Who Cares for America's Children? (1990) / Chapter Skim
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8 The Child Care Market and Alternative Policies
8 The Child Care Market and Alternative Policies
Pages 227-266
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From page 227... ...
In this chapter we review what is known about how well the child care market currently meets the needs of parents and children, and we explore several policy alternatives that have been proposed to improve it. Before we do so, however, some general observations are needed about the evidence that is available on these topics.
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From page 228... ...
Assessing current practices and considering alternatives is also complicated by the dynamic and diverse nature of the child care market. It is one in which providers are a mixture of private for-profit firms, national chains as well as independent operators; private not-for-profit organizations, such as neighborhood churches; public programs, such as Head Start; and individual family day care operators.
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From page 229... ...
Only 18 percent of children under age 5 are in group or center care, most of which is licensed and, therefore, potentially countable from administrative data. About 32 percent are in family day care homes, approximately 60 to 90 percent of which are thought to be unregulated.
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From page 230... ...
Direct evidence of a shortage of infant care was provided by a recent survey of the child care market in three lowincome urban areas, which found relatively little center-based care available to infants and no excess capacity of infant care either in family day care homes or in centers (Kisker et al., 1989~. Staff in resource and referral agencies consistently report that the highest demand is for places for infants and toddlers and that requests are more difficult to fill for them than for older children (Patricia Siegal, California Child Care Resource Referral Network, personal communication, May 23, 1988~.
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From page 231... ...
Of course, it is possible that the number of places for preschoolers still is inadequate, despite the rapid growth of centers and the existence of partday programs and family day care homes. Not all licensed centers operate full-day or full-year programs.
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From page 232... ...
School-Age Children Family day care homes are the dominant form of paid care for older children of working mothers. It is used most often by mothers who work full time and primarily for children 6 to 8 years old (Cain and Hofferth, 1987~.
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From page 233... ...
In terms of chid care and development, these children and their parents have special problems. As discussed in Chapters 3 and 4, poor children have been shown to benefit from compensatory education programs (such as Head Start, Chapter I school-based programs for 4-year-olds, and child care services funded by the Social Services Block Grant [SSBG]
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From page 234... ...
Restrictions under the SS8G program make it difficult for these providers to cover their costs in many states, and therefore there is little economic incentive for new centers or family day care homes to open in rural areas or inner cities where there are large concentrations of low-wage jobs and poor families. Hours of service may also be an important issue affecting the availability of care for children from low-income families.
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From page 235... ...
Head Start requires its local programs to reserve 10 percent of their places for children with disabilities, and approximately 65,000 children with professionally diagnosed handicaps are now served by Head Start. In a small exploratory study, Fink (1988)
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From page 236... ...
The differences in the amount paid for care reported in the NLSY are informative. In direct outlays, the least expensive type of care was that provided by relatives, about $30 per week; family day care homes and center or nursery care, about $37; and a babysitter in the home (the most expensive form of care)
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From page 237... ...
Head Start estimates the additional cost of serving a child with disabilities (compared with a child without disabilities) at $1,000 per child per year (Brush, 1988~.
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From page 238... ...
Confronted with the same income and child care costs, one family might choose eagerly to make the expenditure to allow both parents' careers to progress, another family might bear the expense reluctantly out of real or perceived financial necessity, and another might happily or unhappily decide that one parent should withdraw from the labor force. But when the costs of child care and the average share of income actually going to child care are as substantial as they are for many low-income working families, there is no choice possible.
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From page 239... ...
Raising wages, especially for caregivers with more education, has been shown to increase the quality and stability of staff. But raising wages is expensive, since staff salaries constitute between 60 and 85 percent of the operating budgets of centers and nearly 90 percent of the budgets of family day care providers (Coelen et al., 1979; Fosburg, 1981; Lombardi, 1988~.
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From page 240... ...
In family day care homes, increased wages would have an even greater affect since wages account for 90 percent of the cost of care. Parents, Quality, and Costs A major issue in the child care debate is who should determine whether a child's care is of adequate quality.
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From page 241... ...
Part of the reason wages are low may be because parents, even upper income parents, value other factors, including costs, more than characteristics associated with quality in choosing child care arrangements. Studies of parents' search for child care show that surprisingly few parents visit more than one program before deciding where to enroll their children.
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From page 242... ...
Accordingly, the expansion of services that provide better information to parents as well as to providers might improve the quality of care and the match between consumers and providers without significantly affecting affordability. BENEFITS AND COSTS OF ALTERNATIVE POLICIES This evaluation of the child care market suggests that the current mix of child care services does not adequately meet today's child care needs.
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From page 243... ...
The behavioral consequences of alternative policies are not well understood and are in need of further research. Evidence from the United States and several European countries, however, suggests that government policies in the child care area will have few undesirable effects, or unintended consequences in birth rates, fertility patterns, divorce rates, and labor force productivity (Bane and Jargowsky, 1988; Cherlin, 1988~.
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From page 244... ...
Child Allowances Various forms of child allowances are the most generally supportive forms of family policy and are quite common in other Western industrial~zed countries. Under the most generous policies, financial resources are made available to all parents with children without regard to their income or employment-related child care expenses.
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From page 245... ...
