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.
Not every employer can afford to raise wages, though. If you hike pay, after all, you’re probably going to need to hike prices, and the service you offer may not be valuable enough that customers are willing to pay the higher price. 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, not because they are unusually kind-hearted but because they, through a mix of know-how and technology, figure out how to make it work.
You can see this with things like McDonald’s increasing reliance on kiosks to process orders or Amazon’s innovative grab-and-go supermarket.
But it’s not always so straightforward. The field of child care has seen very little productivity growth over the years, and there aren’t many promising ideas for improving productivity. You could, of course, 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 have TV-oriented child care for three-year-olds with a fairly high kid-to-adult staffing ratio, most people would consider that a bad outcome.
And so child care remains a low-wage, low-productivity sector of the economy, at way below pre-pandemic employment even as the overall labor market booms. Nobody knows how anyone will be able to have kids in the future.
This is a huge problem that calls for serious and creative thinking, but it’s also a helpful 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 subsidies as well, and everyone should try to stay open-minded and flexible about this.
The progressive child care synthesis
Before the pandemic, the progressive movement had already coalesced around an idea about child care.
There were different proposals in different forms and plenty of debate about implementation, but the basic 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 aspect was always a little bit odd, because you don’t normally increase the cost basis of something you’re trying to make more affordable. When these proposals were initially developed near the end of the Obama administration, that element reflected a progressive ideological commitment to raising wages and didn’t make a ton of sense as a child care policy, per se. But in today’s post-pandemic world, it actually does make a lot of sense because the child care 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 it raises the unsubsidized cost of child care.
You can always address that by making the means-test less severe, but that makes the program even more costly. That’s not to say it’s a bad idea — subsidizing child care seems like a pretty good thing to spend a lot of money on — but it is a tough lift politically.
But beyond that, part of what I like about the Buc-ees point in the tweet above is that it illustrates that real costs are involved, over and above the accounting details.
Resources matter not ledger-books
The point, after all, is that a Buc-ees associate is not a child care worker. Conversely, the people working in child care centers are not available to work at the Buc-ees.
A progressive think tank putting together a PDF about child care in 2017 would argue for a program that’s going to raise blah blah billion dollars in revenue by taxing the rich in such-and-such a way, plow that money into child care subsidies, and create tens of thousands of new good-paying jobs. That’s because we had an all-around depressed labor market for almost the entire 21st century, so people got used to thinking of everything in terms of creating jobs.
People wrote books like “The Coming Jobs War,” assuming that the world was in some kind of state of semi-permanent labor surplus and the big question was how to create enough work for everyone.
Today, though, what we see in the child care sector is not just an accounting problem — it’s about the actual human beings. Working in a child care center does not require a lot of formal education or elaborate qualifications, but it’s relatively stressful work. People don’t really want to do it if they can earn as much or more at a routine retail job.
Regardless of how the funds are raised to persuade them to do child care instead, the cost to society is that there is less labor available for the retail sector. That means some mix of higher prices and reduced convenience. And that’s true whether you get the money by closing the carried interest loophole, taxing greenhouse gas emissions, or raising the deficit. The financing choices do matter, but there’s no financing choice so amazing that it eliminates the broad tradeoff.
And on one level, it’s an easy tradeoff — what’s more important, the care of America’s children or retail convenience? But on another level, it’s hard. Basically everyone consumes low-end retail and food service labor. Parents of small kids, by contrast, are a tiny share of the population. Lots of people don’t have kids. Most kids are school-aged. So you’re talking, in effect, about transferring resources from most people to a minority of the population.
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