Childcare Economics

I am an idiot. As such, there are many things I don’t understand. I am only just clever enough to notice this fact.

One of the things I don’t comprehend is child care. In many developed countries people are always screeching about child care. Feminists are screeching about it. Opposition parties are screeching about it. UN agencies, productivity commissions, business councils and mothers are all carrying on like pork chops.

“More child care!” they say. “Without it we shall return to the Dark Ages of beer soup for breakfast and the dunking of nags.” Plus some bad things, I imagine.

Let me explain what I don’t get. The White family have a pre-school aged child called Elspeth. James White works full time and makes just enough to make ends meet but the mortgage is an ongoing struggle. Katerina White has been home with the baby. Now that Elspeth is three month old the Whites expect that they can put her in child care and Katerina can go back to work, thus easing their financial stress.

Katerina makes $300 a day. Childcare costs $150 dollars a day. This means that the family benefits by only $150 a day for all this extra work and the wrench of having strangers look after the baby. Further, the extra income may push them into a higher tax bracket or cause a reduction in government concessions, thus reducing even that small gain.

Not fair! The Whites demand that the government subsidize child care so that the net benefits from working are greater. This makes sense for them. But does it make sense for us, the taxpayers?

What exactly are we paying for? The right for middle class women to return to work and get away from their children, even if for little financial benefit to their families?

One can see how the productivity boffins support the idea. Professionals caring for children make money and pay tax, whereas their parents do it for free and therefore pay no tax. But in the absence of subsidies, wouldn’t some of the potential child care workers be doing something more. . . productive?

Further, if our taxes were not used to subsidize childcare, would they not be used to fund something more needful? Or perhaps the overall tax burden might be slightly lower, freeing up household income for paying off the mortgage that’s causing so much angst. For that matter, perhaps families like the Whites would buy a smaller house in a less desirable area if they anticipated unaffordable child care. Further, sending intelligent and housetrained middle class kids to local public schools rather than to expensive private schools (as used to happen) would improve the quality of the former.

One might argue that without affordable childcare – oh just stop there. I hate that term, ‘affordable childcare.’ Affordable to whom? If subsidized it costs just the same but is more affordable to the beneficiaries. It doesn’t actually get any cheaper. Just different people are paying for it. That is, people who aren’t using it.

Okay, so some might argue that without ‘affordable’ childcare the mother’s professional skills and training will be wasted. Experienced radiotherapists and event managers will be chasing after toddlers instead of contributing their skills to the economy.

Two thoughts on this. One, isn’t time spent raising kids also valuable? Two, don’t women factor in time at home caring for young children when they choose a career path? If you plan to work for seven years full time, take five years off for family and then go back part time, why study medicine? A diploma of education would be a much better return on investment, and we surely need some brainy teachers to instruct our young. Or what about the shortage of nurses that forces Australia to import Taiwanese and Germans?  I’m not seeing how society is losing here.

A scenario to illustrate my confusion over the whole issue: imagine Mrs White puts the baby in child care in order to return to work as a . . . child care worker.  Who is winning in this situation?  What is the point?

Okay, the final issue, and here I am merely plagiarizing Jim’s Blog. Women want to maintain their own career in case they get divorced. Being financially independent makes leaving their husband easier, so a greater number of women do so than was previously the case.

This is the public good we are subsidizing through affordable child care.

This post is not so much a screed so much as it is a pondering. What do you think about this? Are there other angles to consider?

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