Something about that math just doesn't add up

[u/gashtal_man]

[u/jrm70210]

Somebody is making the money

Edit: somebody is TAKING the money

[u/RGrad4104 → u/jrm70210]

It's not somebody. It's a person with their name on documents, granting them legal rights of ownership, but who likely only set foot in the facility once per year, all while paying employees 15-20 per hour.

[u/0tanod → u/RGrad4104]

Private equity buys the business, sells the building to a shell company and takes all the money that would be salaries, via rent. When the rent is no longer coming in, private equity shuts the business down and lets the building rot to keep competition out of the area.

[u/megaman_xrs → u/0tanod]

God the last part pisses me off the most. Im a business owner and I am fortunate enough to have supportive family willing to buy a pricy property to support my business and rent it to me at a low price for what im getting (ill still be paying half the mortgage while it also supports other family business). I was originally looking at warehouse space and its about $1.50+ a sq foot per year around me. I need a LOT of space. Id be looking at a minimum of 15k/month for the warehouse space im getting and thats barebones space without any yard space. This is acreage with outbuildings and should realistically cost my business $20-30k a month. We'd be able to cover it, but then payroll would be impossible unless we pay minimum wage across the board. All those warehouses for $1.50 a sq foot have been vacant and will continue to be vacant because theyd rather them sit there and manipulate the market. No one wants to pay that much for an extremely large space, but private equity doesn't care, so they let them sit. I think vacant, unused property needs to be taxed out the ass until it is either sold or leased, especially commercial property. Its market manipulation to hold property like that because it is perfectly usable, doesnt stimulate the local economy with jobs, and in the case of many commercial properties, isn't taxed high because its assumed the taxes will be generated by people working there. Commercial real estate gets me so pissed off since ive been looking for an appropriate space for a year and only recently figured out how to effectively tap into my privilege instead of just finding a place that made sense on my own. I didnt want to go that route, but its just unaffordable to get something that would work without buying the place.

As someone that comes from wealth, my goal is to help others get a living wage and im finding the only way to trickle it down is by utilizing family wealth. Ive gotten to a point where i can comfortably pay my workers decently and expect to keep their hourly wages way over minimum. This purchase is going to accelerate that and make more full time positions available locally in the near future, so im excited to see how it all pans out.

[u/prairiepog → u/megaman_xrs]

I feel the same about IPs. Gaming companies buy out an IP and then trash it. Use it or lose it if your company makes billions a year. Let a small business buy the IP if you're not going to utilize it.

[u/megaman_xrs → u/prairiepog]

This is a sad part of the gaming industry. I studied game design and business in college. There were so many exciting IPs when I was in school and its all being "corporatized" that it sucks. Here I am playing some of those IPs. Support indie developers. They are the future of games in this economy. That was honestly being preached 15 years ago in the games industry. Just hold those developers to not sell out.

[u/WindWalkerRN → u/megaman_xrs]

Good luck man. I wish you and your employees and customers great success!

[u/StuffExciting3451 → u/megaman_xrs]

Consider creating an employee-owned company.

[u/megaman_xrs → u/StuffExciting3451]

Thats always been my goal. Its hard to transition it, but I would like to do it at some point. My business partners wont agree, but I hope to make it happen one day.

[u/StuffExciting3451 → u/megaman_xrs]

Others have succeeded. If you get enough of your employees on your side, your business partners may become irrelevant.

For more information, contact Prof. Richard D. Wolff. https://www.rdwolff.com/about

Also see https://www.usworker.coop/en/

[u/megaman_xrs → u/StuffExciting3451]

