For many American families, however, the biggest challenge is not funding care but finding it. Warren’s proposal wouldn’t fix that problem. Instead, it might create a situation in which parents who already have child care they like wouldn’t be able to keep it.
Warren’s plan would dramatically increase demand for an already-limited number of day-care slots, as out-of-home care suddenly becomes “free” or much less expensive for millions of families. The plan would also be available to parents who stay at home with their children, encouraging families to use day-care services they don’t necessarily need. The result could be 12 million children, almost double the number currently enrolled, heading off to day care.
That’s if their parents can find a place for them. Warren’s plan does not address — and could exacerbate — one of the main reasons child care is so expensive and difficult to come by in the first place: the heavy regulatory burden imposed by states.
Day-care licensing is generally managed at state and local levels, and the requirements can be notoriously onerous. Massachusetts is pursuing new background-check requirements so strict they could affect 30 percent of day-care workers in urban areas. A recently implemented District of Columbia rule requires day-care workers to have college degrees. Some regulation of the field makes sense — parents need to have confidence that their children will be safe — but initiatives such as the one in D.C. seem like regulation for regulation’s sake.
Minnesota, the fifth-least affordable state for childcare, has lost nearly 3,500 day-care providers in the past 10 years, a decline that state Sen. Karin Housley (R) blames on regulators who have made it difficult to comply with rules that govern things such as water temperature for hand-washing. In California, the number of licensed providers caring for children in private homes has declined by 30 percent over the last 10 years.
The regulations affect not just supply, but also cost: A recent Mercatus Center study concluded that simply easing child-staff ratio regulations to allow one more infant per teacher would, on a nationwide basis, reduce average annual costs for a child’s care by as much as $1,890 — without reducing the quality of care.
Warren’s plan would likely aggravate these challenges. States licensing staffs already struggle to keep up with existing providers and regulations, and Warren’s plan would increase both red tape and the number of centers requiring oversight — leading to delayed licensing approvals and causing inspection backlogs.
Warren’s plan would also create a vicious cycle that increases cost pressures on the families who can afford day care and puts ballooning financial burdens on the federal government. The federal government picks up most of the cost of the “free” and subsidized care. But the rest will come from fees that day-care providers charge to families who don’t qualify for the subsidy, which will inevitably rise. Parents who earn too much for the subsidy will see their out-of-pocket costs grow — until those costs represent more than 7 percent of their income, at which point they, too, will be drawn into the subsidy pool.
Warren’s campaign literature emphasizes that the program will be funded entirely by the “Ultra-Millionaire” tax on families with a net worth of more than $50 million. But it ignores this sleeper tax on families worth much, much less.
These pressures would be intensified by the Warren plan’s requirement that day-care providers who want to participate in the federal subsidy program pay higher wages. Those providers will get federal support to meet the new pay requirements. But day-care providers who don’t participate will suddenly have to pay workers more to compete for talent — and they won’t be able to pass the bill on to the government. Many providers, particularly in-home or small-scale day-care facilities, may have to shut down. Ironically, many of those who could lose their small businesses are women.
These challenges ultimately point to a jarring mismatch between supply and demand for care. When the Warren campaign compares the structure and administration of the new universal child-care benefit to Head Start, it neglects to mention that, even though Head Start receives more than $9 billion in federal funding yearly, there are still significant shortages, epic waiting lists, and high unmet need.
There isno question that day care is painfully expensive, and parents desperately want to know that, while they’re at work, their children are well cared-for. But the United States’ child-care challenges are not wholly — or even mostly — creations of the federal government. The introduction of an aggressive federal entitlement isn’t the way to solve them.