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America’s Insanely Expensive Child Care Is a Serious Economic Problem

February 13, 2019
Jordan Weissman

Something people tend to ignore about the high price of child care in the United States is that it’s not just a burden on individual families; it’s really a weight on our entire economy.

The drag is obvious if you look at how female employment has stalled in the U.S. compared with the rest of the globe since the early 1990s. Back then, shoulder pads were in, Murphy Brown and Designing Women were on the air, and the share of American women in the workforce was reasonably high by global standards. We trailed Nordic nations like Finland and Denmark, which have long, progressive track records on gender norms and family policies. But we were at least in the same ballpark as countries like France, Germany, and Canada, and in some cases outright ahead of them.

Over time, though, the U.S. fell far behind. American women’s labor force participation peakedin the year 2000, then declined. In other wealthy countries, it continued to rise.

Today, the U.S. doesn’t simply lag Western Europe on this measure. We’re behind most of the developed word. Our country ranks 28th out of 36 in the OECD when it comes to employment among women between the ages of 25 and 54 (which are generally considered a person’s prime working years). Forget Scandinavia. We’re underperforming economic also-rans like Poland and Latvia, as well as socially conservative Japan, where the culture has traditionally emphasized a mother’s role in the home.

Why did American women stop storming the job market? Much of the fault lies with our archaic family policies. Other countries took steps to ensure more mothers could work. They expanded paid family leave—which tends to anchor women in the labor force—and offered more generous child care. Japan’s almost miraculous-seeming progress was aided by shifting social norms and an official crackdown on workforce discrimination. In the U.S., however, our approach to supporting parents stayed frozen in time. We remain the only developed nationthat doesn’t guarantee paid maternity leave, and day care can now cost as much college tuition. In effect, we’ve placed a ceiling on the share of women who can realistically work. In one well-known paper, economists Francine Blau and Lawrence Kahn estimated that if the U.S. had even an average set of family support policies compared to the rest of the world, women’s labor force participation would be almost 7 percentage points higher.

Of course, many, many women choose to stay home with their kids, or only work part-time, because it’s what they prefer. In 2012, only 32 percent of mothers with children under 18 said they would ideally like to work full-time. There’s absolutely nothing wrong with wanting to spend a few years exclusively caring for your infant or toddler. That’s what having a free choice between work and family is all about.

But for many mothers, it’s not much of a free choice. Some are nudged out by the cost of day care, which makes working seem less financially worthwhile. This is bad for individual women and bad for the broader goal of gender equality. The years of experience mothers lose while staying home with children can have a deadening impact on their long-term earning power, which goes a good way toward explaining the persistence and severity of the gender pay gap in this country.