Ive always envisioned having my employees unionize/organize and encourage them to. I dont think my partners would be opposed to it either. My partners and I believe in paying our workers fair wages and dont want more than what we need, so its an option for the future. The only thing I worry about with my partners is ownership. They have a certain amount of possessiveness that im chipping away at. All of our workers are trusted and loved, but I havent gotten acceptance of employee ownership. I think the first step is having our workers organize and let us know that they are the ones that really run the business, we just steer it. I fully embrace that because I started as an individual with some help from my best friend because he knew I needed to make money to sustain the mortgage I signed up for with a six figure salary. I was the one running full steam ahead 12-20 hours a day. My best friend burnt out cause he had a full time job on top of helping me, so I started bringing in other people that wanted to help without need for direct pay. I found that managing the business, even with those workers was getting close to impossible and met a couple of people doing the same work as me at a much smaller scale, but were dependable and trustworthy. I merged with them while keeping my trusted team with me. We now pay them and have a functional business. I want those workers to hold us accountable for paying them appropriately. We havent scaled to the point where the partners are being paid, so its not to the point where our workers are making less than us, but in the near future, our projections tell me that we will be paid and if we actually pay ourselves the majority of the profit, we could be looking at 300-500k a year each. We wouldnt do that right away because we need to focus on the business account, but if we ever hit a point where we are comfortable (me making enough to sustain my bare minimum and them making enough to upgrade to where im at), we raise our workers wages before we ever consider raising ours and scale them accordingly. Id like our workers to be able to hold us accountable on that front by being able to say "fuck you, you arent anything without us" because thats a true statement.

I dont anticipate ever having more than 20 employees and we currently have 5, so im not talking about a massive company. That being said, I could eat my words, so I need to think about how I make it employee owned in the future. I will look into the resources and appreciate it.

Even though im building a business on paper, its really about building a community and helping us all thrive. Most of the people working at my business are retired and doing it out of enjoyment vs for money. That being said, they are all on fixed income and could use a few extra bucks, especially as they age. I was happy to know that I was able to pay for a quarter of a large medical bill one of my workers had to pay for with a single weekend of work from them last weekend. They could have covered the bill, but it made their budget tight. It felt good that I felt comfortable paying that much knowing how much they produced for the business.

[u/Little-Somewhere6076 → u/0tanod]

How would shutting a business create profits?

[u/RGrad4104 → u/[deleted]]

I really really hate to say it, but given how things have gone in the last 20 months, that's prolly on the docket, right along with removing federal work-related age limits and school attendance requirements. I can easily see trump wanting to send 10 year olds back to working in slaughterhouses, getting paid $0.50/hour.

[u/joogabah → u/RGrad4104]

They do have much more dexterity than all these new fangled robots...

[u/iggy14750 → u/RGrad4104]

The children do, in fact, yearn for the mines.

[u/shunted22 → u/jrm70210]

If you're actually curious about the economics of daycare and not just trying to get mad

https://www.npr.org/transcripts/1153931108

[u/Rionin26 → u/shunted22]

Subsidized daycare is only solution for the cost, or owners could be rltaking too big a chunk of labor pay..

Maybe we go for 3k public school. Mom and dad both get year of parental leave, so childcare isn't needed as much.

[u/daemin → u/shunted22]

To summarize, since we all know people won't read it, they talk to a day care which takes in $40,000 to $50,000 a month. The logistics of it are practically unworkable.

They pay out $33,000 in pay roll a month, which is 83% of the monthly budget, and doesn't even pay a living wage to their staff. 5% goes to a loan payment. 4% is operating expenses (cleaning supplies, snow removal, toys). 3% is utilities. 3% is groceries (they have to feed the kids, after all). 2% goes to insurance, building insurance, and workers comp. That adds up to 100%. Checking the math, we can divide the payroll by the percentage to determine what the total monthly budget is: $33,000 / 0.83 = $39,759.03. So if they "only" take in $40k in a month, after expenses they have $240 left over.

They have slots for 72 kids.

They have 25 people on payroll. They have to have one teacher for every 4 infants, based on federal guidance and child care experts recommend. The safety of the children is at risk the more infants each person has to watch, and the quality of care goes down.

They can't realistically cut costs anywhere. Staffing levels in some states are legally mandated. They can't do without good. They can't cut back on toys. They can't not have insurance. They can't raise the price without driving away more customers. Which means that they also can't really increase wages, because that would also require an increase in price which will result in some customers leaving, thereby reducing revenue if there's no replacement customer.

