Could child care help open the economy and why is its funding such a contentious topic?
The Biden administration’s American Families Plan proposes a big boost to child care help, but experts disagree on how best to help families
The Biden administration’s proposed American Families Plan includes $225 billion for child care “to ensure that low- and middle-income families spend no more than 7% of their income on child care.” The plan also calls for investing in the industry’s workforce to increase availability and quality of care for kids 5 and younger.
The number of children who could need child care is striking. The Kids Count Data Center said more than two-thirds of U.S. parents with children under age 6 work. An administration-cited study concludes that “a lack of child care options costs the United States economy $57 billion per year in lost earnings, productivity and revenue.”
But while experts agree children should be in a safe and nurturing environment while parents work, they’re not all convinced boosting public funding directly for child care costs is the most effective help for families. Some argue that penalizes families who choose to provide the care themselves.
Others say families would be helped more by benefits like a child allowance that would let parents choose how to use it.
Experts disagree on many points related to child care, from whether financial help should be more universal or only offered to very disadvantaged families, to whether assistance should be tied to expectation that it will allow parents to work. They disagree on how to fund a government, “public” contribution.
Dig deep enough, and it’s clear that there are even philosophical divides on the value of child care to children, regardless of who pays for it — or whether only certain groups of children benefit, while others might be harmed.
Studies fuel debate
The Biden plan would pay all costs for the neediest families, while those earning up to 1.5 times their state’s median income would have child care costs capped at no more than 7% of their income.
Plan critics JD Vance and Jenet Erickson said in an online discussion for the Institute for Family Studies and Plough that the proposal is bad for both parents and children — and expensive. They detailed the expense in The Wall Street Journal: The $225 billion would be added to the $40 billion for child care that was in the stimulus package and the $10.3 billion already spent by the federal government to subsidize care for low-income families, they wrote.
But the primary complaint for Vance, a venture capitalist and author best known for the autobiographical bestseller “Hillbilly Elegy,” and Erickson, a research fellow at Brigham Young University’s Wheatley Institution, is that government subsidies for child care could discourage parents from choosing to have one of them stay at home to care for the children while the other works, or arranging schedules to split child care between them. They said that putting a child in child care isn’t bad, but a federal push to put more children in care is.
Even high-quality care, they argue, can’t compare to the benefits of being at home in a nurturing parent-child relationship. Nor is it possible to ensure all children will receive high-quality child care.
They back their arguments with a study from Quebec, Canada, looking at what happened when families across income groups had access to affordable child care. The study found children from two-parent families who used that care had more anxiety, hyperactivity and aggressive behavior even years later. Erickson said that’s similar to findings of an American study begun 30 years ago by the National Institute of Child Health and Human Development that followed a group of kids for more than a decade and found problematic behavior increased as very young children spent more time in care provided by nonrelatives.
Some kids clearly benefit from high-quality child care — especially children from disadvantaged families, research shows. What matters is home environment quality relative to the day care quality, Erickson told the Deseret News. She believes children are generally more likely to get important needs met — like plenty of verbal communication and stimulation, along with sensitive and responsible caregiving — from loving parents, rather than paid providers.
“Neurological science helps us observe the power of that close relationship, those intensive attachment relationships that are most natural coming from parents because of the love, the bond that they feel,” she said. Bottom line for Erickson is “children need close relationships that are warm and consistent and nurturing — their development depends on that.”
Still, there’s no one-size solution for all families. Some children will benefit more when one or both parents work and others when a parent stays home, she said. Circumstances matter. What’s important “is protecting parent decision-making” and not creating incentives that penalize the latter choice.
U.S. Commerce Secretary Gina Raimondo, former governor of Rhode Island, placed the care economy at the “core of competitiveness, productivity and growth,” recently while discussing child care and paid leave for Brooking Institution’s Hamilton Project. She said 2.5 million women left the work force during the pandemic, many of them to care for their children — a so-called “shecession.” But even before the pandemic, she said America had a caregiving crisis.
The discussion focused partly on a proposal by Elizabeth E. Davis and Aaron Sojourner of the University of Minnesota to make high-quality child care available to all families that need it. “America’s status quo asks the most of parents when they have the least. The public (referring to government funding) invests only about $1,500 per child annually in care and education in children’s first five years of life, when parents have the least earning and borrowing power, and then invests $12,800 per child annually for the next 13 years, when parents have more,” they wrote.
The two say costs could be borne in different proportions by federal and state governments and the families that use child care, depending on their income. While impoverished families could choose government-sponsored Early Head Start and Head Start, every family could access care from a center, home-based or school-based provider that met quality standards. The cost to families would depend on their income-to-poverty ratio.
They suggest eliminating the child and dependent care credit, employer-provided flexible spending accounts and tax credits for employers who provide on-site care. Parents, working or not, could decide if child care would help them.
Davis said quality early care and education “can reduce or prevent those income-related disparities in children’s outcomes, leading to more equitable opportunities and better outcomes,” both long term and short term.
She noted that lack of government funding for programs in a child’s first five years has placed heavy financial burdens on families. Some, she noted, are squeezed in the gap between earning too much to get help with care costs and too little to afford high-quality care.
During the discussion, Michael Strain, director of economic policy studies for the American Enterprise Institute, expressed concern “about the federal government extending its role into the provision of commercial child care.”
He said prices go up when government subsidizes a sector of the private economy. “We’ve seen what happened to the price of college tuition when the government wanted to get into the business of subsidizing college, we’ve seen what’s happened to the price of medical care when the government got in the business of subsidizing health care. I am concerned that subsidies to the commercial day care center will just jack up the price of commercial day care. Again, why not just give give families with kids more money so they can they can do what they want with it, which may include child care,” he added.
Strain favors cash benefits targeting low-income families.
Davis agreed government investment in programs could drive up prices, but said it’s likely to drive up quality, too. Giving families cash doesn’t tie the benefit to quality. A sliding scale would ensure the most benefit goes to the neediest families.
Others have suggested adjusting a child tax credit or creating a child allowance to help families.
Angela Rachidi, another American Enterprise Institute scholar, believes child care spending would do more for families that really need the help. She recently told the Deseret News that expanding the existing $2,000 child tax credit is “a poor and ineffective substitute for targeted child care assistance, even though it is often sold as a better alternative.”
Subsidizing child care expenses boosts employment and helps children by letting parents choose higher-quality care. And while, like Erickson and Vance, she sees great benefit in stay-at-home parenting, she said she opposes government assistance for that..
Rachidi called the child tax credit “poorly targeted to low-income families. I support programs, like the (earned income tax credit), that provide more support to the lowest income Americans rather than programs like the (child tax credit) that primarily benefit higher-income families,“ she said.
Vance and Erickson said it is among lower-income families, in fact, that interest in having a parent stay home with the children is highest. The upper class wants two parents in the work force, Vance said — a division often reflected in policy choices, he added, because policymakers belong to the upper class. He said parents need flexibility to decide.
“Do we want to force a particular model on people or give people resources to make a choice for themselves?” Vance asked.