Why Is Day Care Scarce and Unaffordable?

Social democrats want to nationalize childhood by having government fund and manage universal day care. Social conservatives want the family to be the day care, which is a lovely idea when it’s affordable. Libertarians don’t seem much interested in the subject at all. That leaves virtually no one to tell the truth about the only solution to the shortage and high price of day care: complete deregulation.

Let’s start the discussion right now.

The Obama administration has the idea to model a new program for national day care on a policy from World War II that lasted from 1944 to 1946 in which a mere 130,000 children had their day care covered by the federal government. Here’s what’s strange: right now, the feds (really, taxpayers) pay for 1.3 million kids to be in day care, which means that there are 10 times as many children in such programs now as then. The equivalent of the wartime program is already in place now, and then some. The shortages for those who need the service continue to worsen.

How did this wartime program come about? The federal government had drafted men to march off to foreign lands to kill and be killed. On the home front, wives and moms were drafted into service in factories to cover the country’s productive needs while the men were gone. That left the problem of children. Back in the day, most people lived in close proximity to extended family, and that helped. But for a few working parents, that wasn’t enough.

Tax-funded day care

Tax-funded day care became part of the Community Facilities Act of 1941 (popularly known as the Lanham Act). The Federal Works Agency built centers that became daytime housing for the kids while their moms served the war effort. Regulation was also part of the mix. The federal Office of Education’s Children’s Bureau had a plan: children under the age of 3 were to remain at home; children from 2 to 5 years of age would be in centers with a ratio of 1 adult to 10 children. The standards were never enforced — there was a war on, after all — and the Lanham Act was a dead letter after 1946.

The program was a reproduction of another program that had begun in the New Deal as a job creation measure (part of the Works Progress Administration and the Federal Economic Recovery Act, both passed in 1933). It was later suspended when the New Deal fell apart.

Neither effort was about children. The rhetoric surrounding these programs was about adults and their jobs: the need to make jobs for nurses, cooks, clerical workers, and teachers.

Obama’s day care solution

Obama wants not only to resurrect this old policy but to make it universal, because day care is way too expensive for families with two working parents. This proposal is piling intervention on intervention; it is not a solution. Do parents really want kids cared for in institutions run the same way as the US Postal Service, the TSA, and the DMV? Parents know how little control they have over local public schools. Do we really want that model expanded to preschoolers?

Still, for all the problems with the Obama proposal, its crafters acknowledge a very real problem: two parents are working in most households today. This reality emerged some 30 years ago after the late 1970s inflation wrecked household income and high taxes robbed wage earners. Two incomes became necessary to maintain living standards, which created a problem with respect to children. Demand for daytime child care skyrocketed.

The shortage of providers is most often described as “acute.” Child care is indeed expensive, if you can find it at all. It averages $1,000 per month in the United States, and in many cities, it’s far pricier. That’s an annual salary on the minimum wage, which is why many people in larger cities find that nearly the whole of the second paycheck is consumed in day care costs — and that’s for just one child. Your net gains are marginal at best. If you have two children, you can forget about it.

Perhaps this is why Pew Research also reports a recent rise in the number of stay-at-home moms. It’s not a cultural change. It’s a matter of economics. And the trends are happening because the options are thinning. Parents are being forced to pick their poison: lower standard of living with only one working spouse, or a lower standard of living with two working spouses. This is a terrible bind for any family with kids.

The reason behind the day care shortage

The real question is one few seem to ask. Why is there a shortage? Why is day care so expensive? We get tennis shoes, carrots, gasoline, dry cleaning, haircuts, manicures, and most other things with no problem. There are infinite options at a range of prices, and they are all affordable. There is no national crisis, for example, about a shortage of gyms. If we are going to find a solution, surely there is a point to understanding the source of the problem.

Here is a principle to use in all aspects of economic policy:

When you find a good or service that is in huge demand, but the supply is so limited to the point that the price goes up and up, look for the regulation that is causing the high price. 

This principle applies regardless of the sector, whether transportation, gas, education, food, beer, or day care.

