The U.S. Is One Of The Few OECD Countries Where Child Care Is Unaffordable To Many

 From The Economist

U.S. Is Approaching A Child Care Crisis & GOP Doesn't Care

The following post is by Zeesham Aleem at MSNBC.com:

We’re hurtling toward what experts call a “child care cliff.” It could wreak havoc on families, the economy, not to mention President Joe Biden’s approval ratings.

A $24 billion federal emergency relief fund for child care, passed under the American Rescue Plan Act in 2021, is set to expire at the end of September. That means in a few weeks day care centers and preschools across the country will lose a vital source of funding that helped keep them afloat as the economy recovered from the pandemic. Without continued federal aid, a huge swath of the child care industry is likely to collapse — and send shockwaves through the economy as families scramble to adapt to a reduction in child care options.

The numbers are grim. According to a report by the Century Foundation, a progressive think tank, more than 70,000 child care programs “will likely close,” and "3.2 million children could lose their child care spots." As child care providers are forced to push up their tuition prices to compensate for the absence of aid or shutter altogether, parents will be forced to find alternative arrangements for child care. For many that will mean cutting back work hours or quitting jobs entirely. The cascading effect will be a blow to the economy. The Century Foundation estimates that states will lose $10.6 billion per year in economic revenue, and families will miss out on $9 billion a year in earnings.

This is all a shame, because the emergency funding for child care was working well. It allowed day care centers in some cases to not just stay afloat but to reduce tuition, raise pay for staff, invest in professional development and improve the quality of their services with better equipment. According to the Department of Health and Human Services, the funding helped over 80% of child care centers across the U.S. cover overhead costs and retain employees.

Part of the issue is that the American child care industry was already struggling a great deal before the pandemic. The U.S. is an extreme outlier among affluent nations in how little funding the government provides to assist families with child care. In America, child care centers have long struggled to establish sustainable businesses between the high cost of property and the labor-intensive nature of child care work. And the high cost of tuition for child care was already out of reach for many households before the pandemic. While the emergency funding was a great stabilizing force, the industry is now back on the brink of a major bout of instability.

Democrats sought to address the anticipated end of the emergency funds by including a huge grant for child care in the Build Back Better Act. That plan was meant to guarantee every family in the United States a range of child care options to meet their needs. The bill made it through the House, but not through the Senate, and as the bill was dramatically narrowed in negotiations with conservative Democrats, child care funding didn’t make it into the Inflation Reduction Act that passed in August 2022.  

Unfortunately, despite the cliff it seems like Biden isn’t making child care a top priority in the upcoming government funding fights on Capitol Hill. According to Politico, the White House has signaled that “it wouldn’t prioritize the child care program.” And Democrats are unlikely to pass child care legislation with Republicans controlling the House.

This is a mistake: Letting funding for child care policy lapse isn’t just harmful policy, it’s also bad politics. While the inflation has cooled, families will feel the pinch of fewer and more expensive child care options in a very tangible way. It’s a particularly undesirable vulnerability for Biden as he enters an election year and continues to struggle to sell the economic achievements of his first term in office. 

The Biden administration made a great decision to pour a lot of funding into helping keep the child care industry alive at a time of crisis. But Democrats need to view child care as a social right rather than an option

Most Say Lack Of Child Care Keeps Women From Working

 The charts above are from a recent YouGov Poll -- done on July 14th and 15th of a nationwide sample of 5,392 adults. The margin of error would be less that 3 points.

Investing In Child/Elder Care A Good Way To Fight Inflation

 Most people think the biggest economic problem facing the United States right now is inflation. It is particularly devastating for the poor and working class, who were already struggling to survive.

The Federal Reserve is considering raising interest rates significantly to fight inflation. That could work, but it could also throw the country into recession, which would certainly not help those already struggling.

There is a better way. The Economic Policy Institute suggests investing in child care and elder care. These would boost the income of those struggling the most without adding to inflation, and it would allow an easing of the labor market which would help ease inflation. Here is part of what they had to say:

Inflation is by far the biggest economic concern facing the U.S. economy today. While job growth is historically rapid and survey evidence indicates that workers think now is the best time in years to find a good job, the inflation surge has kept this labor market strength from translating into higher wages and incomes for most households. The most well-known tool to restrain inflation—higher interest rates engineered by the Federal Reserve—is potentially very costly if it leads to higher unemployment and a weaker labor market.

Given all of this, policymakers should look for any tool that can help restrain inflationary pressures without causing significant collateral damage. One such tool could be investments in child care and elder care. By subsidizing families’ use of child care and elder care and providing direct investments to providers, such investments could boost future labor supply by allowing working-age parents and children who want to look for paid employment to do so while remaining confident their family members are receiving care. Further, these investments can help dampen inflationary pressures—that rising wages could in theory contribute to—even well before they fully take effect.  

