Hey Government! It’s Time to Make Child Care Affordable

Since 2016, Ivanka Trump has pushed for the government to adopt family-friendly policies that will reduce the household cost of raising a child. According to NPR, about twelve states will be considering paid maternity leave proposals this year, and several pieces of legislation will be considered at the federal level. Ivanka and these lawmakers are not wrong about the imminent need to reduce the cost of childcare in the US, but their proposals ignore one of the core issues augmenting its cost: government regulation of non-parental childcare.

In President Obama’s 2015 State of the Union address, he said that childcare affordability was one of the keys to making middle-class families feel secure in times of uncertainty and change. The US currently offers federal subsidy programs—such as the Child and Dependent Care tax credit and the Child Care Development Block Grant—for families. However, these programs only alleviate the financial burden placed on households, rather than decrease the price of childcare services in particular. Given that fewer than one in three children have a stay at home parent, the need for affordable nonparental childcare is imperative.

The cost of non-parental childcare varies heavily depending on the state. A study conducted by Economic Policy Institute found that the average monthly cost of nonparental child care for a family with one four-year-old ranges from $344 in rural South Carolina to $1,472 in Washington, D.C. That number is even higher for families with infants or more than one child. In fact, in 33 states and D.C., infant care is more expensive than the average cost of in-state college tuition at a public four-year university.

One factor influencing this cost discrepancy is the many state regulations that have been placed on nonparental childcare in order to certify quality.  Though regulations differ state to state, minimum regulations usually include limiting the number of children per age group, limiting child-to-staff ratios, and imposing education minimums and/or specialized training requirements on caregivers. Every state requires licensing for daycares, and all states, except Louisiana, require licenses for home run daycares. In 11 states, one is required to obtain a license in order to be legally paid to care for a single child at home.

While all these regulations seem like a good way to ensure quality care, various research has found that these regulations inflate prices while having no effect on quality. A study by the Mercatus Center found that state-imposed limits on the number of children per age group increased costs by about 18 percent, and educational requirements for caregivers increased costs by approximately 38 percent. A simulation by the RAND Corporation found that if every state in the US tightened regulations on child-to-staff ratios by 2 children per teacher, the price of childcare would increase by 12 percent. This increase would reduce the number of children placed in licensed care by eight percent, suggesting that parents would find more affordable under-the-table alternatives.

Maternal childcare is still the most effective way to optimize early childhood development. However, in a country with an increasing female labor force participation rate and a single parent population of around 12 million, non-parental childcare is the next best option. If Ivanka and state government officials really care about the health and success of America’s next generations and the financial well-being of working parents, then they should look towards loosening ineffective regulations that are unnecessarily inflating the cost of childcare services.

Kelly Lester is a Catalyst Policy Fellow and currently works as a research associate in welfare policy. She studied economics and statistics at Pace University. Specializing in microeconomics, Kelly enjoys researching labor economics & game theory. She predominantly focuses her policy research on socioeconomic mobility, welfare, wage discrimination & early childhood development.
Catalyst articles by Kelly Lester