide wage top ups, many ECEs have salaries only marginally above minimum wage, according to the report

Plus, when it comes to provincial and federal funding for childcare, support for ECEs comes secondary to fee rebates for parents, the report explains. Take what's happening in Ontario, for instance. Of the $2.3 billion expected to be spent in 2023 on improving childcare access and affordability, 70% will go to parents in fee rebates. That leaves only $700 million to create new spots, enhance ECE wages, and train new workers.

"How does the per day cost for childcare evolve over time? How will the funding arrangement evolve in tandem? Universal childcare represents a major step forward in supporting families and unlocking the economic potential of hundreds of thousands of parents. However, potential increasing costs could result in taxpayers being on the hook," Fong said

"This is ultimately the challenge that governments will face."

With all provinces introducing affordable childcare legislature, affordable childcare will likely become more available across Canada. But as TD Economics speculates, it looks like the race for space is just getting started.

Want to learn more about Economy?
TD Economics Explains: What is inflation?
When will interest rates go down in Canada?
Unpacking TD Economics' latest report, "Balancing pop in Canada's population"

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