Child care is one of the most regulated industries in the country. The regulatory structures began in 1962 with legislation that required child care facilities to be state-licensed in order to get federal funding grants. As one might expect, 40 percent of the money allocated toward this purpose was spent on establishing licensing procedures rather than funding the actual care, with the result that child care services actually declined after the legislation.

This was an early but obvious case study in how regulation actually reduces access. But the lesson wasn’t learned and regulation intensified as the welfare state grew.

Today it is difficult to get over the regulatory barriers to become a provider in the first place. You can’t do it from your home unless you are willing to enter into the gray/black market and accept only cash for your business. Zoning laws prevent residential areas from serving as business locations. Babysitting one or two kids, sure, you can do that and not get caught. But expanding into a public business puts your own life and liberty in danger.

Too many regulations

Beyond that, the piles of regulations extend from the central government to state governments to local governments, coast to coast. It’s a wonder any day cares stay in business at all. As a matter of fact, these regulations have cartelized the industry in ways that would be otherwise unattainable through purely market means. In effect, the child care industry is not competitive; it increasingly tends toward monopoly due to the low numbers of entrants who can scale the regulatory barriers.

There is a book-length set of regulations at the federal level. All workers are required to receive health and safety training in specific areas. The feds mandate adherence to all building, fire, and health codes. All workers have to get comprehensive background checks, including fingerprinting.

There are strict and complex rules about the ratio of workers per child, in effect preventing economies of scale from driving down the price. Child labor laws limit the labor pool. And everyone has to agree to constant and random monitoring by bureaucrats from many agencies. Finally, there are all the rules concerning immigration, tax withholding, minimum wages, maximum working hours, health benefits, and vacation times.

All of these regulations have become far worse under the Obama administration — all in the name of helping children. The newest proposal would require college degrees from every day care provider.

And that’s at the federal level. States impose a slew of other regulations that govern the size of playgrounds, the kind of equipment they can have, the depth of the mulch underneath the play equipment, the kinds of medical services for emergencies that have to be on hand, insurance mandates that go way beyond what insurers themselves require, and so much more. The regulations grow more intense as the number of children in the program expands, so that all providers are essentially punished for being successful.

Just as a sample, check out Pennsylvania’s day care regulations. Ask yourself if you would ever become a provider under these conditions.

A couple of years ago, I saw some workers digging around a playground at a local day care and I made an inquiry. It turned out that the day care, just to stay in business, was forced by state regulations to completely reformat its drains, dig new ones, reshape the yard, change the kind of mulch it used, spread out the climbing toys, and add some more foam here and there. I can’t even imagine how much the contractors were paid to do all this, and how much the changes cost overall.

And this was for a well-established, large day care in a commercial district that was already in compliance. Imagine how daunting it would be for anyone who had a perfectly reasonable idea of providing a quality day care service from home or renting out some space to make a happy place to care for kids during the day. It’s nearly unattainable. You set out to serve kids and families but you quickly find that you are serving bureaucrats and law-enforcement agencies.

The economic solution to the day care shortage

Providing day care on a profitable basis is a profession that countless people could do, if only the regulations weren’t so absurdly strict. This whole industry, if deregulated, would be a wonderful enterprise. There really is no excuse for why child care opportunities wouldn’t exist within a few minutes’ drive of every house in the United States. It’s hard to imagine a better at-home business model.

What this industry needs is not subsidies but massive, dramatic, and immediate deregulation at all levels. Prices would fall dramatically. New options would be available for everyone. What is now a problem would vanish in a matter of weeks. It’s a guaranteed solution to a very real problem.

The current system is a problem for everyone, but it disproportionately affects women. It is truly an issue for genuine feminists who care about real freedom. The regulatory state as it stands is attacking the right to produce and consume a service that is important to women and absolutely affects their lives in every way. In the 19th century, these kinds of rules were considered to be a form of subjugation of women. Now we call it the welfare state.

