Regulations have contributed to a dearth in child care that has forced parents to abandon their jobs, witnesses said in a Tuesday congressional hearing.
The lack of care has driven some parents from the workplace because they can’t afford the child care available to them, or there are no options in their area. Part of the problem is that daycare licensing requirements have left the market with fewer providers, making them more expensive.
“In the case of child care, occupational licensing raises the cost of being a provider, reducing the supply. In turn, that reduction in supply increases prices for consumers,” said Veronique de Rugy in prepared remarks for Tuesday’s House Small Business subcommittee hearing. De Rugy is a senior research fellow at the Mercatus Center at George Mason University, a right-leaning organization.
Rep. Abby Finkenauer, a Democrat from Iowa who is chairwoman of the subcommittee, declared the lack of child care a “crisis.”
Several Democrats seeking the Oval Office have plans to lessen the child care burden. Among them, Sen. Elizabeth Warren of Massachusetts would have the government provide child care to all Americans. Pete Buttigieg would provide universal full-day child care and pre-K for all children from infancy to age 5.
“We need to address this crisis and bring down the cost of child care,” Finkenauer said, adding, “It isn’t just a family issue, it’s an economic issue.”
The congresswoman said that parents are either turning down raises and promotions because they’re afraid to lose child care assistance benefits, or they are leaving the workforce because it’s less expensive to stay at home than to pay for child care.
“Jobs are going unfilled; employers are struggling to attract talent because of the lack of affordable child care in our communities,” she said.
The annual cost to the economy in lost earnings, productivity, and revenue is $57 billion, according to ReadyNation, a Washington think tank that examines the work-life balance. Loosening regulations would help reduce that cost. A Mercatus Center study found that relaxing staff-to-child ratios by one child across all age groups would reduce the cost of daycare by at least 9%.
“The cost of child care is rightly a matter of concern. However, the academic evidence suggests a solution that should be considered carefully: It is child care licensing laws that keep these costs of child care high and the supply of child care restricted,” de Rugy said.
Tuesday’s hearing raised the issue of “child care deserts” where parents either have providers, but no spots are available to them, or they simply have no choices. This makes it difficult for businesses to fill open posts because daycare is out of reach for parents seeking employment.
“Even if parents can afford child care, they often can’t find it,” said Sarah Piepenburg, owner of Vinaigrette, a specialty oil and vinegar shop in Minneapolis, Minnesota, who also testified before the subcommittee. “In my state, for example, 44% of Minnesotans live in a child care desert, where there are simply no spots for anyone.”
Another witness, Dan Levi, president of Levi Architecture in Iowa, said that “the waiting lists [in his state] are in the thousands and it is impacting families and our economy … When a community has child care available, it is able to recruit and retain businesses, employees, and families.”
“Private businesses, and my own business, understand the lack of potential employees in Iowa as a barrier to economic growth. The costs associated with recruitment and retention combined with the limited hiring pool keeps many businesses (including the clients I work for daily) from expanding,” Levi said in prepared remarks.
“We need lawmakers to invest in high-quality child care for everyone in our country,” Piepenburg said.
Finkenauer intends to introduce legislation that addresses this problem. It would “expand financing options for child care,” the congresswoman said. It is not clear if the legislation would address the regulation issue raised during today’s hearing.
