President Joe Biden’s $3.5 trillion Build Back Better Act could dramatically drive up the cost of child care for many families.
According to Matt Bruenig of the People’s Policy Project, a progressive think tank, “The Democrats’ child care proposal mandates higher wages for child care workers but then does not follow through on the public subsidies for all families. The result will be a massive increase in child care fees for families with incomes slightly above their state’s median income.”
He went on to note the “average cost of basic quality center-based infant care is $15,888.” However, Democrats’ child care plan would increase the wages of child care workers to “wages currently received by elementary school teachers.”
Bruenig noted that the median income of an elementary school teacher is $60,660 per year. Raising the wage of a child care worker to that rate would represent a 138% increase.
“If we increase the salary cost from the CAP estimate above by 138 percent, the unsubsidized price of child care goes from $15,888 per year to $28,970, an increase of $13,082 per year. And this is not the only thing the bill does that will increase the cost of care,” he wrote.
The Democratic plan “subsidizes the price of child care by replacing flat user fees with a sliding-scale income-based copayment. Costs that exceed a given family’s copayment amount will be picked up by the government.”
However, Bruenig says in the first three years of the plan, “Families with incomes that are just $1 over 100% of the median income (year one), 115% of the median income (year two), or 130% of the median income (year three) will be eligible for zero subsidies, meaning that they will be on the hook for the entire unsubsidized price, which as discussed above will now be at least $13,000 per year higher than before.”
In one example, he writes that if a family earned $1 more than the median income they would receive no subsidies for child care “even as the unsubsidized price of child care skyrockets due to the wage and other mandates in the Democratic proposal.”
Last year, the country’s median income was $67,521.
“This is obviously a perverse outcome and it’s not clear whether lawmakers even realize what they are about to do,” Bruenig said.
He went on to suggest there will be “many dual-earning couples who cannot afford child care if both of them continue to work, but could afford child care if one of them quit their job and thereby brought their family income below the eligibility cutoff.”
Finally, Bruenig said that while the Democrats claim their plan will be a “boon to women’s labor force participation,” he argued it actually “pushes against it by making it virtually impossible for a dual-earning middle class couple to afford child care in the first three years of the program.”
He suggested Democrats should make all incomes eligible for subsidies “so that at least middle class parents are spared from this perverse outcome, though higher income parents would still be hit with it.”
Alternatively, he said, “simply copying and pasting the Democrats’ pre-k proposal but applying it to ages 0 to 2 would solve the problem entirely.”
However, Bruenig wrote, “As it stands now though, the Democrats are walking towards disaster, both as a policy matter and, very likely, as a political matter.”
According to its “About” page, The People’s Policy Project is a think-tank that has a “special focus on socialist and social democratic economic ideas.”
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