To understand why, one must realize that developments in the labor market will likely determine just how easily (or not) inflationary pressures can be lowered in the next year or so. The inflationary spike that began in 2021 didn’t start in the labor market—it started in commodities and in supply-chain-snarled durable goods sectors where wage growth was actually slower than in other parts of the economy. But going forward, whether or not the Federal Reserve needs to start applying ever-stronger medicine (with deeply damaging side effects) to slow inflation depends on what happens in labor markets. Specifically, it depends on whether or not the initial inflationary shock leads to unsustainably large wage increases that push up inflation even further, leading to wage-price spirals of the sort that characterized the 1970s. . . .

A crucial determinant of wage pressure over that time will be how fast labor supply rebounds from its pandemic decline. Relative to pre-pandemic months, the overall labor force participation rate is down a full percentage point (which translates into roughly 2.5 million potential workers) and even labor force participation among workers 25-54 is down half a percentage point (indicating that it is not demographic changes alone dragging down the overall rate). If this missing labor force returned relatively quickly over the next year, this could greatly ameliorate fears of too-tight labor markets feeding a wage-price spiral. . . .

The Federal Reserve has the most control of inflationary expectations, both through its words and its actions. However, there are progressive fiscalpolicies that can nudge expectations of labor supply upwards. The primaryeffect of these policies—such as child care and elder care investments—provides U.S. families more options and better lives, but the added effect of boosting expectations of labor supply growth means that now would be a great time to undertake them.

The evidence that such care investments boost labor supply (predominantly of women) over time is very solid. Of course, even if such programs were passed today, the investments would take some time to come fully online—child care centers must be opened or expanded and extra workers must be hired to provide the services. Given this lag, some have argued that they might not provide much relief for today’s inflation. But, today’s inflation isn’t really the problem. All of the macroeconomic debate about what the Fed should do hinges on the role of expectations over the rest of 2022 and into 2023. . . .

The even better news about how dramatically expectations of labor supply might shift is that comprehensive care investments could lead us to exceedpre-pandemic labor supply. Labor supply of U.S. women has severely laggedmany of our rich industrial peers. Much of this lagging performance is likely driven by the underinvestment in progressive family policies in the United States.

There are very few options for reining in inflation and changing expectations going forward that don’t carry some steep downsides. But investments in care are an exception. Will they be a complete game-changer on inflation over the next 12 months? Maybe not, but they could help a lot. Even if they don’t work wonders as inflation-control policy, that’s not their main job. They will work well in making U.S. families’ lives better and more manageable, and that’s hugely valuable in its own right.

The United States Has A Critical Child Care Problem

 

The charts above are from The Center for American Progress. It shows the cost of child care in each state for various ages of children in licensed child care centers, and for a family home-based child care that meets licensing requirements. 

Republicans would have you believe that many Americans are refusing to go back to work because they are lazy, or want to milk the unemployment system. I think that's ridiculous. Workers want to work, because it gives them self-satisfaction and dignity. But they must be able to afford to take a job. And the cost of child care is one thing that prevents that.

The sad fact is that a single person with a child making minimum wage just cannot afford to do that. The national minimum wage is only $7.25 an hour. That's about $15,080 a year. Note that the average cost of child care for an infant in the U.S. is $15,900, for a toddler is $13.200, and for a pre-schooler is $10,700. Once the child care is paid (for only one child), there is not enough left of a minimum wage paycheck to support the family! And this is the cost for basic child care. High quality child care costs significantly more -- $28,800 for an infant, $22,400 for a toddler, and $17,200 for a pre-schooler.

Raising the minimum wage would help. A $15.00 an hour minimum wage would translate to about $31,200 a year. That would allow a family to struggle by while paying for basic child care, but still falls far short of allowing them to take advantage of high-quality child care. Doesn't every child deserve high-quality child care? Other developed countries provide high-quality child care for their citizens, and the United States (the richest nation of Earth) could do that, if our politicians cared as much about working families as they do rich families.

Looking at those figures, it should be obvious to everyone that something must be done to help workers afford childcare. President Biden's American Families Plan would do that. Under his plan, no working class or middle class family would have to pay more than 7% of their income for high-quality child care. That would be about $1,056 a year for someone making $7.25 and hour, or $2,184 a year for someone making $15.00 an hour. That would allow them to actually support a family -- especially on the $15.00 an hour wage.

Passing the American Families Plan would enrich the lives of millions of Americans by allowing them to work their way out of poverty, or maintain their middle class lifestyle. It would be a sound investment in the people of this country, and one that would pay dividends for the country in the future.

Unfortunately, the Republicans oppose the plan. The only entities they care about helping are corporations and rich families. The Democrats are going to try to pas the American Families Plan by using the reconciliation process (to avoid a GOP filibuster in the Senate). I hope they can succeed, but it will be close -- and it will require the Senate votes of all 48 Democrats and both Independents. There is not margin for error.

The children of this country deserve high-quality child care. And our federal government should help American working families be able to afford that high-quality child care.