No one is profiting from the high cost of child care

Photo: Herald Post via Flickr

Photo: Herald Post via Flickr

Affordable child care is becoming increasingly unobtainable for Washington families. As the need for child care continues to grow, investment in public programs is dropping and providers are leaving the workforce. A study from New America shows that it costs more to send a child to preschool than a public college. Obtaining care for one child between under 4 years of age will cost the average family from $7,946 to $15,480 a year, a reality that has pushed economic security beyond reach for many working families.

The U.S. Department of Health and Human Services defines affordable child care as care that takes up no more than 10% of a family’s budget. A family in Washington State with median household income for their race or ethnicity will spend the following portions of their total household income on child care:

Native American families:  17 – 33 %
Black families:  16 – 31 %
Latinx families: 19 – 37 %
White families: 10 – 20 %

Analysis based on 2013 median family income data retrieved from Kids Count Data Center

From a free-market perspective, one should be able to explain rising child care costs with simple supply-and-demand. Producers (child care business owners) who offer a scarce but much-needed service (child care) will be able to charge higher prices for those services as long as demand outpaces supply. And if demand for child care continues to grow at a rate that exceeds what business owners can keep up with, prices will continue to rise, translating into greater financial gain for those business owners and maybe even the teachers they employee. Prices would decrease when more providers get into the business after seeing how much others are making.

But this is not what’s happening. Despite the high costs of child care, there have not been huge profits for the providers. It is a notoriously difficult business to be in for owners and employees alike, as it’s plagued by poverty-level worker wages and slim profit margins. It’s so unprofitable for business owners that more than 1,600 providers have left Washington’s child care market over the past six years despite unmet need in nearly every community across the state.

So where is that $15,000 a year in tuition going, if not into the paychecks of child care workers and business owners? The vast majority goes toward simply keeping child-care businesses afloat.

Other types of businesses cut operational expenses and maximize profit through a variety of methods, such as cutting back on office space, contracting out work, and increasing inventory.

Child-care centers can’t use these strategies for a number of reasons. The early learning industry is constrained by staff-to-child ratio regulations and natural limits on the amount of teaching and supervision that a child-care worker can reasonably perform in one day. Square footage-per-child requirements also keep facilities costs prohibitively high (state lawmakers introduced legislation on the issue this session).  While these regulations are well-intentioned and essential for healthy child development, it can be difficult for centers to survive without substantial support from the public sector.

Subsidy rates for existing public assistance programs have never reflected child’s real market value and fail to account for things like regional variation, inflation, or essential expenses like kids’ snacks and janitorial services.

The solution to Washington State’s child-care cost conundrum

Markets can be powerful, efficient forces for economic security, but they also fail—and when they do it becomes the government’s responsibility to step in. Washingtonians need a robust financial investment from local and state government that infuses support into all three levels of the early learning system—families, child-care businesses, and child-care workers.

Seattle and New York City have started to address the problem by creating preschool programs that provide affordable options for working families and a dignified wage for workers. These efforts must be duplicated to fully address the needs of rural and urban communities across our state, and to ensure that teachers are paid a livable wage.

Regardless of whether it’s funded at the state or local level, a high quality early learning system will look like collaborative, innovative, and community-driven programs that are designed to meet the unique needs of their families and workers. It’s a long road to get there, but we can get there, and Washington State needs all hands on deck when it comes to advocating for the kind of child care that our communities deserve.

As the Washington State Legislature continues to negotiate the state budget via its second special session, here’s your opportunity to make your voice heard:

  • Write a letter to the editor of your local newspaper about how much child care matters to your community here (template included)
  • Call or email your senator here
  • Call or email the following early learning legislative champions:
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