Fixing child care requires plan that Republicans reject

Letting the private market handle child care has failed. The service is both undersupplied and overpriced, proving that the private market cannot produce enough affordable care to meet demand. The solution that works is one that Republicans, who currently have control of the White House, Senate and House of Representatives, are loathe to embrace with their overly intense focus on reducing spending: a federal government takeover that replaces the private sale of care with a public provision, either through reimbursement or direct delivery. With the former, providers are reimbursed by the government for providing care. With the latter, private providers are converted to public providers.

At a time when made-up quasi-agencies with names like “Department of Government Efficiency” seem to be making the decisions in Washington and tax breaks for the wealthy and big business are the priority, it may be hard to imagine the government doing anything that entails supporting families. But the economics are undeniable. The fact is that childcare is undervalued relative to the service provided: A family buys child care and in return gains the ability to work. That’s a pure economic dividend.

Perhaps the most notable sign of failure is that privately provided care is completely immune to market solutions. No innovation, no returns to scale, no miracle of supply chains and no leap in artificial intelligence will make it more plentiful or more affordable. As long as it is sold in a market, child care will only decline. Consider that as part of the data collection for the monthly jobs report, the Current Population Survey asks respondents about their economic activity during a single week, called the reference week. If someone reported they had a job, but weren’t at work, during the reference week, they are asked why. Since January 2003 (the earliest data in the series), an average of 26,000 individuals who were not at work during the week said it was due to childcare issues. During the pandemic — when the federal government provided almost $100 billion in support to the child care industry from March of 2020 through September of 2022 — the number shot up to 59,000 on average. It has since averaged around 50,000, off the peak but still double the pre-pandemic average.

Those numbers may seem small for an economy with 170 million workers, but keep in mind that it’s an undercount by at least a factor of four (the survey asks about one week, not the month). And the number is useful to the extent that it indicates direction, which in this case shows child care is less reliable than it used to be for working parents. It’s also much more expensive. Again, since January 2003 and up to the pandemic, the annual growth in the cost of care was 3.4%. The gains slowed to 2.6% during the pandemic but have accelerated to 5.5% since October 2022 – above the overall rate of inflation. Cumulatively, the price has surged 22% since early 2020.

Less reliable and more expensive are joined by their cousin: Hard to find. The US doesn’t have good statistics on total child care capacity, or whether slots are open or filled. However, a good proxy is the number of childcare workers, since regulations require a fixed ratio of children to minder. The sector shed 35% of its employment within the first two months of the pandemic, a much larger degree of decline than the economy overall. And while total nonfarm employment recovered to its pre-pandemic prior levels in mid-2022, the sector took an additional year to do so. But then it stagnated. The sector has just 50,000 more workers than five years ago and has posted just 10,000 new jobs in the past 12 months.

That is what market failure looks like. And the government, in theory, is supposed to fix such failures. But childcare puts Republicans into a difficult spot. They are the party of business and family but when businesses fail families, it tugs at their identity. In 2023, the independent, non-profit 19th News sought an official statement on child care from all 535 members of Congress, and just five Republicans responded. Those that did cited an approach that many Republican-controlled states are pursuing: Deregulate the sector. Their ideas include letting children as young as 14 monitor other children, increasing the allowable ratios between children and monitors, and requiring less training, including safety.