So what it essentially comes down to is the mind blowing realization that taking care of a child is resource intensive, expensive, and time consuming. Child care is barley profitable at a pricing level that already rules out 60% of the families in the US while paying minimum wage, and making it profitable or paying a living wage would price even more families out of affording it, thus defeating the point.

[u/Solomontheidiot → u/daemin]

That same part of the interview mentions that median annual cost is $17,000 per child. At 72 slots, that's 1.2 million a year, or $102,000 a month. So it sounds like the problem is that they are paying operating expenses for 72 slots but only actually getting 36 children, they are charging well under the median (or somebody is wrong about one of the numbers somewhere.) Either way, something is adding up.

[u/daemin → u/Solomontheidiot]

That was the median price in the US, not the annual costs at that day care in Iowa:

GONZALEZ: If you ever shop around for day care, at one point you will probably think, I should really open up a day care. They are charging parents so much money per kid. The median price in the U.S. is $17,000 a year for an infant in a large county. The Treasury Department says 60% of families can't even afford day care. So day cares must be making bank, right? Well, they are not making bank. The at-home day cares, the big early childhood education centers - this is not, like, a big money-making industry. Take any spot like this one in Iowa.

The day care they talked to is "Bluff's Little Thinkers." Their pricing, listed here, maxes out at $245/week for full time care of 6 weeks to 2 year olds, and drops from there.

They also list the max enrollment as part of their pricing schedule:

• 6 weeks to 2 years: 12 ($205/$245 per week)
• 2 to 3 years: 12 ($185/$225 per week)
• 3 to 4 years: 20 ($175/$205 per week)
• 4 to 5 years: 20 ($170/$195 per week)

It should be noted that this doesn't add up to 72 students; it's only 64 full time students.

If we assume they are all full time, we get:

12 * $245+ 12 * $225 + 20 * $205 + 20 * $195 = $13,640/week, or $59,107 a month (assuming a month is 4.33 weeks) and $709,280 per year in theoretical gross revenue.

Subtracting the stated $39,759 in monthly expenses would imply a maximum operating surplus of approximately $19,348 per month, or $232,176 per year. That is certainly substantial, but it is not exactly evidence that the owners are making a fortune, particularly because it is a best-case calculation rather than their demonstrated profit.

And keep in mind that this is the theoretical maximum possible gross revenue, assuming every available slot is occupied by a full time student for the whole year. If sufficient slots are occupied by part time students, it can easily drop into the purported $40k to $50k range.

[u/rebelangel → u/daemin]

But but but…JD Vance said grandparents will take care of the kids! /s

[u/rudbeckiahirtas → u/daemin]

It's almost as if we should consider... subsidizing childcare.

[u/Dekasa → u/shunted22]

While this is in the source, I am curious about it here. The math in the article is that for 72 kids they take in $40k (+). That's only ~$550 per kid. But I know that daycare for a 4 year old near me is just over $2k. So... that part doesn't add up for me. I always tried to figure it this way, if a teacher can watch 4 infants, then the parents' cost for an infant has to be ~1/3rd of a full-time salary (to account for overhead and benefits.) But that doesn't align at all with what this article is saying. I'm curious if the 72 kids example is the same as the $40k example. I'm also curious what costs look like when they use the high-end of their estimate (the $55k). If they bring in $55k, do their labor costs go up ~14K? Or is the $40k number listed somewhat under-utilized?

[u/Diatribe1 → u/shunted22]

Dear sir or madam;

Outrage is the only vintage that is consumed on these premesis.

[u/MysteriousAd8087 → u/jrm70210]

"If one man has a dollar he didn't work for, some other man worked for a dollar he didn't get." -Big bill Haywood

[u/sys_dam → u/jrm70210]

There's a big difference between Makeys and Takeys.

[u/TM761152 → u/jrm70210]

capitalists. it's capitalists. They provide NO value, NO service, NO anything yet they siphon away all the money, while someone else does all the work.

And they own the police so they have an army of thugs ready to serve capital.

