Economist Casey Mulligan has an op-ed in the Wall Street Journal on the childcare provisions in the “Build Back Better” bill. Here’s a sample:
Child care is already a major expense for parents, and President Biden pledges to reduce its cost with his multitrillion-dollar Build Back Better bill. Yet while some of those who receive government subsidies may see reduced costs, millions of other working parents could see their child-care costs double. The new program would act like a $20,000 to $30,000 annual tax on middle-income families.
The bill’s latest draft proposes to reinvent child care with a trifecta of cost-increasing forces. First, it would remove much of the incentive to offer lower-cost care. Millions of families would have their child-care expenses capped by statute, which means they’d pay the same at an expensive facility as at a cheaper one.
Providers would quickly discover that lower prices no longer are much of a competitive advantage. Moreover, the providers would be reimbursed extra for what Congress calls “quality,†which is a euphemism for having more staff per child. The history of rate regulation is that cost-plus schemes result in needless waste and higher prices for consumers without quality improvements.
Churches and other faith-based institutions have a natural cost advantage in child care because church facilities would otherwise sit unused on weekdays, when the demand for care is greatest. Build Back Better would squander this advantage by financing capacity expansions only at nonreligious competitors.
Second, providers would need extra staff to comprehend and comply with all the new statutes, certifications and agency rules. Just as physicians complain about paperwork eating up time that could be spent with patients, child-care providers will lose time they could be spending with kids.
Third, the bill imposes “living wage†regulations on staff pay. In a study for the Committee to Unleash Prosperity, I estimate these regulations alone would add 80% to child-care costs.
I agree with some of what Dr. Mulligan has to say but disagree with others. For example, I disagree with this completely:
The best way to help working families is to cut their tax bills, which helps not only families using child-care facilities but also those providing the best care available—at home with mom or dad.
Almost 2/3s of households already pay no federal income taxes. What good is a tax cut to them? And to my eye at any rate those are the households most in need and deserving of assistance.
In addition there are basic questions that need to be addressed. No one seems to be pointing out the inherent contradictions in positions that Republicans are taking. I agree with conditioning receiving welfare on work. It has proven effective. However, is it not obvious that also imposes a mandate for childcare?
About a quarter of all children live in single parent households. For them there is “at home with mom or dad” there is only “home alone”.
Additionally, I believe there is a categoric difference between subsidizing childcare for the highest quintile of income earners and for the lower quintiles. For the latter childcare is a necessity like food or shelter. Providing subsidies for the former is just subsidizing their lifestyles. Why do the Democrats insist on subsidizing the lifestyles or the well-to-do?
As we pointed out. The problem is why dual incomes are a necessity to being in the middle class.
That’s the root cause of the issue and subsidies is a means to ameliorate the symptoms. And subsidies aren’t likely to be effective because unless the extra money increases supply, subsidies make childcare more expensive overall; defeating the whole exercise.
Single parent households is hard. Its a trilemma between helping single parents; not encouraging single parenthood (by choice); and addressing the well being of the child.
as I pointed out here.
I just finished reading a little article on what the author called “the paradox of cost disease sociialsm”. There’s no paradox involved. It’s basic supply and demand.
The point I was trying to make in this piece is that there are basic questions like
Just because you’d like something to work doesn’t mean it will work. The author of the op-ed to which I linked clearly wants a Leave It To Beaver/Ozzie and Harriet society and like it or not those are now out of reach. It would take a solid generation of changes in thinking I can’t imagine taking place and the problems would remain all of that time.
Again, easy to answer. Women in the workforce. It’s both a cause and effect. It began as an effect when wages stopped growing as a result of immigration and globalization (and that’s 50 years ago). Then it became a cause. You can’t double the size of the workforce in just a few years and not expect wages to go down.
There have been a lot of articles from the Left criticizing the structure of this program. A couple additional aspects is that it requires the state to set up a qualifying program and will be on the hook to pay for portions of it, while the federal government funding is only for a number of years. A lot of states won’t do this because Republicans will block it, the states don’t want to be on the hook if the feds don’t extend the program, or they believe it is going to create a price spiral that hurts the middle class.
I think another issue is that the individual subsidies are front-ended to the poorest families who currently do not use what the middle class considers the traditional child care facilities. They will suddenly be able to place their children in such care, and those currently using those facilities will face new competition from spots due to increased demand, which presumably will be resolved by price hikes. It may be more appropriate for the government to focus on those most in need, but there is a big political cost imposed by screwing over the middle class.
I’m sympathetic to the cost of child care, but I’m not sure there are any easy solutions that don’t raise costs. I think the Left believes that the feds should just go into the childcare business and build programs of its own instead. They distrust the national party constantly relying upon existing business, state and local government to solve these problems.