From my reading of the literature on this subject, I’m startled at how small is the recognition of the causal relationship between the regulatory structure and the shortage of providers. It’s almost as if it had never occurred to the many specialists in this area that there might be some cost to forever increasing the mandates, intensifying the inspections, tightening the strictures, and so on.

A rare exception is a 2004 child care study by the Rand Corp. Researchers Randal Heeb and M. Rebecca Kilburn found what should be obvious to anyone who understands economics. “Relatively modest changes in regulations would have large and economically important consequences,” they argue, and “the overall effect of increased regulation might be counter to their advocates’ intentions. Our evidence indicates that state regulations influence parents’ child care decisions primarily through a price effect, which lowers use of regulated child care and discourages labor force participation. We find no evidence for a quality assurance effect.”

This is a mild statement that reinforces what all economic logic suggests. Every regulatory action diminishes market participation. It puts barriers to entry in front of producers and imposes unseen costs on consumers. Providers turn their attention away from pleasing customers and toward compliance. Regulations reduce competition and raise prices. They do not serve the stated objectives of policy makers, though they might serve the deeper interests of the industry’s larger players.

Creating a free market for child care

And so the politicians and activists look at the situation and say: we must do something. It’s true, we must. But we must do the right thing, which is not to create Orwellian, state-funded child care factories that parents cannot control. We must not turn child care into a labyrinthian confusion of thousands of pages of regulations.

We need to make a market for child care as with any other service. Open up, permit free entry and exit, and we’ll see the supposed problem vanish as millions of new providers and parents discover a glorious new opportunity for enterprise and mutual benefit.

But isn’t this laissez-faire solution dangerous for the children?

Reputation and market-based quality control govern so much of our lives today. A restaurant that serves one bad meal can face the crucible at the hands of Yelp reviewers, and one late shipment from an Amazon merchant can ruin a business model. Markets enable other active markets for accountability and intense focus on consumer satisfaction.

It’s even more true of child care. Even now, markets are absolutely scrupulous about accessing quality, as these Yelp reviews of day care in Atlanta, Georgia, show. As for safety, insurers are similarly scrupulous, just as they are with homes and office buildings. As with any market good, a range of quality is the norm, and people pick based on whatever standards they choose. Some parents might think that providers with undergraduate degrees essential, while others might find that qualification irrelevant.

In any case, markets and parents are the best sources for monitoring and judging quality; certainly they have a greater interest in quality assurance than politicians and bureaucrats. If any industry is an obvious case in which self-regulation is wholly viable, child care is it. Indeed, the first modern day care centers of the late 19th century were created by private philanthropists and market entrepreneurs as a better alternative to institutionalizing the children of the destitute and poor new immigrants.

The shortages in this industry are tragic and affect tens of millions of people. They have a cause (regulation) and a solution (deregulation). Before we plunge wholesale into nationalized babysitting, we ought to at least consider a better way.

This article originally appeared on Fee.org

Jeffrey A. Tucker

Jeffrey Tucker is Director of Content for the Foundation for Economic Education. He is also Chief Liberty Officer and founder of Liberty.me, Distinguished Honorary Member of Mises Brazil, research fellow at the Acton Institute, policy adviser of the Heartland Institute, founder of the CryptoCurrency Conference, member of the editorial board of the Molinari Review, an advisor to the blockchain application builder Factom, and author of five books. He has written 150 introductions to books and many thousands of articles appearing in the scholarly and popular press.

25 Skills Kids Should Have Before They Leave Your House

A list of skills children should have before they leave your house!

We all hear about how many millennials lack practical life skills, some have even taken “adulting” classes. While this is somewhat amusing, it is ultimately sad. The New York Post has laid blame at their parents, which isn’t entirely wrong. While these adulting classes are sad, it is good to see that some millennials are trying to correct the issue by taking these classes.

Here I am going to layout practical life skills I think are fundamental to have and some, at the end, that I think are good to have.

Let’s start off with the basics!