245 Cal Cat AD ._ o Ct C~ Ct C)
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From page 246... ...
the result of providing $4,000 to families for every child aged newborn to 5 and $2,000 for every child aged 6 to 12.~i With such an allowance, parents could more easily afford to provide care themselves or to purchase care of adequate quality at prevailing market rates. The net cost to government of providing child allowances would actually be considerably less than the gross cost since it would presumably replace the current personal income tax exemption for children, as well as several current child care subsidies and general income support programs (e.g., AFDC, the dependent-care tax credit, and the earned income tax credit)
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From page 247... ...
Fully paid Month parental leave 5.0 Frank (1988) Provider Subsidies Universal child care 126.0d Panel on Child Care Policy Extending Head Start to full day, 2.3 Brush (1988)
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From page 248... ...
A refundable tax credit could also be linked to employment and income, as is the current earned income tax credit. In his fiscal 1990 budget, President Bush proposed a $1,000 refundable per-child tax credit that would go to families with children under the age of 4 and annual earnings of between $8,000 and $20,000.
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From page 249... ...
Subsidy for Paid Child Care The second major form of consumer subsidy is directly linked to nonparental child care expenses related to employment. As we have noted, the current dependent care tax credit subsidizes employed parents who purchase child care services: child care is regarded as a work expense, at least part of which is credited in calculating a family's income tax liability.
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From page 250... ...
There is no direct link between employment-related tax credits and the quality of care, however, unless the availability of the credit is limited to child care services that meet specified standards. Current tax credit benefits are distributed to an estimated 9 to 12 percent of working families who pay for child care and claim the credit to reduce their income tax liability.
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From page 251... ...
Such a policy would provide benefits to about 20 percent more households than benefit from the current dependent care tax credit, at a cost about 25 percent higher than the current credit. Unlike child allowances, child care tax credits guarantee that the benefit is spent on (nonparental)
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From page 252... ...
Parental leave policies increase parental choice about whether to work outside the home or to work at home caring for a young child. Extended paid leaves are expected to increase the number of parents, primarily mothers of infants, who would temporarily leave their jobs and care for their children themselves, thus easing the demand for infant care services.
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From page 253... ...
provides rough estimates for a range of paid parental leave options. Based on labor force, age, and birthrate data, these estimates range (in 1983 dollars)
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From page 254... ...
In contrast to consumer subsidies, which are directed primarily at increasing the affordability of child care and increasing parental choice, provider subsidies have more targeted objectives to increase the supply of care for special categories of children and families, and to improve the quality of available services. Head Start, for example, is designed primarily to help poor children prepare for school, and the Child Care Food Program is designed to promote better nutrition among poor children who are in child care.
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From page 255... ...
Sentences for Children in Low-Income Families Several alternative policies have been proposed to improve services for children in low-income families. One option is to extend the current Head Start program to make it a full-day, full-year program.
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From page 256... ...
aged newborn to 5 years who live in families below the poverty line, the number who live in single-parent families, and the number in families with both parents in the labor force. This formula reflects a commitment to serve poor children from families with no employed parents as well as children from low-income working families.
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From page 257... ...
Although child care workers in centers generally have some formal child development training, a high proportion of workers in family day care homes have limited formal education and little or no formal child care training (Coelen et al., 1979; Fosburg, 1981; Kisker and Strain, 1988~. Increasing the supply of trained providers is likely to increase the wages of child care workers and, hence, increase the cost and affordability of care.
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From page 258... ...
Efforts to establish federal child care regulations have a long and beleaguered history; efforts to encourage states to adopt more stringent regulations have been limited. Although there is convincing evidence that increasing the stringency of regulations and their enforcement improves the quality of care, there is widespread disagreement about whether national standards or regulations are feasible, whether the federal government can or should enforce child care regulations, how the states could be induced to adopt and implement more stringent regulations, and whether it is possible to effectively regulate family day care homes as well as child care centers.
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From page 259... ...
Critics of stronger regulations point to the difficulties of widely varying parental views about what constitutes quality care and the inadequacy of current enforcement efforts. They also note that it is extremely difficult to effectively enforce services provided in family day care homes.
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From page 260... ...
Some proponents of resource and referral services claim that they will encourage parents to become effective monitors and so fill the gap between appropriate standards and enforcement of regulations. Resource and referral services can provide critically needed support and assistance to family day care providers, who tend to work in isolation, to lack efficient mechanisms for filling staff vacancies, and to have limited access to training and technical assistance (Kisker and Strain, 1988~.
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From page 261... ...
Most American parents want to retain a high degree of independence from government in choosing employment and child care, and the panel agrees that parental choice should be a key feature of public policy. Current policies do in fact provide some subsidies for most families, and this approach could be expanded through tax credits and child allowances.
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From page 262... ...
1988 Projecting the Costs of Full Day Child Care from the Costs of Head Start. Paper prepared for the Panel on Child Care Policy, Committee on Child Development Research and Public Policy, Commission on Behavioral and Social Sciences and Education, National Research Council, Washington, D.C.
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From page 263... ...
Fosburg, S 1981 Family Day Care in the United States.
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From page 264... ...
1988 What day care crisis? AEI Joumal on Govemmenz and Society Ref~lanon 2:13-21.
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From page 265... ...
Stephan, S., and S Schillmoeller 1987 Child Day Care: Selected Federal Programs.
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From page 266... ...
1988 The Parental Leave Crisis: Toward a National Policy. New Haven, Conn.: Yale University Press.
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