Aparna Mathur, Abby McCloskey, and Angela Rachidi write for the American Enterprise Institute about problems associated with U.S. Sen. Elizabeth Warren’s proposal for universal child care.
There is no denying that child-care costs are a growing problem for families. Even conservative estimates suggest a 14 percent increase for the typical family since 1990, and many believe that American families need relief. Unaffordable child care can be a barrier to employment for parents who want to work, which harms their financial health and the growth and dynamism of the broader American economy.
But universal child care is the wrong approach.
First, just because something is expensive does not mean the government should subsidize it for everyone. Support should be targeted to families for whom the cost prohibits working or directly results in compromised quality of care. The more income-targeted the approach, the fewer unintended consequences that result and the less support to families that can pay for child care on their own.
Second, and ironically, government efforts to address affordability would likely increase the costs of child care even further. As the economist Jeffrey Dorfman writes, “when government provides payments for anything, the cost of that good or service always rises.” This is because costs become distorted when providers have no incentive to increase productivity and compete for business. And increased costs do not always mean higher-quality care. Parents are less likely to hold providers accountable for quality when they pay little for it.
Third, it is important to remember that we are not starting from scratch when it comes to helping families with child-care expenses. The proposal layers on top of the existing system of tax credits and block grants to states.