Cooking

It is something that sounds easy to some of us but this is a skill that is becoming lost on millennials and younger generations. At a time when fast food and eating at restaurants is the norm, cooking for oneself has been slowly disappearing. I don’t mean cooking as in microwaved mac and cheese and Ramen noodles. I mean actually cooking a meal. It is a skill that is rather important to save money and eat healthily. Here is a quick beginner guide on how to cook! To get your child started, get them in the kitchen with you to help out. I don’t mean let them play with the knives or stove top but let them crack an egg or two, help mix batter, pour flour in for your recipe. Get them in their to start helping so you can get them interested in not only making the food but eating the food you make!

How to wash laundry.

It is the bane of the house wife’s existence, and a child’s if they had chores growing up. Nobody wants to do it, nobody wants to fold it, yet, it must be done otherwise your clothes just smell bad. It is washing clothes. Whether it is separating the laundry into colors and lights, darks and whites or hot or cold water. This is a skill that is pretty essential to being an adult, nobody wants to be the smelly person at school nor the office when they get older. Here is a Video how to on how to wash clothes, although you won’t need it if you just let your little ones help you with it. It will take a little bit longer, and probably won’t go as smoothly but it is a valuable skill to have.

Folding Clothes.

Well, now that the laundry is done it needs to be folded and put away. This is another skill that is beginning to go the way of the dodo. It seems as though many children and even parents leave the clothes in a hamper or throw them on the floor when they are clean…. and when they are dirty. It is a good thing to have your clothes folded, or hung and put away so one has a room or home that is clean and does not have clothes strewn everywhere. Don’t let that little tykes size fool you, they can put clothes on hangers and even put clothes up if you show them how and offer a little assistance. It also helps the children with the dexterity in their hands working on those fine and gross motor skills.

Washing Dishes.

Here is something that has slowly been replaced by technology. Many houses and apartments have a dish washing machine so much of the elbow grease, if not all have been taken out of the equation. That isn’t a bad thing… till it is. I have on more than one occasion needed to wash dishes by hand, this doesn’t include my entire childhood either. Whether the dishwasher was broken, didn’t clean dishes completely, or didn’t have one, having that skill gave me the ability to have clean dishes. Kids, young and old, should have no issues washing dishes. It really is a simple task to do.

Clean the house. 

Some of the aforementioned skills could be lumped in here as well but this is a big one already. Cleaning the house. It needs to be done and as an adult, your children should know how to do it. I mean, your not going to be there to do it for them, nor should you. For children, this can be started fairly early in life. Give them some chores, have them sweep up the kitchen floor, wipe the counters or tables down, vacuum. There are any number of things children can do if we let them. Show your kids how to clean, use a broom, vacuum, make a bed or any number of house cleaning skills. These will serve your children in the future. Many parents come to the conclusion that children can’t handle these tasks, lest we forget children were working in coal mines at the age of six, they can handle a broom.

Buying Groceries. 

Along with cooking goes buying groceries. You really can’t cook if you don’t have food. While you can always garden, that will most likely not be the only place you get your food from. My mother used our shopping trips to have my brother and I work on budgeting, how to find unit prices on things to find the best deal, and made us do the math and calculate what the groceries were going to cost before we got to the register. Luckily we didn’t have to worry about working taxes into our calculations that young. We were homeschooled for awhile and those are some things that creative parents do, turn a grocery store trip into an educational moment. I didn’t actually learn to grocery shop till later in my teens but that foundation of knowing how much we needed versus what we could spend has served me well. This is one of those essential skills that can be a sub-category to another one that will be mentioned later on. Some suggestions like using a list, whether on your phone of on paper would work.

Budgeting. 

