Child Care is Expensive, or Why I Bought My Mother-In-Law a Car

[kalistos]

@mrdann My statement did not relate to urban vs. rural areas at all, it's a state-wide average (based on public data from Childcare Aware for America and the Consumer Expenditures Survey).

My point was that many parents find it more financially sustainable to become stay at home parents for longer during the early childhood years, because their potential salaries often don't outweigh the cost of childcare for 2 or 3 kids (e.g. compare the median public school teacher salary to the local cost of high-quality childcare in any area, whether it's urban or not). This has been shown to be one of the primary reasons why the U.S. is basically the only developed country that has recently (over the past 2-3 decades or so) seen a strong and persistent decline in the female labor force participation rate, after strong persistent gains since the 1970s.

If you're a SAHM due to personal choice ("I like staying home and it works best for us"), that's fine. If it's a constraint ("I'd like to work instead but then I need childcare which is just too expensive unless I pick a crappy option"), that's something that merits government intervention.

Subsidizing childcare can also be done conditional on a work requirement, such that the policy would partially pay for itself by increasing the labor supply of parents (mostly women who supply labor more elastically), which in turn increases their work experience and human capital and thus future wages and tax revenue by mitigating the motherhood penalty.

 

[mrdann]

@kalistos

My statement did not relate to urban vs. rural areas at all, it's a state-wide average

It should be broken out, because then we get statistics with huge ranges like you shared.

My point was that many parents find it more financially sustainable to become stay at home parents for longer during the early childhood years, because their potential salaries often don't outweigh the cost of childcare for 2 or 3 kids (e.g. compare the median public school teacher salary to the local cost of high-quality childcare in any area, whether it's urban or not).

People putting 3 kids in childcare is not the norm, and I don't know why you expect the country to subsidize it to enable it. It's a personal choice to have that many kids, and you should be family planning to be able to afford it.

Why would we compare median teacher salary with urban/rural childcare costs? We should compare median urban salaries with median urban childcare costs, similar as rural to rural if you want a fair comparison.

This has been shown to be one of the primary reasons why the U.S. is basically the only developed country that has recently (over the past 2-3 decades or so) seen a strong and persistent decline in the female labor force participation rate, after strong persistent gains since the 1970s.

I don't know about you, but I don't see a 60% to 57% decrease that occurred due to the 2008 GFC as "a strong and persistent decline". Women participation rates have remained relatively stable since the late 80s, almost 40 years, and are at their pre-pandemic norm. So your assessment about childcare costs leading to a large drop in women workforce participation rates is very incorrect.

If you're a SAHM due to personal choice ("I like staying home and it works best for us"), that's fine. If it's a constraint ("I'd like to work instead but then I need childcare which is just too expensive unless I pick a crappy option"), that's something that merits government intervention.

A personal choice to have multiple children when you can't afford the cost to maintain a certain lifestyle via childcare does not merit government intervention. I don't know why you think you're entitled to subsidized childcare at the expense of everyone else, but your partner can find a job that covers the cost.

Subsidizing childcare can also be done conditional on a work requirement, such that the policy would partially pay for itself by increasing the labor supply of parents (mostly women who supply labor more elastically), which in turn increases their work experience and human capital and thus future wages and tax revenue by mitigating the motherhood penalty.

This is a lot of fluff and buzzwords to say that you want the best of both worlds: other people paying for your childcare and seeing more money from a dual-income family.

 

[kalistos]

@mrdann This study (published in a top journal) is a little dated (from 2013), but recent relative trends in female LFP and childcare costs in the U.S. versus most other developed countries would only strengthen its conclusion:

Female Labor Supply: Why Is the United States Falling Behind? - American Economic Association (aeaweb.org)

A drop from 60% to 57% may not seem huge, but this is millions of women, and it's even larger relative to other countries that by and large have seen increases in LFP over the same time period, e.g. here's the US compared to the UK, Canada, Australia, Belgium, Netherlands, France, Germany, Italy and Greece (all of which have seen increases since 2000; only the US is an outlier):

Labor force participation rate, female (% of female population ages 15+) (modeled ILO estimate) - Greece, Germany, France, , Belgium, Netherlands, United States, , Italy, Canada, Australia | Data (worldbank.org)

Of course there are other things going in in different countries, but the relative cost of childcare explains a large fraction of the divergence in relative trends (see also the AER paper I linked).

If you're against subsidizing high-quality childcare, then are you also against funding public schools? By the same token, those are also funded through (mostly local and property) taxes which may disproportionately burden people who chose not to have kids, right? Clearly society agrees that we need to collectively invest in our future generation of workers and taxpayers, to make sure our system remains sustainable and so that even people who chose not to have kids can enjoy well-built roads and Medicare when they're old and no longer productive.

If childcare becomes so prohibitively expensive that people choose to have fewer kids (which is already what we're seeing; the US population is stagnating and the main source of growth is coming from immigration), then that's a clear signal for government intervention imo. Obviously one can disagree on the extent and the means, but I think a childcare subsidy with a parental work requirement would be a lot more productive (i.e., less distortionary) than simpler cash-based incentives (like the simple Child Tax Credit which discourages working all else equal).

