Child care is a ‘textbook example of a broken market’

Jenny Gold, Tribune News Service

Child and family policies have catapulted to a prime spot in the presidential race as Kamala Harris promotes a new care economy for working families and former President Trump touts his past record. “We see a future with affordable health care, affordable child care and paid leave. Not for some, but for all,” Harris told a crowd at the American Federation of Teachers convention in Houston, just days after she became the presumptive Democratic nominee.

The Democratic Party platform released on Sunday, right before the Democratic National Convention in Chicago, includes proposals to create a universal preschool program for 4-year-olds, provide child care for less than $10 per day for millions of working families, and restore the pandemic-era expanded child tax credit. Harris also proposed adding an extra $6,000 tax credit for families with newborn babies.

As president, Donald Trump signed legislation that provided a major increase to child-care block grants to states and recently highlighted his increase of the child tax credit in 2017. But he did not mention child care during his speech at the Republican National Convention, and the 2024 GOP platform also did not mention this issue. Still, the promise of affordable child care has long been a point of bipartisan agreement, a rare issue that has not been overly politicized. “Both the right and the left see the need for children to be taken care of while parents work,” said Christy Felling, director of communications for the nonprofit First Five Years Fund. “But as with everything, the devil is in the details.”

So what might affordable child care actually look like under a Democratic or Republican administration, and why is the current situation so dysfunctional? An examination of past proposals and actions, as well as interviews with child-care experts across the country, reveals the basic contours of how an affordable system might differ from the child-care market the US has today.

Former US Treasury Secretary Janet L. Yellen described the child care system in 2021 as “a textbook example of a broken market.” Child-care employees are some of the lowest paid workers in the economy, at an average of $13.22 an hour. There is near-universal agreement among early-childhood experts that high-quality care requires a consistent, nurturing relationship with an attentive caregiver. Yet low wages lead to high staff turnover, as many workers leave beloved jobs for better pay in sectors including retail and, in California, $20-an-hour fast-food outlets. Yet despite these low wages, the price of care is astronomical for families, and can outpace college tuition and even mortgage payments in many states.

In California, for example, placing an infant in a private child-care center cost an average of $19,547 per year in 2021, according to the nonprofit Child Care Aware. That’s 15% of the median income for a married couple in the state, and 47.6% of median income for a single parent. “No one in their right mind would design the system we have,” said Kathryn Anne Edwards, a labor economist and policy consultant who studies the child-care market. Low-income families can receive government assistance to help cover costs, or attend free government-funded programs including Head Start and state preschools. Seventeen percent of children under age 5 in California are served by government-subsidized child-care programs.

But for California families earning more than $113,292 a year, who don’t qualify for subsidized care, child care is an individual responsibility. “What we hear continuously (from families) is that, ‘It’s child care or housing. It’s one or the other. I can’t afford to do both,” said Miriam Calderón, chief policy officer at Zero to Three, a nonprofit that focuses on early childhood.