President Joe Biden’s Build Back Better agenda has been marketed as a panacea to everything that ails the United States today. The administration has promised everything but the moon – that comes later – without costing the taxpayer a single cent. One component of the president’s economic prescription is government-supported child care, allowing women to return to the workforce to earn a living and have a portion of their income confiscated by the state. However, a new study shows that Biden’s plan for child care is nothing more than a nostrum that will fall short of its intended objective. At this point, the same could be said for pretty much everything coming out of the White House since Inauguration Day.
Child Care Is Not What It Seems
Biden and the Democrats will be spending billions of dollars on “affordable high quality child care.” But what does this mean? According to the administration’s Oct. 28 statement:
“Limit child care costs for families to no more than 7% of income, for families earning up to 250% of state median income. It enables states to expand access to about 20 million children. Parents must be working, seeking work, in training or taking care of a serious health issue. This is a long-term program, with funding for six years.”
A new report suggests that the cost of child care will skyrocket under the Biden plan. Matt Bruenig of the People’s Policy Project, a progressive think tank, explains that this proposal requires higher wages for child care workers without going ahead with taxpayer-funded subsidies for families.
“The result will be a massive increase in child care fees for families with incomes slightly above their state’s median income,” he wrote.
Today, the average cost of child care is just short of $16,000. The chief problem is that the Democrats want to raise wages for child care employees to mirror what elementary school teachers earn, which is around $60,000. This would represent a 138% increase. As a result, child care without considerable state support would seriously raise the cost by more than $13,000 to nearly $29,000 per year.
Bruenig added that the Democratic plan installs “a sliding-scale income-based co-payment” system, letting the government cover the costs that surpass a family’s co-payment amount. On the surface, this might seem like an appealing solution, but anyone earning $1 over the three-year median income levels would not be subsidized.
Despite claims that this proposal would nudge women into the workforce, it would be challenging for many Americans to foster a two-income household since the cost of child care would be substantially more expensive. “This is obviously a perverse outcome and it’s not clear whether lawmakers even realize what they are about to do,” Bruenig said.
The Child Care Conundrum
Many experts contend that the United States is experiencing a child care crisis. Be it because of the exorbitant cost or the paucity of options, a growing number of women are choosing to stay home and take care of their little ones. The conversation on whether this is a positive or a negative can be left to the third-wave feminists and right-wing commentators. However, clearly, the United States does not possess affordable child care. The government has either exacerbated the situation or put forward a series of public policy tools to worsen the problem.
Data suggest that the child care industry is run by a handful of businesses that possess the resources to adhere to the myriad of regulations imposed by the governments. The sector needs more competition, but it can only support more companies through less red tape and a greater push for deregulation.
According to research from Mercatus Center scholars, the other issue is that rules and regulations pertaining to child-staff ratios, group-size restrictions, and education requirements have contributed significantly to higher child care costs without leading to any improvement.
Another key aspect is that higher taxes and soaring inflation are diminishing living standards, forcing many women to head to the office, creating even more demand for something in such short supply. As Jeffrey Tucker opined in 2019: “Parents are being forced to pick their poison: lower standard of living with only one working spouse, or a lower standard of living with two working spouses. This is a terrible bind for any family with kids.”
Get the Government Out of the Way?
So, what is the solution to the child care puzzle anyway? Many conservative and libertarian economists have proposed abolishing all licenses and regulations and extending unlimited tax credits to families who utilize child care services. Some want to go as far as eradicating the minimum wage. These two or three remedies would not only manufacture additional supply but also cut costs. Indeed, for something as critical as caring for a child, serious due diligence and research are still essential for parents. Like any market, some child care centers would be glorious, while others would be disappointing.
~ Read more from Andrew Moran.
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