Ahhh, budgets. There is nothing that can do more for you and drive you crazier than this. It can be as simple as a pen and paper or you can get an app on your computer or phone. Either way, it is a good idea to have a budget. It is never fun to swipe your card and see insufficient funds where it should say approved. Along with budgeting, we should teach our children about credit and personal finance in general. This will give them a leg up on many adults as this is not a skill that is taught in school nor one usually taught at home. We have been working with our son with money, budgeting, and personal finance and he is only four. He has to earn the money he gets by completing certain Jobs that are not his choirs. When he earns that money he has three jars to put it in. Depending on how much he earns, he has to split it between the jars. One jar is for money he can spend, the second is his savings, the third is his giving. This third jar is money he gives to someone who needs it or a charity or to an organization. This is to help instill in him a sense of giving back. Surprisingly enough, we don’t have to force it, this is something he enjoys doing, plus I make sure Susie and I set the example for him. If you your child is computer savvy they could go the route of a budget on a computer with a spreadsheet or go with something like YNAB program or Money Dance

Write a check.

Writing a check, it is such a menial and mundane task yet it is a rather important one to be able to do. My father taught me by letting me practice writing his checks for him. I would write them out how he told me to and he would sign them. It was an easy and quick way to do it. Now along with that, your children should also know how to endorse a check, and when a check should be endorsed. I have been surprised by a number of people I have seen who do not know how to do that. Here is a little video how to write a check.

Pay Bills….On time

This is a skill you can start at any age the child has interaction with any money he has earned, either by chores or jobs elsewhere. Paying bills is one of those adult things that is essential to know how to do and it is one of those things that schools never teach and parents neglect it as well. This goes along with our budget discussion above. This is such an essential skill that even today’s adults struggle with.

Jump Start a Car.

This is pretty important I think. A lot of people don’t know how to do this or do it correctly. It is a simple skill that can save you a ton of money and a huge headache. If you stop to jump someone’s car and your child is with you, that is a perfect time to teach them how to jump a car. Explain to them what is happening and why the car needs to be jumped, and then show them how to do it. My son thought it was pretty neat when I explained it to him. Although he thought the car was going to actually jump when I explained it the first time.

Basic Car Maintenance. 

This includes checking tire pressure, changing a tire, changing the oil, how to check the oil, where the washing fluid goes, where the anti-freeze goes and any other pertinent info that they might need to do their part in keeping that car moving on the highway. Here is a short video of some specific things for car maintenance.

Read a Map. 

This goes along with the car idea. Being able to read a map in the age of GPS seems a little ancient to some. It is a good skill to have, especially if your GPS stops working or if it isn’t working right. Being able to read a map will get you where you need to go without that annoying voice coming from your phone. If your child is really adventurous you could turn this into reading topographical maps and learning land navigation. Admittedly, that isn’t everyone’s idea of fun.

Learn How To Sell. 

I think this is an essential skill to have. I am an adult and I am still learning how to do this. A friend of mine told me the other day “If your kid can sell, he will always have a job”. I believe it is true. Being able to sell things comes in handy every day. Not only to just sell product but to sell their ideas, themselves in job interviews. They can use this skill to help create a business or to sell enough to have enough capital to create the business that they want. I honestly don’t have enough know how myself to give any pointers but I have attached 3 links below to help you give your children the skill of selling. The one I am looking forward to is Junior Money Makers and I am pretty excited about it. It is a new podcast and it is going to highlight kids, 18 and younger, who have created their own businesses. It is a wonderful idea and I look forward to the release date. I will keep you posted on it’s release date. The next on is the Art of Charm. This is a podcast/blog/class that highlights entrepreneurs, what they do, how they do it and more. These are skills children can learn and cultivate as they grow!

10 Ways to Teach Your Kids to Become Entrepreneurs

Teaching kids to sell

Teaching children how to buy and sell

Learning on their own

This one should come natural to children. However, public schooling seems to kill this natural love of learning. Helping or guiding your children to build this skill should be one of the most important to help them learn. Once they have this skill, they can go on to learn what they want, when they want. This is the skill I have been most thankful for. I have been able to learn many of the things I know on my own time outside of “schools”. This has been a tremendous and wonderful gift my parents have given me. How do we teach children this skill? We simply must not crush their spirit when it comes to learning as well as showing them where or how to find what they need to learn. Libraries, Youtube, Google, trial and error, themselves, older adults and even you. These are all resources that they can use to help them learn on their own. You can visit my free courses page, it has a huge list of places you child can go to learn, or you if you would like. You can also learn Austrian Economics here. Plus a massive list of resources for homeschoolers here.

