Why housing and child care cost too much
On housing and child care, Minnesotans face higher costs than many other Americans. In 2019, the average Minnesota family paid over $16,000 to keep a child at a day care…
The idea that our state should spend, or as politicians like to say, “invest,” more of our tax dollars on childcare was not only prevalent in this year’s legislative session, but also seems to be gaining traction in some localities.
Take St. Paul for example. At the end of July, Mayor Melvin Carter vetoed a proposal for the city of St. Paul to provide free childcare, citing that the proposal would not raise enough money. The St. Paul City Council, however, overruled the veto, and now the question will head over to St. Paul voters on the November 2024 ballot.
Meanwhile, at the state level, there is a celebration due to the tremendous infusion of cash that the state delivered to the state’s childcare industry. Specifically, in the next four years, over half a billion dollars will go to the childcare industry, some as direct payments to providers, some to raise reimbursement rates for the state’s CCAP program, and some to increase funding for early learning scholarships, among others.
All of this begs the question, should we celebrate the increased state funding for childcare? And more importantly, “Should St. Paul cover low-income families’ childcare costs?,” come November 2024, as MinnPost asks.
To objectively ascertain whether a policy is worthy of undertaking, in public policy analysis we use the cost-benefit analysis. That is, if the net benefit of a certain policy exceeds its net costs, then that policy is worth considering. The idea that we should spend more money on childcare seems to rest on one particular idea, which is that for every dollar that our state spends on childcare, we reap multiple more dollars.
The push for more childcare funding at the state level has been especially successful due to this kind of reasoning. For example, when he was pushing for his “One Minnesota Budget” in February, which included billions for early-childhood education, Gov Walz said the following,
If you take this down to a strictly economic investment, it’s 12-to-one that we get back on every dollar that we invest in early-childhood education.
But there is a point I have made numerous times that is worth repeating, especially when we see what’s happening in St. Paul. That point is this: the idea that for every dollar we invest in childcare, we get $12 or $16 more, is based on studies that happened decades ago. These studies were intensive and specifically targeted small populations of disadvantaged African-American children. Moreover, in addition to childcare, the programs in these studies also included home visits.
Such studies bear no resemblance to the programs being pushed either at the state or local level in our state. So, there is no realistic way to expect that we would reap similar gains. What studies seem to agree more on more consistently is that child outcomes are more dependent on the home environment.
A study by the National Institute of Child Health and Human Development, for example, found that children develop better when they have a good home environment. Specifically, the research found that factors like household income, parental level of education, and whether it’s led by a single parent or two parents are better determinants of how well a child turns out in his or her early years. Other factors like the mother’s personality and sensitivity to her children also significantly affect kids’ development.
If our state is going to spend money on early childhood education, it should focus on the most disadvantaged children, for these are the children for whom access to childcare can
mitigate the effects of negative home experiences by providing a more nurturing and conducive learning environment.
That is not what has happened in this year’s legislative session, however. Instead of becoming more targeted, most programs were expanded to parents with higher incomes, and to more children, and so was funding. In St. Paul, the city’s proposal would not only fully cover childcare costs for parents with incomes below 185 percent of the poverty level, but parents with higher incomes could also get partial subsidies.
As far as the evidence, small, intensive, high-quality, and well-targeted childcare programs are the most cost-effective way of improving outcomes for low-income and disadvantaged children. Big universal programs, merely place an undue burden on taxpayers while doing little to nothing for children, and in some instances, actually harm them.
The fact of the matter is that high-quality affordable childcare is hard to find, first of all, due to strict regulations. So, if anything, loosening these regulations should be the first thing legislators must focus on.
But if taxpayers’ money must be spent on childcare, let’s at least be realistic about how much such spending benefits children or our society.
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