Various Republicans have recently highlighted one of the critiques I made of the Democratic childcare proposal (Mitch McConnell and Tim Scott, among others). The critique is that the proposal’s wage, quality, and credential mandates, combined with its hard subsidy cliffs, will result in individuals with incomes above the subsidy cliff paying substantially more for childcare than they currently pay.
When Republicans bring up this point, they like to cite my October 20 piece, which showed that increasing childcare worker wages to elementary school worker wages would cause the cost of unsubsidized infant care to go up from around $15,900 to around $29,000, an increase of around $13,000. These numbers closely mirror similar figures produced by the Center for American Progress (CAP), with the lower figure being CAP’s “base quality” infant care cost and the higher one being CAP’s “high-quality” infant care cost.
More significantly, my estimate is very similar to one produced by the District of Columbia’s Office of the State Superintendent of Education (OSSE). The DC OSSE report uses a much more sophisticated cost model than the one used by me or CAP and includes direct data from DC childcare providers. Despite these differences in method, it reaches a nearly identical conclusion that wage rules like those in the Build Back Better childcare plan will increase the unsubsidized prices of center-based infant and toddler care by around $12,000. These days, when people ask me about this issue, I tell them to read the DC OSSE report, because it is much better than anything I have produced on the topic.
When I first raised this issue a couple of months ago, there was a fierce but ultimately very brief effort to discredit it. The effort featured mostly unspecific objections, and at times even some objections that seemed to prove my point. After the DC OSSE report came out, I privately sent it to some of the staunchest objectors and asked where they think it went wrong, but so far, I have not heard anything back.
The only significant objection in the initial fury that was at least cognizable was one that said that the wage, credential, and quality hikes are meant to be phased in over three years and therefore the unsubsidized prices would not rise immediately. This objection is at odds with what the advocates tend to say about the bill when speaking to other audiences, but more important than that, it is utterly detached from the reality of what happens when a sector with a labor shortage that pays the 2nd percentile wage is flooded with new demand from newly subsidized users. The pay hikes in the legislation are not merely nice to have. They are necessary to actually dramatically increase the size of the sector to deliver the promised services.
For the past month or so, I haven’t really seen anyone contest this point anymore, even though it’s become more prevalent with media coverage of the proposal regularly including this as one of the issues with the legislation and elected officials occasionally mentioning it as well.
Of course, watching Republican senators talk about the problem is kind of silly, because they would oppose a childcare proposal regardless of its content and would especially object to my proposed solution to this specific problem, which is to get rid of the subsidy cliffs and provide subsidies to all childcare users.
But it’s even sillier that the Democrats have put together a proposal so sloppy and ill-conceived that Republicans can take these shots at it. The problems with this subsidy cliff design are very well-known at this point. In fact, they are so well-known that, in this same piece of legislation, Democrats have included a provision to permanently get rid of a virtually identical subsidy cliff used to compute subsidies for insurance purchased on an Obamacare exchange.
How do you see the problem well enough to want to fix it when it comes to Obamacare but don’t see it well enough to want to avoid it when it comes to creating a childcare subsidy scheme?
What’s sad is that this isn’t even the worst instance of policy amnesia when it comes to this proposal. That honor belongs to designing the program as a cash grant to states that choose to participate in it. We know from Medicaid expansion that the result of this design will be that many states won’t participate. Indeed, we know this well enough by now that, in this same piece of legislation, Democrats have included a provision to directly provide health insurance to people in nonparticipating states who fall into the so-called “Medicaid gap.” They could change the design of the childcare program to avoid creating a similar “childcare gap,” but they don’t seem to want to.