For decades, activists and lawmakers have tried to change the way child care works in the U.S. But they haven’t had much success. More recently, a fight has been brewing at the local level. This Tuesday, several places around the country will vote on whether to subsidize childcare. WSJ’s Harriet Torry explains what that could mean for one county in Texas. Further Reading: -Are American Taxpayers Ready to Foot the Bill for Child Care? -Child Care, Rent, Insurance: Where Inflation Hits Hardest Now Further Listening: -How Employer-Funded Child Care Can Work Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: Why is daycare so expensive in the U.S.?
Here in the U.S., if you have children, or even if you don't, you probably know that daycare is really expensive.
How on earth are y'all affording daycare?
I had somebody tell me $550 a week for a kid. Are you insane?
daycare is so high right now that me and my husband had to make the decision to take my son out of daycare for the summer if you add in my third it's going to come to about 6800 a month for daycare that's only from nine to two a day i need the freaking raise and a big one to be able to afford this how would you describe the state of early child care in the u.s right now
Well, one of the people who I spoke to described childcare as a broken business model because childcare is extremely expensive for parents to pay. At the same time, childcare does not make a lot of money. And the reason for that is because it is so labor intensive and they have to pay staff. You know, you can't get an algorithm to put a toddler down for a nap or change a diaper remotely.
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Chapter 2: What are the economic challenges facing childcare providers?
You need people to be in person. My name is Harriet Torrey and I cover the U.S. economy. So why are you writing about child care? I think it's an overlooked aspect of the U.S. economy because so many people struggle with child care. This is not something new that the economy is suddenly facing. And this is something that really underpins the U.S. economy in so many ways.
People need reliable child care in order to participate in the labor force.
For decades, there have been attempts to change the way childcare works in the U.S. Activists have called for reforms, and there have been bills introduced in Congress. But it's still really hard to find affordable childcare. So more recently, some community groups and lawmakers have taken the fight to the state and local level.
In this year's election, several places around the country have childcare measures on the ballot. And one of those places is in Texas.
This November, it will be up to Travis County voters to decide whether or not to approve a proposal aimed at making childcare more affordable.
Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Friday, November 1st. Coming up on the show, what subsidized childcare could mean for one county in Texas. For many families, the high cost of childcare can seem like a problem they have to solve on their own. Will they burn through their savings? Will a parent have to stop working?
But our colleague Harriet says that there's a bigger economic issue going on.
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Chapter 3: What childcare measures are on the ballot in Texas?
There is a market mismatch because childcare is unaffordable for families and it's also not hugely profitable for businesses. And childcare educators themselves don't make particularly high wages at all. And it's hard for businesses to pay them more because they would have to pass on those costs to parents who are already struggling to pay for daycare in the first place in many cases.
What is the average cost of childcare for families for one child here in the U.S. ?
Chapter 4: How can subsidized childcare impact families?
The Labour Department has done some research into the cost of childcare. And it really depends on where you live. If you live in a big city, it's probably going to be more expensive than somewhere smaller. But it could be $17,000 a year. For a lot of people, their daycare bill is the same as their mortgage every month.
So if you have more than one kid who's not in school yet, that is very expensive.
Harriet spoke to families about the issue in Travis County, Texas, where a child care measure is on the ballot. Travis County includes most of the city of Austin.
One thing that's interesting is that in places like Austin, paying for a year of child care is now more expensive than paying for a year of in-state college tuition. But the very different thing between paying for your child's college and paying for your child's daycare is that you have the best part of two decades to prepare for college.
To find out more about why that daycare bill can be so high, we talked to Jordan McClay. She's the director of the Ebenezer Child Development Center in Austin, which primarily serves lower-income families. The other day, Jordan was in a classroom hearing from the toddlers about their Halloween costumes.
I know. Do you want to wear your costume? You don't have to. You want to be a princess? Maybe we can make Usually when I come in, they'll run over and give me a hug and offer me something they've made in the kitchen. It's usually a plastic lemon, which is fine. It's great. You know, it just, it's joyful. You go in and it's a place where you want to be.
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Chapter 5: What is the average cost of childcare for families?
Daycares like Jordan's typically serve children from the time they're infants until they're about four years old when they start kindergarten. And like a lot of daycares across the country, Ebenezer Child Development Center is wrestling with the economics of the childcare market. The center charges around $1,000 a month for each child.
With just 23 kids enrolled, Jordan says there's not a lot to work with. What are you spending money on primarily?
I would say at least 80% goes to teachers, goes to salaries. And then we are not a new building. Example, you know, we had a plumbing issue, completely unexpected, and that is $10,000. Bye. And nevermind, you know, the normal air conditioning. We live in Texas. Our air conditioning is running, I would say easily nine months of the year. And when it's not, the heat is running.
And we also have a janitor that comes every night, which is about $2,000 a month. And so generally breaking even is great. I've never worked at a center where it was a moneymaker.
In a typical business, in order to increase revenue, a business owner might cut back on expenses or raise prices. Jordan can't do either of those things. She can't trim staff, her primary expense, because there are regulations about the ratio of adults to children in a daycare. In Texas, for instance, there's got to be at least one caregiver for every four infants.
At the same time, Jordan can't raise her prices because parents are already struggling to pay the tuition.
We have to have a tuition that's high enough. To pay our teachers, right? But then is also allowable for parents.
And you can't charge any less at this point, right? Much less increase the tuition to help you pay for what you need to pay for to keep the place running.
Exactly. And it's that fine line. There's this gap.
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Chapter 6: Why is it difficult to attract childcare workers?
Prop A does have some detractors. Some Republicans against the measure would rather reduce regulations on businesses than raise taxes. Here's one critic being interviewed by a local television station in Austin.
You know, property taxes, it's death by a thousand cuts. Are they going to ask us in a couple of years for another tax increase to subsidize groceries? Another tax increase to subsidize rent?
Opponents also say that raising property taxes could exacerbate Austin's already high housing costs. The Travis County GOP say they don't support the proposition, but they haven't mounted a formal protest against it. What's interesting to you about this effort or this ballot measure?
I think just the fact that this is being taken to the people to decide. Austin is an interesting city. It has seen a lot of growth in recent years, but at the same time, it has seen a big jump in the cost of living. So people who don't have kids might be thinking, why should I support this measure? Why is this my problem?
But I think a lot of people realize that the more people that are able to work, the better it is for the economy overall. And in order for the city to remain a magnet and for Businesses to move there, they do need to have reliable childcare in place.
And if Proposition A passes, it'll be one of a number of similar efforts around the country. Florida this year started offering tax breaks to businesses that provide childcare for employees. Vermont created a new payroll tax to increase staffing and capacity at daycares. In Louisiana, taxes on things like gambling and cannabis are being used for early childhood education. And St.
Paul, Minnesota and Sonoma County, California both have measures similar to Prop A on Tuesday's ballot.
If these pass... It will be an acknowledgement that this is an issue that needs action, that communities need to kind of come together and do something about, because it is a real problem in a lot of places, and we've seen that.
If it does pass, is there a chance that it could be heralding the beginning of a broader shift, whether within Texas, maybe some other cities might be interested in trying something like this out or beyond?
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