Child day care centers particularly feel the burden of increased labor costs

OPINION:

The House Education and Labor Committee recently advanced the Raise the Wage Act out of committee, which would increase the federal minimum wage to $15 an hour. This 106 percent increase in the federal minimum wage has already made skeptics of both Democrats and Republicans given its potential to drastically increase labor costs for small businesses. One particular group of businesses have already felt the negative effects of a $15 minimum wage in Seattle: Child care centers.

In a recent study, economists from the University of Washington analyzed how Seattle’s $15 minimum wage increase, which began in 2014, has impacted child care workers’ overall compensation and how child care centers were responding to rising labor costs. Their findings, published in the Social Work and Society Journal, show that child care centers were forced to increase tuition costs, reduce expenses, slash staff hours and cut staff benefits or professional development investments.

The economists analyzed data from 200 Seattle-based child care centers, 41 of which participated in annual surveys. The authors met with 15 child care center directors to get their perspectives on coping with the minimum wage ordinance.

One director feared that the wage hike would place an especially “huge burden” on low-income families and workers: “I’m all for people making more money. But I just have to pass that cost down. And what it does, is it crowds out lower middle class people, which is essentially what I am.”

In 2017, the most common response to the mandate was to raise the rates that families had to pay, followed by reducing workers’ hours. Adding to complications, many centers reduced the number of publicly subsidized chil dcare spots, resulting in higher care costs and reduced availability for families unable to pay full tuition.

The burden of minimum wage mandates are not unique to Seattle. One news station described how Washington’s statewide minimum wage hike — a jump from $9.47 to $13.50 by 2020 — was creating a “child care desert” in rural Whitman County in Washington State. Mary McDonald, executive director of Community Child Care Center, claimed, “It’s just as much to have a couple of children in child care as it is to be putting a child through college.”

Last November, just days after Arkansas’ voters approved a $12 minimum wage hike, daycares across the state began plans to cut employees’ hours or increase their tuition rates. In Las Cruces, New Mexico, daycare owners were some of the most vocal critics of the county’s 2019 minimum wage increase. The owner of Little Tumbleweeds daycare explained that it could not increase its rates to comply with the mandate, because the amount of money the center receives for customers who get state child care subsidies would not increase.

While an increase in government funding may be a temporary solution to a widespread problem, this directly contradicts claims that wage mandates will ultimately save money for taxpayers. But this should come as no surprise. Research from economists with San Diego State University and University of New Hampshire found no evidence that increases in the minimum wage reduce government spending on means-tested public programs. While wage increases may cause some low-income workers to exit-public problems, that trend is canceled out by the workers who are pushed into welfare programs due to diminished job opportunities.

As “Fight for $15” advocates continue to push a higher wage mandate at the federal level, congressional representatives would be wise to listen to those who will be most intimately impacted by such a drastic wage increase.

• Richard Berman is the president of Berman and Co., a public relations firm in Washington, D.C.