OPINION:
Nothing makes progressive journalists panic like an expiring federal government program.
On Sept. 30, $24 billion in pandemic-era aid to child care providers ended. Contrary to dire predictions, women went to work in October defying apocalyptic warnings that 70,000 centers would shutter and women would be compelled to stay home.
At the height of the pandemic, day care providers had trouble finding customers and workers as more women worked from home or collected pandemic relief payments.
The American Rescue Plan program was intended to get these centers through the crisis, and it largely worked. Otherwise, the female labor force participation rate would not have recovered to pre-COVID levels.
The federal government has not backed off from assisting families and child care providers. The child and dependent care tax credit offers up to $3,000 per child, and the child tax credit offers up to $2,000 per dependent, subject to rather generous income caps.
Congress has increased funding for the Child Care and Development Block Grant program by 30% — about $8 billion per year.
We are back to where we were before the pandemic. That’s not all that bad — or good. Child care costs too much, but the cost is subject to exaggeration.
Child Care Aware of America put the annual cost per child at $11,000 in 2022. With the rapid pace of inflation in that sector, it’s now in the range of $12,000 — not over $15,000, as Sen. Tim Scott claimed in a recent GOP debate.
Getting a handle on child care costs is difficult, and mothers find the resources in many ways. According to Care, an organization that monitors and reports on caregiving trends, the national average weekly cost of nanny care is $736, but for day care centers, it’s $229 per week. The latter varies greatly among established brands like KinderCare and women taking a few children into their homes.
State regulations and quality of care varies substantially and is a major source of anxiety for parents. What we do know is the financial burden remains heavy.
Of the parents Care surveyed, 67% are spending 20% of their household income on child care. The Department of Health and Human Services considers child care affordable when a family spends no more than 7% of its income on day care.
The proposals in Build Back Better would have dramatically raised costs. Those would have sent money to the states to establish prekindergarten programs, elevated salaries to the levels of public preschool teachers and provided vouchers to low- and middle-income families.
But by increasing demand faster than supply, those would have exacerbated shortages for middle- and upper-income families.
With the competing costs of industrial policies, other social programs and defense spending, and federal deficits posing a threat to the creditworthiness of the U.S., the kind of massive effort envisioned in Build Back Better is not likely.
Progressives are fond of asserting that the U.S. spends a lot less than most other advanced industrialized countries on child care, and parental out-of-pocket payments are much lower in those places. In other advanced industrialized countries, however, tax burdens are much higher for working families.
The kind of welfare state Build Back America would have created — through the child tax credit, family care, paid family leave, universal pre-K, and guaranteed assistance to working parents for child care — requires the typical European worker to fork over 50% more of their pay in income and payroll taxes than Americans do.
Tax burdens would force into the workforce many married women who prefer to be at home with their children — the tax burdens on those families’ single income would be too great. We already may have more women working than would prefer to.
The COVID shutdowns and hangover of working from home, which are likely to moderate as the labor market adjusts and cools, have scrambled preferences. It will be hard to get a read until we get beyond the economic slowdown that may arrive this year.
An American Compass survey and a Gallup Poll taken prior to COVID appears to confirm that a majority of working- and lower-class couples and a plurality of middle-class families would prefer to have one parent working and one parent at home. Only upper-class professionals overwhelmingly prefer the child care option.
Progressives like to argue that financing more women at work would raise gross domestic product by up to $1 trillion over 10 years. But that does not necessarily make us better off.
When parents care for children at home, that creates value — what economists call household production — that is not captured by GDP. If many women value being at home more than a paycheck, we should be measuring differently the benefits of pushing them into the workforce via a welfare state that imposes higher taxes to fund bigger child care subsidies.
Instead, focus on enhancing the child tax credit — subsidize families directly and let them decide how it best cares for their children.
• Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.
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