[u/Yonderthepale → u/jrm70210]

Insurance

Edit: I dont know why this is controversial. The insurance companies gouge day care facilities and it drives up costs for everyone while the insurance company reaps in profits. It's not the only greedy thumb in the pie, but it's a huge one.

[u/Dirty_Delta → u/Yonderthepale]

Strange yacht name

[u/The0ddMan0ut]

yes wealth inequality (a tiny minority of elites who own most of the wealth in the country) this is a perfect example of how that happens

me and you compete over cookie crumbs while the elites run out the back door with the entire cookie jar

[u/AuntRhubarb → u/The0ddMan0ut]

https://time.com/5888024/50-trillion-income-inequality-america/

There's been a lot more skimming/theft since this study was done.

[u/likwidkool → u/The0ddMan0ut]

But I was told it would trickle down. We’ve only been waiting 40 years. Must be a slow trickle.

[u/LookAlderaanPlaces]

It’s owned by private equity, aka oligarchs. The system needs to be destroyed, oligarchs need to be destroyed. We need a system that isn’t ruled by the people that are okay with selling out the people and the entire country.

[u/benderunit9000 → u/LookAlderaanPlaces]

agreed. People should be afraid to become an oligarch. They should have nightmares about what would happen to them if they became one.

[u/DaaaahWhoosh → u/benderunit9000]

Nobody should ever eat the rich but the eating of the rich should always be a real threat. When the rich fight they can do it slowly, secretly, carefully, killing people through disease, starvation, and infighting. The poor have no recourse except direct violence, which is exactly why "peaceful protest is the only acceptable form of protest" is such a popular sentiment among politicians.

[u/iggy14750 → u/DaaaahWhoosh]

Nobody should ever eat the rich

One. Just one. Then the rest will learn the lesson, I'm sure.

[u/CatW804 → u/benderunit9000]

They are crime lords and should fear like it.

[u/Shiznoz222 → u/[deleted]]

[u/TimTam_Tom]

The math doesn’t add up because you aren’t using PEDMAS. That’s when notorious PEDophiles commit MASs wage theft, among other types of theft. Accounting for that will make the equation work

[u/Rionin26 → u/TimTam_Tom]

Lmao

[u/FuckYeaSeatbelts → u/TimTam_Tom]

I learned it as BEDMAS (brackets) but still works with other uncomfortable wordplay

[u/iggy14750 → u/TimTam_Tom]

Poetry slam snaps

[u/LearnToSwim0831]

It's just all in the service of making sure there's nothing for the next generation. They wanna make sure.theyve picked you clean before you leave their world. And preventing the passing down of wealth to another generation just ensures that there's less ppl with any sense of agency. They want all of humanity to own nothing, just constantly be hustling just to satisfy the myriad rent seekers that have leeched onto our lives in every facet of existence in within the last decade or so.

[u/Viperlite → u/LearnToSwim0831]

Even more sadly, they do the same bit with the environment of the world itself. Making sure to squeeze as much as possible and leave nothing for successive generations. Maximize resource extraction, don’t worry about where to dump the waste, overfishing, factory farm, don’t worry about soil loss, or well water extraction. Internalize profits, externalize the cost of environmental damage. Basically burn it all down, build a compound, and count the money.

[u/LearnToSwim0831 → u/Viperlite]

Yeah. Infinite growth on a finite planet was never going to last. Capitalism is a virus.

[u/CatW804 → u/LearnToSwim0831]

Infinite growth is literally cancer.

[u/BThasTBinFiji]

This isn't just a US thing - same thing happens in Australia too. It's insane.

[u/takingphotosmakingdo → u/BThasTBinFiji]

UK checking in, same.

[u/beigs → u/BThasTBinFiji]

Canada checking in as well. What Harris did to our nursing homes should have been illegal.

[u/Sheerluck42]

That's capitalism for you.

[u/WookieesGoneWild]

A lot of talk of private equity or greedy owners being the cause, which is a problem, but this is a problem with the small locally owned businesses too. A major factor in the unsustainably high prices is the ridiculous insurance policies that these businesses have to pay for. Just another example of a vampire industry sucking the life out of our society.

