Why Rich Women Have Great, Low-Cost Childcare, And Poor Women Pay Out the Nose

You can thank regulations and licensing rules for pricing child care out of the reach of many lower-income families while leaving wealthier women with gray market or black market solutions.


U.S. Army

Daycare for an infant is now more expensive than the average cost of in-state tuition and fees at public colleges in 31 states, according to a recent report. Childcare in the U.S. sets a family back $15,000 a year per infant on average. It is more expensive than rent in 22 states. But while many poor women are dropping out of the workforce in part due to these costs, well-to-do families skirt the problem by exploiting loopholes like the U.S. au pair program and by illegally employing undocumented domestic workers to obtain good-quality childcare at below-market prices.

You can thank regulations and licensing rules for pricing child care out of the reach of many lower-income families while leaving wealthier women with gray market or black market solutions.

Despite the cost, almost half of children under five spend at least part of their week in the care of somebody other than a parent. Nearly 11 million children under age five are in some type of child care setting for an average of 35 hours. Few families remain unaffected by the cost of childcare.

High-cost, low-quality childcare options impact women differently depending on their income level. The Pew Research Center recently found that almost one-third of mothers are now stay-at-home parents, up from a 45-year low of 23 percent in 1999. Who are these mothers? According to recent studies,"Less-educated moms and those who live in in lower-income households are generally more likely to stay home with the kids than more-educated moms and or those who live in higher-income households."

While the Great Recession hit salaries, the cost of childcare has only grown, up 70 percent since the mid 1980s. It would seem that high childcare costs plus reduced employment opportunities and stagnant wages are incentivizing low-income women to drop out of the workforce entirely.

Moms who do work tend to choose jobs with shorter and more flexible hours. According to polling by the Working Mother Research Institute, "The majority of moms believe that a flexible work schedule is the most important benefit a workplace can provide."

But employers pay a premium to have workers who will work when needed. Research indicates that a huge chunk of the widely-cited 77-cents-on-the-dollar gender wage gap is a result of women's preference for shorter, flexible hours over better pay. Part of the reason moms need shorter, more flexible hours is that day care centers tend to close for weather and holidays, while work still needs to be done. The centers won't care for sick children, and they charge dramatically more per hour outside of the 9-5 window. All this leads mothers to work shorter, more erratic hours, which contributes to why women without children earn much more than mothers in the United States.

The situation is costly, and not just for mothers. There's research evidence that access to decent day care increases productivity.

It makes sense to ask where all the money for childcare goes. It's certainly not going to overpay childcare workers. They earn less than parking lot attendants.

Perhaps some of the cost goes toward complying with all the regulations on care centers. Forty states require some kind of official training for childcare providers. And 33 states require directors to have a Child Development Associate (CDA) credential or clock hours, credits, or earn a higher credential than a CDA in early childhood education, or to have an associate degree in early childhood education.

Thirty-eight states plus the Department of Defense require familiarity with relevant licensing regulations. Thirty-four states plus the DoD require training about the prevention of Sudden Infant Death Syndrome (e.g., safe sleep positions for infants). In 42 states all childcare workers are required to obtain at least 12 hours per year of additional training. And 49 states require child care workers to plan learning activities for children.

Despite all these requirements, childcare in America is still of very low quality. A survey by the National Institute of Child Health and Human Development deemed the majority of operations to be fair or poor, with just about 10 percent providing high-quality care.

While middle- and low-income women are dropping out and leaning back in response, upper-income women are opting out (of the legal childcare market) and relying instead on undocumented domestic help and au pairs.

A fascinating report by American University Associate Professor of Law Janie Chuang reveals how "the legal categorization of au pairs as 'cultural exchange participants' is strategically used to sustain—and disguise—a government-created domestic worker program to provide flexible, in-home childcare for upper-middle-class families at below-market prices."

And that's just for families who skirt the law. Many more just flout it. More than a third of all domestic workers in the U.S. are non-citizens, and a substantial percentage of them are undocumented. Well-to-do families solve childcare problems by hiring and housing undocumented workers, working them more hours than is legal, and paying them under the table.

This solves all sorts of problems. Whereas low- and middle-income mothers have to take off work to care for sick children, must leave work on time or risk paying out the nose and must stay home when day care centers are closed, nannies are available around-the-clock, allowing high-earning women to continue to work without interruption.

What we have in America is a system whereby well-off families get excellent child care without the "aid" of labor laws or child care regulations while poor families pay exorbitant prices for poor-quality care made more expensive by these same laws and regulations.

This situation regarding childcare is unfair. The solution is two-fold. First, eliminate costly and useless state-level daycare regulations. Most have zero impact on actual improvements in safety or quality, and exist mainly to limit competition for existing licensed centers and caretakers. Second, even the playing field for domestic help by relaxing immigration restrictions and offering paths to citizenship for domestic workers. It isn't right that only rich, well-connected families in cities have access to affordable, flexible child care. Every family should have these options available\.

Caring for an infant demonstrably does not even require English skills. There is simply no reason, other than government, that it should cost more than college. Let's stop using the state to erect useless barriers to entry. In so doing we can stop the tide of women dropping out, leaning back, and earning less. By making childcare more flexible and affordable we can even the playing field for women at every rung on the economic ladder.