A $15 minimum wage would also raise childcare prices
A new report by EPI is calling for a $15 minimum wage in order to help childcare workers, but that would also raise childcare costs for parents.
During the 2020 presidential campaign period, free childcare for all was one of the most popular promises of candidates from the Democratic Party. Bernie Sanders and Elizabeth Warren, for example, promised some form of free childcare for most, if not all, American kids.
If his American Families Plan that was announced on April 28 passes, Joe Biden will be on his way to fulfilling a promise of his as well –– free universal childcare for all American kids 3 and 4.
But what does free mean exactly? For a lot of people, free means paying zero dollars directly to the cost of the good or service. And that may be exactly where the confusion lies.
As the Wall street Journal reports,
President Biden proposes spending $225 billion over 10 years to subsidize child care, including by capping costs for low- and moderate-income families, boosting pay and training for child-care workers and providing federal dollars for care centers. He also wants to spend $200 billion over a decade to establish a national preschool program for all 3- and 4-year-olds in partnership with states.
Those billions of dollars are going to have to come from somewhere. And according to the Biden administration, that is going to be big corporations. But then again, corporations are made up of people who ultimately bear the tax burden. And according to evidence, workers bear the majority of the corporate tax through low wages. Consumers also bear some portion of business taxes through higher prices.
But even if the money was to be raised through other means like debt, it is still a cost people are paying indirectly. High debt levels mean potentially high interest rates and stagnating or declining economic growth. All government spending comes from the people, directly or indirectly.
So, would free childcare really cost Americans $0? In short, no.
This applies to virtually any government-provided good or service. Just because the government is paying for it directly with no direct payment from individuals to providers of the service does not mean it is free, whether it be college or healthcare. It is taxpayers who shoulder the bill for extravagant government spending programs.