On April 28th, President Joe Biden unveiled “The American Families Plan,” a proposal that would pends $1.8 trillion on various programs targeting families and children. Among other things, the proposal calls for universal pre-school for three and four-year-olds.

“President Biden is calling for a national partnership with states to offer free, high-quality, accessible, and inclusive preschool to all three-and four-year-olds, benefitting five million children and saving the average family $13,000, when fully implemented. This historic $200 billion investment in America’s future will prioritize high-need areas and enable communities and families to choose the settings that work best for them. The President’s plan will also ensure that all publicly-funded preschool is high-quality, with low student-to-teacher ratios, high-quality and developmentally appropriate curriculum, and supportive classroom environments that are inclusive for all students. The President’s plan will leverage investments in tuition-free community college and teacher scholarships to support those who wish to earn a bachelor’s degree or another credential that supports their work as an educator, or to become an early childhood educator. And, educators will receive job-embedded coaching, professional development, and wages that reflect the importance of their work. All employees in participating pre-K programs and Head Start will earn at least $15 per hour, and those with comparable qualifications will receive compensation commensurate with that of kindergarten teachers. These investments will give American children a head start and pave the way for the best-educated generation in U.S.”

Childcare is indeed a thorny issue, especially since the COVD-19 pandemic greatly exacerbated shortage. But providing universal childcare comes with its own issues that we should not ignore.

Let us for instance, analyze the idea providing high quality universal childcare. For most goods and services quality is straightforward to measure. While for childcare the issue is different. Governments usually use observable measures like student-to-teacher ratios, group sizes and teacher training qualifications as measures for quality. However, as research shows, these factors do not directly correlate to quality childcare.

Quality in childcare is more directly associated with the type of training than the level of training. Quality is also associated with the type of interactions educators have with their kids. However, since the government has no viable way of measuring these qualities, they instead settle for burdensome requirements like student-to-teacher ratios, factors that increase the cost of providing care. Increasing regulation pushes providers out of the market and discourages new ones from coming in.

Choice matters

Additionally, parents have different needs, and they, therefore, prefer different childcare arrangements. Parents that work non-traditional hours are, for instance, served best with informal family childcare providers that are more flexible. Similarly, rural areas which are not as dense or rich as metro areas are best served by family childcare providers.

Subsidies and government funding programs, since they come with numerous rules, usually work better for licensed centers than small childcare providers. Therefore, it is likely that universal childcare will push most family providers out of the market in favor of established centers. However, this will greatly diminish choice for parents, especially low and middle-income parents that rely on subsidies.

Preschool kids help providers stay in business

Younger kids are very expensive to take care of. Infants, for example, require much more stringent rules like very low student-to-teacher ratios. This means providers spend more taking care of these kids than they do older kids. Providers offset the losses they make on infants through the profits they make on serving older kids. Taking away pre-schoolers from private providers will financially squeeze providers and render them completely unprofitable and unable to care for younger kids.

All in all this proposal is more likely to make childcare more expensive, while potentially offering little benefit. And after the failure that is public schools, do we need more government in educating or taking care of our kids?

Martha Njolomole is an economist at the Center of the American Experiment, a Minnesota-based think tank.

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