New York Times Flunks Accounting

The New York Times' Stacy Perman argues for the public policy concept that increasing minimum wage will hurt small businesses. She starts with Dolores Riley, who owns Gramma’s School House Childcare and Learning Center in the northern New Jersey suburbs. At the start of the second paragraph, Perman destroys her own argument. The money accounting line:

Since 2008, the number of children her company cares for has dropped to 40 from 75, reducing her annual revenue to $350,000 from $600,000.

The better story here would be (a) a drop in revenue has nothing to do with an increase in expenses such as  higher minimum wage costs, or (b) a day care in the northern New Jersey suburbs (home to million of commuters to Manhattan) is facing a 47% decline in enrollment.

Story idea A should have been caught by Perman's editor or copy editor. This possibility suggests, "New York Times' editors continue to post poorly argued stories on company's website," as an even better story.

Story idea B, though, has merit. As the Chronicle of Higher Education (paywall) and (Forbes) noted fewer four-year olds exist compared to 18 year olds. With fewer four-year olds, nursery centers such as Gramma's would be faced with a decline in revenue.

Other reasons for Gramma's decrease do exist, including:

  • more women or men staying home with pre-school age kids
  • newer and/or better child care facility opening near Gramma's
  • newer and/or better child care facility opening in Manhattan
  • public schools adding pre-K programs

All of these list items including story idea B would explain the 47% decline in enrollment at Gramma's. An increase in minimum wage does not explain it.

Perhaps Riley needs to develop and implement a marketing plan.

Gramma's need more 4 year olds to improve its financial health