Regulations Drive Up Cost of Child Care, Hurting Poor Families Most

In most states, putting a toddler in daycare is more expensive than sending a student to a state university. According to the latest research, the average annual cost of child care in the United States is approaching $10,000, or about 40 percent of the federal poverty line for a family of four.

For the families of the estimated 15 million young children who need child care services in the United States, these exorbitant costs are unsustainable. Policymakers have a responsibility to create a regulatory environment where affordable, high quality child care providers can thrive.

One major reason why child care is so expensive is that providers must comply with hundreds (sometimes even thousands) of pages of government regulations, pertaining to everything from child/staff ratios to the educational credentials of care workers to the size of outdoor play areas.

For more than twenty years, economists studying the impact of regulations on child care prices and quality have concluded that government mandates drive up the cost of child care, especially in low-income areas, with small or even undetectable effects on quality.

Two particular forms of government regulation have contributed to soaring prices in the child care market. The first dictates the maximum number of children each caregiver can be responsible for, known as the child:adult ratio. The second delineates the minimum educational attainment of child care workers or supervisors. Research has shown that both of these metrics add substantially to child care prices while doing little to improve the quality of services.

A study by the RAND Corporation found that tightening regulations by reducing the child:adult ratio by two children per teacher, for all ages and all states, would increase the price of center-based care by an average of 12 percent, resulting in 8 percent fewer children being placed in child care centers and 1 percent fewer mothers choosing to work outside the home. The study also failed to find any indication that these government regulations enhanced the quality of child care.

The evidence is clear that states with the most affordable child care also have less restrictive staffing requirements. For example, Mississippi allows child care centers to assign a maximum of sixteen four-year-olds to each caregiver. New York, on the other hand, allows only eight four-year-olds per caregiver. It should come as no surprise that the cost of child care for a four-year-old in Mississippi is $4,556, compared to $12,064 in New York.

Most states also require that care workers have a high school diploma, which has been shown to be associated with an increase in child care costs of between 22 and 46 percent per child. Yet there is little evidence that this mandate improves outcomes. Instead, the evidence suggests that the most important determinant of quality is the amount of training in early childhood education workers receive, not whether they’ve graduated from high school.

The motivation for tightly regulating the child care market — the desire to protect children from neglect or abuse, while ensuring a nurturing learning environment — is laudable. Yet despite the bold claims of their proponents, state regulations have done little to achieve these objectives.

Lawmakers should reconsider these rules and halt the constant escalation of prices. Poor and low-income families can’t afford it.

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