Cadillac Child Care

Cadillac Child Care

Writing in the fall issue of Regulation magazine, Ryan Bourne of the Cato Institute discusses how well-meaning regulations on providers of child care (pre-school and daycare) increase the costs of child care without meaningfully improving quality.

There are a host of regulations Bourne identifies, such as minimum staff-child ratios, but of particular interest to readers of Rent Check are the training requirements for staff:

Thomas and Gorry find that requiring lead teachers to have a high school diploma can increase child-care prices by 25–46% percent. Hotz and Xiao likewise find that increasing the average required years of education of center directors by one year reduces the number of childcare centers in the average market by 3.2–3.8%. Again, this effect manifests itself overwhelmingly in low-income markets, with quality improvements (proxied by accreditation for the center) overwhelmingly occurring in high-income areas…

Last year, the D.C. city government passed new rules requiring that teachers at child-care centers and caregivers at home-based centers obtain a two-year degree in early childhood education, while assistant caregivers must obtain a newly created Child Development Associate certificate. Even if these measures raise quality in terms of outcomes for children whose families can afford care, the requirements will further constrict the supply of child care in a market where prices are already very high. That may explain why city leaders have delayed implementation of the new regulations and are engaged in new attempts to subsidize child-care provision.

While there are benefits to having more qualified child-care providers, it’s clear that mandating unreasonably high requirements for providers has a negative effect on affordability. The temptation to regulate the quality of these programs so every child gets the “cadillac treatment” harms lower-income families forced to choose between paying for child care and working or staying home and forgoing that additional stream of income.

And there’s a certain irony to be found in the case of child care. Perhaps it would be better to forgo a trip to the doctor or the dentist if they’re quacks or snake-oil salesmen, but in the case of child care, “direct parental care is an alternative to outside child care, yet there is no political movement for direct regulation of parents.”

The least well-off in society can rarely (if ever) afford “cadillacs.” Policymakers need to wise up to this fact and recognize that regulations that mandate only the best services money can buy only benefit those with money to buy them.

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By |2018-09-19T13:59:31-07:00September 19th, 2018|Blog, Occupational Licensing|