Issue Position: Federal Support of Day-Care/Pre-School

Issue Position

Federal Support of Day-Care/Pre-School

Paying for childcare is another major work disincentive, whose alleviation can boost the economy in both the short and long run. In the U.S., new mothers from low-income households pay roughly 30 cents of every dollar they earn on childcare, making it much harder for them to rejoin the workforce and get ahead. In Sweden, on the other hand, the figure is just 3 cents. Why the difference? The Swedish government, like a number of other advanced economies, provides highly subsidized daycare and pre-K centers for young children. No surprise, then, that in Sweden the labor force participation rate of mothers with young children is one-third higher than in the U.S.

We need to help mothers get back to work when they feel the time is right. Given the extra taxes that working moms pay, providing subsidized childcare could well pay for itself or at least cover much of its costs. Subsidizing daycare and pre-K centers can also help children learn critical socialization skills.

Let me quote Nobel Laureate James Heckman on this subject. Heckman has spent much of the last decade studying the importance of and economic returns to investing in very young children, particularly those in economically disadvantaged households.

The highest rate of return in early childhood development comes from investing as early as possible, from birth through age five, in disadvantaged families. Starting at age three or four is too little too late, as it fails to recognize that skills beget skills in a complementary and dynamic way. Efforts should focus on the first years for the greatest efficiency and effectiveness. The best investment is in quality early childhood development from birth to five for disadvantaged children and their families.

Source