 

[mrdann]

@kalistos

This study (published in a top journal) is a little dated (from 2013), but recent relative trends in female LFP and childcare costs in the U.S. versus most other developed countries would only strengthen its conclusion

What trends in women workforce participation are you referring to? Because it's been stable for like 40 years.

A drop from 60% to 57% may not seem huge, but this is millions of women, and it's even larger relative to other countries that by and large have seen increases in LFP over the same time period

Your link shows the US is near the top of this list of other countries. And considering your old source stating that only 29% of the decline was due to things like childcare costs, your premise that there is a huge decline in participation due to childcare costs is wrong.

Of course there are other things going in in different countries, but the relative cost of childcare explains a large fraction of the divergence in relative trends (see also the AER paper I linked).

If we take your source at face value, 29% of the 3% decline would mean less than 1% of the workforce participation variation we see is due to childcare. Meaning your premise that childcare costs are causing "a strong and persistent decline in the female labor force participation rate" is still wrong.

If you're against subsidizing high-quality childcare, then are you also against funding public schools?

The two services are completely different, so no I'm completely fine with public schools but not public daycare.

If childcare becomes so prohibitively expensive that people choose to have fewer kids (which is already what we're seeing; the US population is stagnating and the main source of growth is coming from immigration), then that's a clear signal for government intervention imo.

Childcare costs are not why we see the population growth level we do in the US. Other countries that subsidize things like childcare are seeing similar decreases as well, which is due to being a first-world country and women having more birth control and career options. So no, it's not a clear sign that we need government intervention to give you free daycare.

 

[kalistos]

@mrdann 29% of a 3% decline (more like 6-9% if you compare it to the increasing trend in other countries) is huge. Back of the envelope, the Blau and Kahn study implies that if childcare costs in the US had followed similar trends as they did abroad (where LFP kept going up), we would have had perhaps 2-3% higher female LFP(i.e., 29% of the 6-9% difference-in-difference estimate), which equals millions of people (based off of roughly 80 million women in the labor force). That's very meaningful. Broadly speaking, these predictions are confirmed by several other papers, both reduced-form studies (looking at past data using various causal inference tools) and structural analysis papers (which can be used to simulate counterfactual policies related to childcare), e.g. this one which shows that even small childcare subsidies would have comparatively large positive effects on female LFP even once you take into account the possible general equilibrium effects on childcare prices (higher demand => even higher prices):

An Equilibrium Model of the Impact of Increased Public Investment in Early Childhood Education | NBER

Sadly it does not seem like you're arguing in good faith (erroneously calling my evidence based statements "wrong" based on apparently no evidence beyond your own opinion or political beliefs), so I'll leave it at that. I know you won't take my word for it, but I wrote my PhD dissertation on this very topic, so I'm gonna go out on a limb here and say that I know the literature and the empirical evidence better than you do. Thanks for engaging anyway.

 

[mrdann]

@kalistos Didn't take long to whip out the "bad faith" accusations once actual data was shown to you that women labor force participation rates were nothing like the "strong and persistent decline" that you claimed it was, nor the impact of childcare costs responsible for a huge drop in that rate either using your very own source. You also keep trying to shift the discussion from women's declining work force participation rates to your claimed impacts in an attempt to avoid admitting that. You keep trying to use inaccurate descriptions like "huge" when talking about a sub-1% change to a large population to exaggerate the effects as "proof" you are right.

I don't care what incorrect conclusions you made in your PhD assertion, they carry zero weight here on Reddit. Please save your bad faith accusations for others, I don't see a point in continuing this discussion either if your goal is to just insult people who disagre with you.

 

[kalistos]

@mrdann It is indeed hard to argue with someone who does not even accept the basic facts as shown by the data. Once we agree about the data, which clearly shows that childcare prices are an important determinant of female LFP, then we can move on to personal opinions (e.g. about whether and how much policy intervention we need to address the issue).

If you don't even accept that female LFP in the US has declined (both in absolute terms, and even more so relative to other developed countries which have seen increases over the same time period, see also my World Bank link which shows the great divergence during 2000-2023), then there's not really a point in arguing any further imo.

For statistical purposes, it doesn't matter at all that the US still has larger baseline female LFP rates in absolute terms compared to other developed countries; the relative changes over time are what matters when you're trying to establish causality (which is what the AER paper did, showing quite clearly that around 30% of the relative variation in LFP over time can be explained by relative changes in the cost of childcare in the US vs. elsewhere over that time period). Given all the other factors that drive labor supply (wages, income levels, human capital, social norms, fertility, social policies, etc.), the fact that 30% of variation can be explained by childcare costs alone is surprising to say the least (hence why the paper got published in a top-5 general interest journal). It's both statistically and economically significant. The assumptions underlying their methodology are pretty minimal, and hard to argue with (unless if you somehow weigh your own layman's opinion more than those of the academic referees at the AER, who likely told them to do various robustness checks to prove their analysis was solid). If you still disagree about this basic premise, then show me an academic paper that shows otherwise (i.e., that shows that female labor supply is inelastic or independent to childcare prices, and/or that shows that relative childcare prices have not gone up in the US).

