Rethinking U.S. Child Care Policy: Demand for High-Quality Care Will Increase Only When Consumers Have Better Information about Child Care and Stronger Economic Incentives to Purchase Excellent Care

Article excerpt

Child care in the United States is, by many standards, in poor shape. Commonly heard complaints include that today's system of child care endangers the well-being of children, causes financial hardship and stress for families, makes it next-to-impossible for low-income families to work their way off welfare, causes substantial productivity losses to employers, and prevents many mothers from maintaining productive careers in the labor force.

Because child care is a service that is bought and sold in markets, economics can provide a useful framework for thinking about its problems. As with any commodity, supply, demand, cost, price, and quality are key elements of market analysis. But with child care, quality plays a special role, because this characteristic may affect the development of the children who receive the care. Extensive research during the past 25 years documents a positive association between measures of child care quality and the social, emotional, and cognitive development of children. Although most of this research stops short of proving that the association is causal (there is ample reason to expect that children who would have developed well anyway will probably be placed in higher-quality care environments), a number of well-structured studies do support a causal relationship. These studies also show that the benefits of high-quality care are probably larger for children who are at risk of developmental delays as a result of liv ing in poverty.

Analyzing the source of the quality problem in child care suggests a remedy. However, putting this remedy into action will require a fundamental reorientation of public policy, leading in turn to major shifts in the behavior of care providers and in the actions of parents.

Although there' are no national data regarding quality, an intensive study by Suzanne Helburn of the University of Colorado of 400 day care centers in four states documented what many child care experts have been saying for a long time: "Child care at most centers in the United States is poor to mediocre, with almost half of the infant and toddler rooms having poor quality. Only one in seven centers provides a level of quality that promotes healthy development." Analysis of data from this and other studies reveals that child care is of low quality, on average, because of the unwillingness of many consumers to pay a high enough price to cover the cost of high-quality care, even though the cost to providers of improving the quality of care would be moderate. Higher-income children, on average, receive child care of roughly the same quality as lower-income children, indicating that the quality of child care is not a high-priority item for most consumers.

Even when high-quality child care is available, it is expensive in comparison to the income of low-income families. Families in poverty who pay for child care spend more than one-quarter of their income on that cost. Thus, high-quality care is very likely beyond the reach of most low-income families unless subsidized by the government. On the other hand, the large majority of U.S. families are not poor. The average family that pays for child care spends only 7 percent of its income on child care. These families could afford higher-quality care as easily as they could afford a nicer car. Research shows that day care centers can and do improve quality when the price of care rises. But centers have relatively little financial incentive to offer high-quality care, because consumers, on average, are not willing to pay much more for better care. To put it simply, the problem is not on the supply side, but on the demand side.

Workers who provide child care receive low wages, which leads to a high turnover rate among care providers. This instability contributes to low quality of care in a number of ways; for example, fewer workers hold their jobs long enough to build a good base of experience or to take part in extended training and education. …