Whenever there’s a conversation about taxes and subsidies, childcare is one of the most talked about goods. It warrants frequent mentions by political pundits, women’s rights advocates, and even by US Presidents. What is it about childcare that attracts a seemingly disproportionate amount of dialogue compared to other goods?
Before we get into numbers surrounding the childcare market, it is worth remembering the social and political aspects of childcare as a service. At its core, childcare enables parents to work. This means that workers who might otherwise be limited in their productivity can reach their full productive potential knowing that their child is being professionally cared for. Childcare is also a service that disproportionately affects the productivity of women, who are held primarily responsible for the raising of children in the majority of American households. Though such a responsibility might be attributed to individual choice by more conservative economists, the responsibility disproportionately falls in the hands of women. Many single mothers cannot afford to stay home with their child(ren) and so the cost of childca
re directly affects their income in a manner that is beyond their control.
In the United States, about 40% of children spend at least part of their week in the care of someone other than a parent. That amounts to 8.2 million American children. Though the average amount of household income spent on childcare has remained constant at around 7% since 1986, the costs of childcare have nearly doubled in the same interval according to Child Care Aware America. Taking such a large bite out of household
income means less disposable income that would otherwise be spent on goods and services. Some economists have theorized that the relatively high cost of childcare in America was a factor in the slow economic recovery following the 2009 financial crisis.
In President Trump’s tax proposal to Congress, he pledged to make childcare more affordable. However, experts at the Tax Policy Center found that 70% of benefits from Trump’s plan would go to families that make over $100,000 per year. His plan includes a tax deduction for childcare which is only factored through income tax, which barely affects most working class families.
Childcare is a service that affects our rights as Americans as well as the well-being of our economy. To lower the cost of childcare is to strengthen the freedoms of single mothers and provide more income to parents at the beginning of their earnings trajectory. Thus childcare is a pivotal issue that is always worth discussing when formulating government budgets.