Don’t Make Child Care Worse
Child care costs have been rising rapidly across the country. In some places, annual infant care can cost more than $22,600 per year, putting a strain on family budgets. If parents had access to affordable, reliable child care options it would be easier for mothers to work outside the home. This would raise GDP in addition to helping parents.
Despite a general agreement that it is desirable to reduce the cost of child care, legislators remain unsure as to how to best help make that vision a reality. Some policies and proposals could inadvertently make the situation worse.
Dramatically reducing legal immigration, which is a possibility being considered in some immigration proposals, would put a strain on the supply of child care. A smaller pool of potential child care workers would lead to higher costs and could limit their capacity to accommodate more children needing care.
In the United States, a proposal released by Senate Democrats last fall, the Child Care for Working Families Act, would make child care a federal entitlement. The proposal would fund preschool for children ages 3 to 4 for families under an income threshold, cap child care expenses for families under 150 percent of their state’s median income with subsidies making up the difference for centers, and impose a new set of regulations on federal child care centers.
The bill would reportedly cost $60 billion each year. If child care centers were to respond to the new sources of generous federal subsidies by charging more, it would increase the associated public outlays and ensure that many working families continue to spend a substantial share of their income on child care.
One of the problems in child care relates to the regulations that place a limit on the degree of innovation or flexibility within the sector. Strict legal caps on the ratio of children per worker are a serious constraint. Putting more money behind the current models of child care, as with Child Care for Working Families Act, would do little to actually reform the status quo. This is not a sustainable answer in a sector that has already seen rising costs without a corresponding increase in efficiency or quality.
In addition, some places are already imposing new rules on child care centers. The Washington, D.C., Office of the State Superintendent for Education passed a rule requiring child care workers to obtain some kind of degree or complete a Child Development Associate’s program by 2020. The new rule generated a significant amount of backlash from child care workers and parents alike, and in response the OSSE is considering postponing the deadline to 2023. These rules would increase child care costs and reduce the number of options available, in some ways exacerbating the challenges facing working parents.
According to a Census Bureau report, families with employed parents have always made use of a variety of child care arrangements for their young children, but the distribution of these choices has been relatively stable over time. The percentage of arrangements through an organized facility such as a day care center or nursery has fluctuated around 25 percent. Child care arrangements through parents have been steady at comparable levels, as have arrangements through other relatives. The rest have been in a changing mix of other nonrelative care and miscellaneous care arrangements.
In a separate 2016 survey from NPR, the Robert Wood Johnson Foundation, and the Harvard T.H. Chan School of Public Health, parents were “nearly equally satisfied” with the child care across different types of settings. No single form of child care arrangement has become the dominant choice, and working parents appear to some extent to have heterogeneous preferences or options when it comes to child care arrangements.
The experience in the United Kingdom serves as a cautionary tale and the most recent example of overregulation. The U.K. expanded the number of hours of free child care for eligible working families from 15 to 30 hours per week. The move was in part a response to rising child care costs, themselves a result of the rules in place, such as high staffing ratios or more stringent qualification requirements.
Unfortunately for the affected families, the new policy has reduced the number of informal child care suppliers has declined sharply, as many places were unable to comply with the regulations already in place. The higher demand, fueled by the recent expansion, has far outstripped supply, leading to cases where parents are unable to find a place for their child.
Child care is one area where good intentions have led to policies that exacerbate the problems they hope to address. Regulations increase costs or reduce the number of choices available, and could actually reduce access to affordable child care. Subsidies can also elevate one form of child care over others, and limit the ability or incentive to innovate. In searching for answers in child care, Congress and President Trump should first and foremost avoid making the situation worse. As simple as that sounds, in many cases it has proven to be too tall an order.
Charles Hughes is a policy analyst at the Manhattan Institute. Follow him on Twitter @CharlesHHughes.
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