Comparing the Cost of Google Daycare with the Rest of the Free World...

The price tag bandied about regarding Google Daycare - 57K for 2 kids under Google's new bundling plan - sent a shockwave out across parents in the working world.  Relax everyone, it's got more to do with the cost of stuff in the valley than it does with any Google desire to stick it to working parents.

For some perspective, let's rely on economic data supplied by yours truly and trusted subscribers to the Capitalist:

-First, there's me.  I live in Birmingham, Alabama, a metro area with a population of a little over one million.  The southeast/sunbelt is known as a pretty affordable area to live, and the magic city was recently rated as the 3rd most affordable housing market in America.   I had two kids in high end, education-first day care for four years, and the biggest annual bill I ever had was around 16k.  That's 8K per kid, and that came down a bit as the youngest one got out of infant care, etc.  (total annual cost per kid - 8K).

-Then, there's my friend Evil HR Lady, who hit us in the comments to the original post.  I don't know where she lives, but my guess is it's a metro area bigger than Bham that's not on the west coast.  She gave us the weekly cost of $300 for one kid, which is $1,200 per month or $14,400 annualized (assumes 2 weeks out for a trip to the EHRL beach house) (total annual cost per kid - 14.5K).

-Next, friend of the Capitalist, Meg, gave us the baseline cost of daycare in the Silicon Valley area, providing a figure of $10/hour or 20K annually for solid daycare.  Ouch.  (total annual cost per kid - 20K)

So, those are the market figures, and it's important to note that those prices represent parents paying 100% of the cost.

And, that's where the math gets freaky when comparing the market to Google's subsidized daycare. 

Let's start with what's easy.  Daycare at Google, for those fortunate enough to get the benefit (supply/capacity issue) use to be able to get 2 kids in daycare for 33K a year, or 16.5K per kid.  That made it twice as expensive as Birmingham, but comparable to where Evil HR Lady lives and cheaper than what folks could buy on their own in the Valley.  With the price increases, that figure goes up to 57K, or 28.5K per kid.  That makes it twice as expensive as EHRL, and significantly more costly than what Meg reported as a baseline.

But, that's not the full story, since Google was subsidizing and continues to subsidize the cost of their daycare.  According to the NYT article, Google was subsidizing the cost-per-child, before the change, to the tune of 37K per child, meaning the total loaded cost was 53.5K per child (wow).  The article suggests that Google was making changes to the childcare operation that included raising the child per caretaker ratio.  That would naturally drop the total cost.

Assuming Google made changes to the childcare operation that resulted in them providing a subsidy per child similar to Cisco and Oracle (12K per child), the total cost of the Google daycare solution would be 40K per child (28.5 per kid plus 12K - I rounded down).

And that's roughly 5 times the Birmingham price, 3 times the EvilHRLadyville price, and 2 times the normal Silicon Valley price. 

Which means if I ever work for Google, I would be... how do we say it....

...a Telecommuter, from Birmingham.

WOW.      

The price tag bandied about regarding Google Daycare - 57K for 2 kids under Google's new bundling plan - sent a shockwave out across parents in the working world.  Relax everyone, it's got more to do with the cost of stuff in the valley than it does with any Google desire to stick it to working parents.

For some perspective, let's rely on economic data supplied by yours truly and trusted subscribers to the Capitalist:

-First, there's me.  I live in Birmingham, Alabama, a metro area with a population of a little over one million.  The southeast/sunbelt is known as a pretty affordable area to live, and the magic city was recently rated as the 3rd most affordable housing market in America.   I had two kids in high end, education-first day care for four years, and the biggest annual bill I ever had was around 16k.  That's 8K per kid, and that came down a bit as the youngest one got out of infant care, etc.  (total annual cost per kid - 8K).

-Then, there's my friend Evil HR Lady, who hit us in the comments to the original post.  I don't know where she lives, but my guess is it's a metro area bigger than Bham that's not on the west coast.  She gave us the weekly cost of $300 for one kid, which is $1,200 per month or $14,400 annualized (assumes 2 weeks out for a trip to the EHRL beach house) (total annual cost per kid - 14.5K).

-Next, friend of the Capitalist, Meg, gave us the baseline cost of daycare in the Silicon Valley area, providing a figure of $10/hour or 20K annually for solid daycare.  Ouch.  (total annual cost per kid - 20K)

So, those are the market figures, and it's important to note that those prices represent parents paying 100% of the cost.

And, that's where the math gets freaky when comparing the market to Google's subsidized daycare. 

Let's start with what's easy.  Daycare at Google, for those fortunate enough to get the benefit (supply/capacity issue) use to be able to get 2 kids in daycare for 33K a year, or 16.5K per kid.  That made it twice as expensive as Birmingham, but comparable to where Evil HR Lady lives and cheaper than what folks could buy on their own in the Valley.  With the price increases, that figure goes up to 57K, or 28.5K per kid.  That makes it twice as expensive as EHRL, and significantly more costly than what Meg reported as a baseline.

But, that's not the full story, since Google was subsidizing and continues to subsidize the cost of their daycare.  According to the NYT article, Google was subsidizing the cost-per-child, before the change, to the tune of 37K per child, meaning the total loaded cost was 53.5K per child (wow).  The article suggests that Google was making changes to the childcare operation that included raising the child per caretaker ratio.  That would naturally drop the total cost.

Assuming Google made changes to the childcare operation that resulted in them providing a subsidy per child similar to Cisco and Oracle (12K per child), the total cost of the Google daycare solution would be 40K per child (28.5 per kid plus 12K - I rounded down).

And that's roughly 5 times the Birmingham price, 3 times the EvilHRLadyville price, and 2 times the normal Silicon Valley price. 

Which means if I ever work for Google, I would be... how do we say it....

...a Telecommuter, from Birmingham.

WOW.      

Comments

[Paul Hebert]

But it's not your normal day care either... From a web site (great cite huh?)

"...Two massive and fully equipped centers, the Kinderplex and the Woods, featured the most cutting-edge early childhood care.

At the Kinderplex, a company called Children's Creative Learning Centers provided "learning in a play-based, developmentally appropriate environment that incorporates a variety of activities and multicultural aspects in a thematic style." Google ran the Woods itself, using a trendy preschool philosophy called Reggio Emilia."

That's gotta be worth a premium no?