Is Private Equity to Blame for the Childcare Crisis? New Study Finds PE-Owned Daycares Target Loose Rules

Rishabh Mishra

Sat, August 29, 2026 at 5:01 PM GMT+3 5 min read

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A new study offers a more nuanced picture of private equity's role in U.S. child care, finding that PE-backed providers account for about 10% of the child-care workforce and are heavily concentrated in a small share of U.S. counties.

The researchers found no evidence that private equity is the primary reason child care is unaffordable, but they did find that PE-backed providers tend to cluster in counties with tight child-care markets and states with looser staffing rules.

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Strategic Location and Relaxed Staffing Rules

The research, authored by Jessica Brown of the University of South Carolina and Chris Herbst of Arizona State University and reported by Vox, indicates that private equity's share of the childcare workforce has hovered near 10% since 2010. However, 75% of PE-backed centers sit in just 5% of U.S. counties, with PE-backed providers tending to favor states with looser staffing regulations.

"Given what we see, private equity is not the reason that childcare is unaffordable," Brown told Vox. Co-author Herbst noted that while they jokingly considered calling their paper "'Much Ado About Nothing,'" geography remains a major factor as PE chains consistently seek out tight markets and flexible labor laws.

Senate Probe Examines Investor Profits

The academic findings add crucial nuance to ongoing legislative inquiries. U.S. Senator Jeff Merkley (D-OR), Ranking Member of the Senate Budget Committee, launched an investigation in March 2026 into major PE-owned chains like KinderCare and Learning Care Group, accusing corporate owners of "prioritizing investor profits over the well-being of the families and communities that depend on these services."

Merkley's inquiry seeks to clarify whether leveraged buyout debt and financial extraction compromise child welfare and tuition affordability.

Quality Versus Accessibility

Despite public criticism, the study shows PE-backed providers operate similarly on price to other large chains and are actually more likely to hold top state quality ratings. However, they remain less likely to accept government childcare subsidies.

"It may not be that they are rendering low-quality care," Herbst told Vox. "They may be rendering very high-quality care, but inaccessible to a large number of families because of where they are doing business."

PE-backed chains were less likely to take public subsidies — 70% did, versus 78% of other large chains — but were more likely to hold their state's top quality rating.

Ultimately, the researchers found that private equity providers tend to concentrate in profitable markets with tighter child-care capacity and looser staffing rules, while broader systemic factors appear to play a larger role in the affordability crisis.

Broader Scrutiny of Profit-Driven Care Models

The political probe aligns with broader alarms sounded across financial markets. Benzinga reached out for comment to media publisher Hunterbrook Media and its acquired unit, The Bear Cave, following their scathing short reports on care-economy operators.

The Bear Cave published a short report in June 2025 alleging widespread safety problems at KinderCare Learning Companies Inc., including incidents involving children left unattended and alleged abuse.

Hunterbrook Media separately alleged that understaffing at Ensign Group Inc. facilities saved the company an estimated $161 million in staffing costs over five months, while its analysis found worse quality and safety indicators at facilities with larger staffing gaps.

Photo courtesy: Shutterstock

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