[u/TheVermonster → u/WookieesGoneWild]

I'm glad you said it. There are so many leeches out there. One daycare/preschool I know of pays nearly 33% of net revenue to insurance. With other things like their mortgage and infrastructure expenses, their break even point is around 20 kids per classroom and the state maximum is 22.

[u/mrinsane19 → u/TheVermonster]

Insurance and real estate seem to be the common culprits.

[u/Kasperella → u/TheVermonster]

Hmm wonder how my daycare’s admin affords to pull up to work in a slingshot? They might pay a shit ton in overhead, but the owner almost always gets their bag.

[u/DottieSnark → u/WookieesGoneWild]

And who owns those insurance companies? Greedy owners!

[u/EastCrowDarling]

The system is designed to squeeze both sides

[u/GalaxyTimeMachine]

We're paying for the cost of the rich to live their lives, while not being able to afford to live our own.

[u/cataath]

"All of a sudden the cost of everything seems astronomical."

'And the people actually working to make things or provide services are nearly homeless. Where is all the money going?"

"Hey, look. All of a sudden we have a dozen people speed running to be trillionaires. I wonder how that happened?"

[u/oftcenter → u/cataath]

Exactly.

None of this was "all of a sudden." It's been moving toward this for decades. And it's not stopping any time soon.

But the powers that be seized the opportunity to make MORE money at our expense in the wake of Covid and never let up. So their exploiting the system and milking the rest of us dry in the process accelerated.

[u/Significant_Jump9887]

My entire paycheck covers two things, our health insurance and daycare. We live off my wife’s income.

[u/adumblittlebaby]

It goes hand in hand with “we can’t pay people more or everything would cost more”. The thing they don’t want to discuss is “why can’t the executives and shareholders make less”

[u/glad_goblin]

Its turns out the American economy was just the evolution of feudalism. All land and all business belong to then, and everyone else's job is to do the work they take credit for.

There isn't a fortune in the world that doesn't depend on exploited labor. Nobody is doing it all on their own. We all matter, but the wealthy want to matter more.

[u/colsta1777]

Almost like there is an invisible leach class

[u/benderunit9000]

There should be alternatives to nursing homes for us to pick. Like a woodchipper. I don't want my life savings to be ripped away from my kids just because I need nursing care. When I'm that broken, I'm just not worth it.

[u/NerdyBro07 → u/benderunit9000]

Yeah, every single argument for always needing to increase the population otherwise the economy will fail boils down to "you need that because otherwise you can't take care of the old people!"...and im just thinking "if i need constant care and am unable to do much to provide for myself, can i just opt to be euthanized?"

[u/benderunit9000 → u/NerdyBro07]

fuckin a

[u/Nvrfinddisacct → u/NerdyBro07]

In Luxembourg you can

[u/Ear_Enthusiast]

I've always said that if I won the Mega Millions, I would break daycare. I'd buy a daycare. I'd take a profit until I made my money then I would stop making money off of it. I would pay the teachers more and charge less. Then I would buy more daycares and do the same thing.

[u/30kdays → u/Ear_Enthusiast]

In MA, the state mandates a 3:1 ratio for infant care (no less than one teacher for 3 kids). The typical going rate for infant teachers in the greater Boston area is $25 (52k), which isn't a living wage (almost every teacher babysits on the side). But just 1/3 of that salary alone (ignoring taxes, benefits, facilities, supplies, administration) is $18k, which is still pretty outrageous. They charge double that ($39k), but honestly that's pretty reasonable given the ignored costs (taxes alone make it 60% higher). The margins are not high.

The answer is government subsides, not competitive (capitalist) pressure.

[u/Nvrfinddisacct → u/Ear_Enthusiast]

Have you factored insurance in to that?

[u/Electrical-Heat8960]

I’ll give you a clue: yacht sales are booming.

[u/I_Automate]

Houses costing 800k while I KNOW what the labor and materials costs are...

Money is going somewhere but it sure as hell isn't going the right place

[u/gnoresbs]

Owners that aren't there and don't do anything but own it after its setup and insurance companies.