Instead, so far, your response has essentially been "the decline seems minimal or non-existent when I eyeball this chart, and 2% is a small number anyway, therefore anything you say is wrong". I would indeed call that arguing in bad faith.

It's like saying "global average temperatures have only risen by 1 degree over the past X years, which is pretty small, so we shouldn't really care. Also, the US is still colder than some other countries in the world, therefore you're wrong when you say that this is a significant change."

 

[mrdann]

@kalistos That's a lot of text for you to still deny misrepresenting the data (workforce participate rate isn't decreasing), exaggerating the effects (1% variance in workforce participation rate due to child care costs, not 30%), and utilizing the appeal to authority fallacy to act like your PhD claim or singular study you rely on mean anything. You refuse to acknowledge that the US was near the top of the chart in your source for workforce participation, just like you refuse to acknowledge that countries with more support for women and childcare had lower women workforce participation.

Instead, you would rather continue your misrepresentation and just label anyone who disagrees with you and uses your own source against you as "bad faith". And yet fort some reason, you still prefer to keep coming back to get some kind of last word in, even though you keep trying to label others as "bad faith". Definitely makes it seem like you aren't here in good faith, you're just digging the hole you're in deeper.

 

[binjod]

@brandonhi I have never made this comparison before, but it makes a shit ton of sense.

I do well enough financially to take care of the family, when we had our second (Irish twins) the discussion topic was this:

"Why would one of us work for the sole purpose of paying someone else to raise our kids?"

After going over the budget, my wife decided to stop working until the kids go to school. Granted, I do work from home so I'm able to provide some coverage during the day.

 

[alex1111999]

@brandonhi My MIL also offered to provide childcare, then decided she couldn’t do it anymore so we had to scramble for daycare. I get it, taking care of kids is exhausting. Just be ok with her changing her mind and think of what you will do if she does.

 

[brandonhi]

@alex1111999 Yeah we already assumed that could happen. That’s why we’re splitting the time between her and daycare. I also WFH so worst case scenario I can take care of the little guy and flex my time.

The good news is she doesn’t really do much, so we’re hoping we can at least get three years out of her. At that point the car will be paid off lol.

 

[isaiahb]

@brandonhi I’m about 2 years away from only one in childcare instead of 2. I hate to say I can’t wait because I don’t want to fast forward parenting two small boys and I know I can’t get it back but damn I could use another $25k in my pocket.

 

[777life]

@brandonhi I feel very fortunate. We managed to get a spot at our local YMCA which has been well funded by some NFL individuals so its a massive facility for our small area. They have 7 different classrooms, though they dont pay terribly well so staff arent the highest of trained but they do have a few leads with degrees. Daycare is like 40 bucks a day now. Even at that low cost, if I were in a similar situation a car would be a viable alternative. My problem is my mom isn't overly reliable. I already struggle enough with the kiddo getting sick and needing to pull her out of daycare. Having the potential call off of my mom as well would just put me over the stress edge.

 

[thienvietcom]

@brandonhi It's beyond fucked up. The quality of care hasn't even changed much but the prices continue to go up.

My wife asked her mom to move in. Saves us ~1900 bucks a month. Technically saving us even more because our 2nd is due in 2 months. She doesn't get a lot in a retirement income so we let her live with us and she watches our daughter for the 3 hours that separates our schedules. Can I just say how insanely difficult it is to find part time day care.

 

[jwilging01]

@thienvietcom TLDR at bottom

This year, for the first time, we paid a pretty well known tax service to do our taxes because we had a lot of uncommon things going on (lawsuit for back pay plus punitive, early withdrawal from IRA & 401k multiple jobs in multiple states). Online calculations had us owing ~$11,500. We have been claiming her parents as dependants because they are immigrants and have ZERO income. No jobs or social security.

This year they filed for themselves. The tax preparer had us hand write receipts showing we had paid them each 8k for the year for watching our twins 3 days a week. (Of course they both give it back to put towards the household's expenses) Because they are grandparents, no nanny taxes are owed by my wife and I. And since they had no other income, they were $0 owed/$0 refunded. My wife and I still paid ±$1300. Even after paying about $600 for mine and my in-laws tax prep, that still beats the hell out of 11k.

My point is, talk to a tax pro about doing something similar. It could lower your taxable income significantly.

 

[thienvietcom]

@jwilging01 I'm gonna run this by my wife. We typically just do our own taxes and what not, just claim the basic stuff and all that. Thanks for the heads up.

 

[brandonhi]

@jwilging01 Oooh that’s a great idea. My MIL is on SSDI, so I’ll need to check.

 

[mrdann]

@thienvietcom

It's beyond fucked up. The quality of care hasn't even changed much but the prices continue to go up.

Yes because regulations determine the kid:caretaker ratio and since many commenters seem to live in urban centers that comes with a higher minimum wage. Not to mention inflation affecting every aspect of operating a daycare/preschool.

 

[khudsar]

@brandonhi Validation of your decision and our childcare expenses decision, sadly.

 

[volokh]

@brandonhi That's why they call these "The Sandwich Years" - you're taking care of your kids and your parents. Your solution is a really good one that works well for everyone all around.