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The Problem with Childcare: You either don’t have it or cannot afford it

Childcare is critical for most families to allow parents to go to work or take care of younger children. All in all, having access to childcare can make a big difference in families life satisfaction and well being. Parents who have good quality and reliable childcare enjoy peace of mind, have time to get things done, and overall less stress. However, there is a problem: Childcare in the US is hard to get and extremely expensive. Parents who want to send their child to an excellent childcare center need to get on a wait list, often before the child is even born. Any sudden changes such as an unexpected move to a different city can leave parents stranded, looking for last-minute childcare options. Often, these options are not of high quality. Further, childcare can cost families more than $5000 a month – depending on how many children require childcare. Together, these factors cause three issues that we should all be worried about:

  • Expensive and hard-to-find childcare puts an emotional and economic strain on families. Being a parent is stressful as it is. However, having to worry about money and their ability to meet the time requirements of a full-time job adds to this stress. According to the National Institutes of Mental Health (NIMH), long-term stress can cause other health issues such as heart disease or high blood pressure, as well as mental health issues such as depression or anxiety. Why would we do that to parents? Families are a major contributor to our economy. We need to take better care of them. (1)

  • High-quality childcare leads to better outcomes for children. We want to raise the next generation of leaders. We depend on our children to become the next inventors, founders, and scientist to keep our nation’s competitive edge. Research studies suggest that low-quality childcare may not meet our children’s developmental needs. We are leaving some of our children behind, just because we do not care to invest in them. This is one corner we should no cut, our future may depend on it. Our children’s future does depend on it. (2)

  • Not having adequate childcare options for families reduces parent’s ability – most often mothers – to participate in the labor force. Only about 60% of mothers with a child under three years of age work (full or part-time) compared to over 90% of fathers. In addition to putting a financial strain on the family, this loss in labor force participation impacts the economy. With an aging population and a declining birth rate, sooner or later there will be a shortage of workers. This is already happening in other countries such as Japan. Getting back into the workforce after an extended stay at home is difficult and is often accompanied by having to accept a lower paying position (and being overqualified for that job). Better access to high-quality and affordable childcare would allow more parents to participate in the labor force and thereby stimulate the economy. It might even pay for itself. (3)

Childcare is not only an issue in the US. Other countries deal with this problem as well. On May 9th, Japan moved to make preschool education free for all (4). The government hopes that this move will increase Japan’s birthrate, as the population is aging and the workforce is shrinking. Being forced to act by changing population dynamics, this is one example of a country realizing that the financial burden on families takes a toll and is threatening future economic growth. If the plan will work out and how the government pays for it remains to be seen.

On the other side of the world, the opposite is happening this month. In Ontario, Canada, the government just cut CAD 80 million from childcare centers (5). This move will make childcare more expensive for families – potentially leading to some of the issues described earlier. A recent change in tax credits for Canadian families may help make up for some of the increased costs. A similar approach has been used in the US when tax credits for families with children were increased in 2018. However, the US tax credits only benefit families with 1 or 2 children. If you have 3 or more, the tax credit does not increase further – even though childcare costs will continue to rise for families.

The issue is difficult, and funding is tight in every country. However, the take-home message here is that childcare is important for parental mental health, workforce participation, the economy, and our children’s development. With so many issues at stake, we should make a stronger effort to get this right. For more information, we recommend a recently published video by CNBC detailing some of the financial burdens faced by young families.


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