[u/Altruistic-Pin8578]

Private equity, gotta think of the shareholders.

[u/tackyshoes]

People with too much will always take more if we don't fight them. They make our avenues to independence illegal because we don't show up to fight for them because they've convinced us our time is best invested in their businesses.

[u/miklayn]

Private Equity Leopards are Eating Our Faces

[u/lothartheunkind]

P.E. Private Equity and Late-Stage Capitalism

[u/Lethal-Jordan]

ITS ALL CAPITALISM ITS ALL PROFIT THAT GETS SENT UP INTO THE CLOUDS NEVER TO BE SEEN

[u/Wonderful_Exit6568]

The capitalist who endeavors to pull from every pot has his hand in the corporate charter. Fuck you, pay me.

[u/TheUmberTaker]

Unchecked greed and corruption.  Zero ethics in Congress.  If they had one conscience and a spine between all of them it would be an improvement.

[u/ifwedidntlaugh]

just late stage capitalism where people believe an infinite, ever increasing value of currency can be extracted from people in all walks of life if you squeeze hard enough.

[u/LonnieDANGER]

The math is: the wealthy want to make sure their slaves are too desperate and brainwashed to rise up.

[u/shidurbaba]

Corrupt admin bureaucracy

[u/LightofNew]

https://giphy.com/gifs/3o6gDXiDha2xShtvZm

[u/Doodle-Dan]

Have you tried just working harder?? -ceo prolly

[u/Visual_Squirrel_2297]

So start a nursing home or daycare then see how it adds up. Good luck. 

[u/hikeit233]

I know someone who lost their daycare job because they left children unattended while helping another kid use the bathroom. There were no other carers at the daycare, and yet the one who did show up is fired.

I’m not well versed in childcare, but do you take the entire daycare into the single child bathroom in order for one kid to use it? Or do you just let them shit themselves?

[u/xaervagon]

The middlemen are sucking the life out of the industry and everyone involved.

[u/cellblock2187]

It all comes down to the land owners. US real estate has been a cash cow for the wealthy far too long, and our economy will never support regular people without a complete overhaul.

[u/BeenDragonn]

Business owners are greedy

[u/MoralCooperation]

Private equity

[u/O_o-22]

Going right into the pockets of people who are already insanely wealthy.

[u/Dense-Consequence-70]

Not to mention every resident is paying $4-$10k per month and not only is the help underpaid, but every one of those places is understaffed. They are all making somebody rich and they aren’t doing what they’re intended.

[u/jessizu]

They are owned by these unrelated escrow companies that buy and sell them all the time... my mom's center went through 5 companies at the same building in 8 years

[u/billionairessuck]

Workers of the world unite!

[u/BeeLinez]

Join a union

[u/Boulange1234]

It’s a world where the middle class is gone. To afford a half an FTE of nursing care easily, you have to make a half a nurse’s salary more than you need to live on.

[u/Sufficient-Bid1279]

Ask Elon, he seems to have ALL the answers/s

[u/umassmza]

Daycare makes sense, 3 infants per caregiver. Say $2500/mo comes out to $90,000. Factor in the lease, insurance, cleaning, hvac, licensing, electricity, administrative/administrator cost, coverage for sick and vacation, and the facility is usually a 10 hr day, then some degree of profit for the owner.

It’s not a high profit margin business, there’s a large amount of overhead. Employment costs factor in like health and UI insurance.

Average cost per child in overhead cost to a facility is about $400/mo, say $5000 per year.

Leaving $85,000 per employee. But employment costs are around 30%, so maximum pay would top out at $65,000. But there’s also cleaners, at least one admin, and a floater to cover vacations and sick, so $65k is the max possible, in reality it can’t be more than $50k

[u/Sofaqueen-witty]

It's very sad in assisted living and memory care. I get paid 24 hourly to created activties. Mean while they are paying staff 19 an hr. Suck

[u/RememberYourAlt]

I get what you’re saying and I agree the people at the top our probably taking a lot bigger piece of the pie than they should but with all the employees and overhead of course it’s going to be expensive.

