Democrats Are About to Massively Spike Childcare Prices for Working-Class Families
The Democratic Party’s current childcare proposal would raise costs on many moderate-earning households by $13,000. It’s not clear the party realizes the disaster it’s about to thrust these families into.
The Democrats’ childcare proposal mandates higher wages for childcare workers but then doesn’t provide public subsidies for all families. The result will be a massive increase in childcare fees for some families. (Aaron Burden / Unsplash)
Trying to run a childcare system using market prices runs into three main problems.
The wages for childcare providers wind up very low.
The costs for parents wind up very high.
Paying the costs out of pocket requires families to undergo major drops in their standard of living when they have a child and creates asymmetries between identical families with different numbers of children.
For a government, solving these problems is pretty simple. You can pass a law that mandates higher wages for childcare workers and then use public money to fund the childcare sector rather than rely upon user fees. This gets you lower (or no) costs for parents, higher pay for workers, and reduces (or eliminates) the negative shocks and horizontal asymmetries that come from funding the childcare system with out-of-pocket fees.
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