How to pay taxes

Paying taxes. The bane of many people’s existence and something nobody enjoys doing. This is essential to know how to do or at least essential to know someone who does. With the proliferation of online programs and businesses that prepare taxes, it may seem like it isn’t important but knowing the basics is important so you have some sort of understanding of how convoluted paying taxes really are. Here is a small article on taxation from the Mises Institute.

Basic First Aid

Whether you are in an urban environment or in the wilderness basic first aid can help save a life. Whether it is just CPR or you go further and learn more is up to you but it is a good idea to have at least the most basic first aid under your belt. From the Red Cross, here are the basics of first aid. Those of you who have children that love the outdoors can go even further with wilderness first aid courses. These are skills that can save a life and as a nurse, I am a bit biased and think that this is one of the more important skills one can learn.

What to look for in Car Insurance

What should you look for in car insurance? That is a somewhat subjective question since what will work for one, may not work for another. Also, different states have different requirements for those who wish to drive on the roads. Where should teens and young adults go to find the answers to what they need? Well, Edmunds has a good little resource. Triple-A is another good resources

How To Use a Computer

Using a computer is something that is essential in our modern world. Most jobs require the use of computers and it generally makes life a bit easier if you are proficient in using a computer. To aid in that here a few links. The BBC has some good guides and articles. Here are some basic Mac and Windows guides.

Time Managment

Time management skills are not only lacking in many teens but adults as well. Time management is something that is truly important to master not only for business but in personal life as well. This is one of those skills that get talked about often but not many practice nor try to master. Some good tips and tricks can be found at Mindtools. Dartmouth College has a great resource for managing time for not only students but everyone. Ted Talk even has a talk on it as well.

Manners

mind your manners, this is what my grandma would say as she rapped my knuckles with a wooden spoon as I reached across the table. Manners matter, this is often overlooked and people find it archaic but being polite and having manners is something worth instilling in your children. We have all had rude people in our lives that lacked manners and nobody like that so why not remedy that with your own children? The Art of Manliness has a good article on manners. Laurie Johnson has 8 good tips for both boys and girls. For those who don’t know, here is a video of what bad manners look like.

 

Learn How To Swim

Learning how to swim is one of those skills that can save your life. It is not just for enjoying a day at the pool or beach but can genuinely be a skill that can save you or a friend! Live Strong has a good article on learning how to swim and there is a decent video as well.

Teach a child to swim

How to Listen Carefully

The more you listen and the less you talk, the more you will learn and the less you will miss.

Tips on Effective Listening 

Listening Tips for the Classroom Environment 

Techniques for Active Listening

Make a Good First Impression

A first impression truly sets the tone for most relationships. Yes, some can overcome a bad first impression but this is not the norm. It is best to have a good first impression. Fortunately, Mindtools put together a helpful guide.

 

Write a Resume

Most young adults will want to learn how to write a resume. This is their ticket to getting a job they may want. It is a good skill to have and may give you an edge over the competition. A good resume can set you apart so learning to write a resume can make a huge difference.

For others, it would be better to make a value proposition than a resume. Praxis has several great articles about this here. A value proposition can set you apart, especially if you don’t have experience. Read about it and see if it is for you and your kids.

Along with writing a resume and making a value proposition one should learn how to rock an interview. Huffington post has 5 steps to rock an interview as well.

Ramit Sethi has a good video on how to write a winning resume that is definitely worth a watch as well!

Address an Envelope

This is one of those skills that are going by the wayside because of email. However, some bills still get paid this way and it is absolutely wonderful to get a hand written letter from someone. Here is a quick video on how to address and envelope.If you have any that you think should have been on the list but didn’t make it, comment below and tell me. We love to hear from you!

If you have any that you think should have been on the list but didn’t make it, comment below and tell me. We love to hear from you! Make sure you share with your friends!