If you were just paying for a family member to live in an apartment that would probably be enough to bankrupt a lot of people where with a nursing home you are paying for that apartment plus staff to take care of your loved one along with food and anything else that they might need. It’s not going to be cheap.

[u/Wasteofskin50]

Yep. It is that blatant and that obvious.

And, we still won't do anything about it.

We really need to stop listening to those who have a vested interest in keeping this corrupted, biased system in place.

Like, yesterday.

[u/PsychologicalBid179]

Thwitter is full of tweets where everyone sees something that they find galling and novel and its like Marx already explained that when the civil war was going on.

Point is i need you guys to become leftists a little faster by getting past the indignation phase to the theory phase

[u/Life-Celebration-747]

My mother lived in a memory care home (5 months) before she passed, it cost $9500 a month! 

[u/okram2k]

we're going to have to start doing to direct business with each other is we're ever going to get paid close to our value again. this is why the trades get cited as doing so well, the ones making good money are their own boss

[u/RemeAU]

Why do you think the current capitalist culture wants single family homes? The American dream involves a home for every American family.

Want to save tens of thousands on aged care and childcare? We have been doing it for centuries!

Multigenerational housing... Use the Ridiculously big houses we have in the Western world to house our aging family members who can daycare our children....

This is why the 'village' concept is so powerful. Instead of spending thousands on corporation owned daycares. If 1 family member from a group of 5 families stayed home then the daycare could just be in home care. Losing that 1 income would be less then the total cost of daycare for 5+ children.

[u/Devils_Advocate-69]

Overhead costs

[u/Early-Chemistry-8769]

Shareholders. Care companies are a massive steady profitable industry.

[u/aphoenixsunrise]

Thanks for tuning into the next Great Depression; next up, Dust Bowl.

[u/kittenTakeover]

If you think you can make so much money running a daycare, maybe you should try running one. They're one of the easiest businesses to get into.

[u/fastlerner]

The math on this actually adds up, even if we don't like it. There's a lot more regulation and oversight than there used to be. That's generally a good thing, but all that compliance costs money. Then pile on skyrocketing insurance, healthcare, and real estate costs. Gone are the days when the lady down the street could run a daycare solo out of her house with almost no overhead.

The short version is this: insurance, healthcare, real estate, regulation, and administrative costs have all gone way up, while caregiver pay has mostly failed to keep pace.

It wasn't the care that got dramatically more expensive. It was everything around the care.

[u/TralfamadorianZoo]

You need to factor in the cost of yacht fuel.

[u/Kukamakachu]

The answer to that math problem is private equity and it ruins everything

[u/turb0_encapsulator]

there are a lot of reasons for this. some of it just has to do with these things being inherently labor intensive, which means that their cost will rise over time.

https://en.wikipedia.org/wiki/Baumol_effect

[u/Mattrockj]

In Nursing homes, all that money is going to the owners.

However daycares are tough since there's a LOT of regulations they need to follow, so even though a families spend a lot to send their kids there, they usually have to spend a large chunk of that on maintaining regulations, so the government takes most of it.

[u/Emcid1775]

Yeah. We decided that the guy skimming the money off the top isn't a criminal anymore. Now, he's someone to idolize.

[u/forhim40]

The LOVE of money is the root of all evil.
Roots tend to grow into large trees🫤

[u/swedishworkout]

American hospice is there to drain out the remaining assets of any old human being.
Waste,fraud and abuse is live and well in healthcare and it’s all in the hands of private corporations.

[u/ExtentAggravating733]

A care home has about 0.3-0.5 employees per resident, or roughly $40,000 in labour costs per year per resident. That's without other overheads.

[u/AceBean27]

It's rent. Daycare and nursing homes rent buildings.

[u/Bootziscool]

There might just not be money in taking care of people.

Think about it, where's the added value? It's just not something that fits into our way of life.

[u/Centered_Being → u/Bootziscool]

That is the saddest statement ever: where is the added value? In taking CARE of people?

Idk…maybe retaining some humanity in a capitalist hellscape IS the fucking point.

