Immigrants could help alleviate the child care crisis

More workers is good, actually

In a full employment economy, there is a lot of pressure on employers to raise wages. That’s good because it helps people increase their earnings.

But not every employer can afford to raise wages. If you hike pay, after all, you’re probably going to need to hike prices. And at a higher price the service you offer may just not be valuable enough for customers to want to buy it. That means over time full employment should contribute to productivity gains. Labor will tend to migrate to employers that are willing and able to raise pay, probably not because they are unusually kind-hearted employers but because they are employers who figure out some mix of know-how, technology, and whatever else to make it work.

I see this at work in my neighborhood on a daily basis with things like McDonald’s increasing reliance on kiosks to process orders or Amazon’s innovative grab-and-go supermarket.

That said, it’s not all flowers and sweets. Supervising young children is an activity that has seen very little productivity growth over the years and where there are not a lot of really promising ideas for improving productivity. You obviously can reduce the labor intensiveness of supervising children by letting them watch a lot of television. But this doesn’t work for the youngest kids. And while you could probably have three year-olds sitting around all day watching television with fairly high kid:adult staffing ratios, most of us think that would be a bad outcome.

So child care lulls around as a low-wage, low-productivity sector of the economy with the result that as the overall labor market booms the child care sector is at way below pre-pandemic employment and nobody knows how anyone will be able to have kids in the future.

Dan Wuori @DanWuori

According to @CSCCEUCB, the median wage for America’s child care professionals is $11.65 an hour. By way of contrast, here’s where those same teachers could currently start at a gas station now hiring near me.

This is a very serious problem that I think both calls for serious and creative thinking, and is also just a nice illustration of some broader dynamics in policymaking. I think the most feasible solution probably involves bringing in a lot of immigrants, but there are a lot of things you could do with subsidy as well and everyone should try to stay open-minded and flexible about this to an extend.

The progressive childcare synthesis

If you go back to before the pandemic, the progressive movement had already coalesced around an idea about child care.

Different proposals existed in different forms and there was a big debate about the specific implementation in the original Build Back Better proposal but at a high level of abstraction the idea was to increase the pay of child care workers while subsidizing the consumption of child care services on a means-tested basis.

The higher pay part of this was always a little bit odd because normally when you are trying to make something more affordable you don’t try to push up its cost basis. At the time these proposals were first being developed near the end of the Obama administration, that element really just reflected a progressive ideological commitment to raising wages and didn’t make a ton of sense as a childcare policy per se. But in today’s post-pandemic world, it actually does make a lot of sense because the childcare sector is facing intense competition from other employers of low-education workers. If you wanted to substantially expand consumption of child care services, you really would need to pump in enough subsidy to raise the pay rates.

That’s fine as far as it goes, but it creates a dilemma around the means-testing piece because you are raising the unsubsidized cost of child care.