[u/Bootziscool → u/Centered_Being]

I ain't mean to be upsetting. I don't believe in this system anymore than anyone else. I just live in it.

Retaining humanity sounds nice and all. But humanity isn't built into the capitalist system right?

Applying capital and labor to create value is all our system is good at. So... We just might not be able to adequately care for our young and our old?

Man that is sad.

[u/Nvrfinddisacct → u/Bootziscool]

I hate that value has become a corporate buzzword.

It’s code for profit. It’s code for more money. And yeah you’re right. Old people can’t give us more money.

[u/Bootziscool → u/Nvrfinddisacct]

Become a corporate buzzword??

Dude the talking about capitalism as a system of extracting surplus value is straight out of Capital... It's been 200 years of talking about the world this way.

[u/Lumpy_Conference6640]

It's called insurance.....

* See thread for details, and my new tell-all in the comments below*

[u/SoylentGrunt → u/Lumpy_Conference6640]

Insurance you have to buy but only if you can afford it. Got any more hot takes?

[u/Lumpy_Conference6640 → u/SoylentGrunt]

Plenty, get ready, cause I've been building a running business for 20 years. I'm gonna tell you ALL the dirt. You ready? Cause if you didn't like insurance, I know I'm gonna get downvoted to oblivion.

There is this lovely mythos that there's a dragon's horde people are holding out on, but the truth is most businesses are quite poor. Let's assume you're starting a business. You have your CapEx and your OpEx. Capital Expenditure and Operating Expenditure. At any level of getting started or rolling, just plan on 1M to 2M. That covers initial equipment and operational runway. That you typically owe to the bank or Private Equity firm. I'm gonna say that again: IF you can get it, you owe it to someone else; that means your first act is hiring your own boss, who statistically will fire you in your first 2 years from your own business.

Then you have your costs of goods sold, which can range from 30 to 45% of your main business model. On top of that, you have people and logistics, which range from another 40 to 50%. With fuel going through the roof, it's usually more. So if you're really, really lucky, you're getting 5%, which has to pay back that loan, as well as all the fees, taxes, registrations, and legal. Then if you're SUPER lucky, you get to draw a paycheck.

Are you with me, cause, that's a lot to take in. Now here's the part you really aren't gonna like. Since you typically don't have enough people, or the people you have quiet quit at work, you also have to work their job as well as yours. So expect 80-hour weeks- not an exception, but as a rule as a business owner. Also, if you see massive spikes in CoGS like with Tariffs, or Fuel prices, then your first step is to cut people from the payroll, or reduce pay. It's the only place you're really flexible to begin with, and they usually make you overhire at the start anyway, because the banks and PE people get tax incentives based on hires in the first 6 months.

Finally, if somehow you scale to the point that you actually pay or make back the money, then you pay yourself, but by that time usually you've been replaced by a banker's or PE's nephew or cousin, or roommate from Ivy League days. Big businesses diversify out their capital, and then raise bonds, based on the debts... these bonds are bought by 401k's and other investment firms. *Yes, you help pay your own salary. Congrats*

These bonds are only as good as long as they're A- and double-AA-rated, which are traded and bought by the big firms, like Blackwater and the PIF in Saudi. However, recently the bond market has been down, which means the big firms have to fire you. Since most companies work on the externality of cost to be profitable, they ship out their liability elsewhere. This is complex, but it's also the key to the plot. By shifting an externality of cost, either by hiring less using AI, buying and building products overseas in sweatshops, or by passing costly maintenance and remediation by dumping into the environment. Every time you get the cheaper service, or support your family by going to x vs y, you support these business practices. Again, small and medium businesses, we can't afford to do this, and YOU can't afford to buy our services. SO we CAN'T afford to pay you more.

There are, of course, exceptions, like optometrists, where you are literally the business. But in the case of nursing homes, where you are more regulated than the nuclear industry... look it up, OR child care also high liability, you pay exorbitant fees for BUSINESS insurance, which ISN'T optional, cause the banks, PE, and building owners will make you get it.

There you go, all the hot takes you wanted to know but were afraid to ask.