Quebec offers public childcare for $6 a day. Why can't the U.S. ...

CLEVELAND, Ohio — Childcare in the United States is expensive. In fact, it’s some of the most expensive in the world, and it’s become an enormous burden on working families.

For many American parents, the offer of inexpensive, high-quality childcare accessible to everyone would be a dream come true. So what’s standing in the way? The cost?

Although that’s what many an American politician has claimed, our Canadian neighbors say otherwise.

The Canadian province of Quebec has had universal childcare since 1997, costing families a mere $8 per day (just under $6 in U.S. dollars), and after 25 years of scrutiny, economists say the system not only pays for itself; it actually makes money.

You read that right. It doesn’t cost taxpayers a penny. It generates revenue. And what’s more, the publicly funded childcare centers are consistently of higher quality than private ones. So much so that families are leaving the competing system of private childcare centers for public ones, and the government is taking them over.

If that surprises you, you aren’t alone. A few Canadian economists had to eat crow too.

“Private markets for childcare have unfortunately been a failure,” wrote Pierre Fortin, emeritus professor of economics at the University of Quebec at Montreal and former president of the Canadian Economics Association in a 2021 op-ed for the Canadian newspaper Daily Globe and Mail.

Adding parenthetically, “That’s hard to admit for me, given I’ve spent my entire career promoting market-based solutions to economic problems, but that’s how it is.”

At the time Fortin wrote that, Chrystia Freeland, the Canadian Minister of Finance, had just announced her plan to expand the universal childcare model that was so successful in Quebec to all of Canada, effectively changing a for-profit childcare system much like we have in the United States, to the government-subsidized model like they have had in Quebec for the past 25 years.

Since then, Canada has divvied up C$30 billion in initial funding amongst its provinces with the goal of creating 250,000 new childcare spaces that will cost parents only C$10 a day by March 2026. Currently midway through the transition, parents received a 25% rebate in 2022. That rebate increased to 50% in 2023 will continue to increase until the goal of C$10 per day per child (just over $7 U.S.) is reached in 2026.

It’s a plan the women (and men) of Canada’s liberal party had been pushing for years without success, said Gordon Cleveland, economist and Associate Professor Emeritus at the Department of Management, University of Toronto Scarborough.

“Women in all parties had been quite favorable to moves on childcare for years, but with the boys running the show it really hadn’t come to the top of the pile yet,” said Cleveland.

That is, until COVID-19 demonstrated how crippling the loss of childcare could be to women, families and the economy. While childcare centers in the U.S. and across Canada shuttered, those in Quebec not only managed to stay open, but thrived, paving the way for Freeland to reintroduce the idea.

“She said, this is a good idea, let’s mimic what they’ve got in Quebec, let’s finally put money forward,” Cleveland said.

Increasing women in the workforce

In Quebec, reducing the cost of high-quality childcare to the point that it became almost universally affordable to all socioeconomic groups, allowed a greater share of parents (predominantly women) to work or continue their education or job training.

Prior to 1998 when the government first began subsidizing childcare, just 67% of Quebec women with children ages 3 to 5 worked outside the home. By 2014, that number was 82%. Today Quebec has one of the highest rates of working women in Canada, and among developed countries worldwide.

“Economists from the left and right have looked at this and everyone agreed that there was a surprisingly large impact on women’s labor force participation in Quebec,” said Cleveland.

As women returned to the workforce, this translated into increased tax revenues from both their immediate and future salaries. Studies of Quebec’s universal childcare program found that every dollar spent on childcare generated a combined increase in tax revenue and economic benefits totaling $1.75.

The economic benefits to increasing female workforce participation aren’t unique to Quebec either. In Europe, where universal childcare programs have been in place since the 1970s, a report by the Organization for Economic Co-operation and Development found that the family-friendly policies introduced in Nordic countries over the past 50 years and their associated increases in female employment boosted growth in GDP per capita by 10% to 20%.

Today’s women are better prepared than ever to enter the labor market. The number of women pursuing higher education has increased steadily over the last 40 years, outpacing men in both college enrollment and graduation.

“In that context to ignore the contributions that women can make to the labor force and consign them to staying home and looking after children-- that’s not a very good choice,” Cleveland said.

Other countries have made childcare a significantly bigger socioeconomic priority, and yet, when it comes to government assistance for childcare, the U.S. ranks near the very bottom compared to other developed nations. The question is, why?

A checkered childcare past

Part of the answer may lie in our history.

Some of the first childcare centers in the U.S. were born of charity. In the late 19th century, charity-run nurseries were opened to care for the children of the factory workers in urban city centers.

In our Rethinking Childcare series, cleveland.com and the Plain Dealer in 2023 are examining the struggle of finding quality, affordable childcare and proposing solutions to share families’ burdens and help the economy. Follow the coverage at this link.

Into the early part of the1900s, childcare consisted of a mix of charity and private nurseries, and free, government-sponsored Emergency Nursery Schools that opened during the Great Depression, for children of the unemployed.

Meanwhile, activists lobbied for financial payments known as mother’s pensions that would allow mothers to stay home. However, these pension payments were frequently insufficient and not universally available, and consequently the number of working women continued to grow.

It wasn’t until World War II that the U.S. created its first and only universal childcare program as an incentive for women to join the war effort.

War industry legislation, known as the Lanham act, provided $52 million to subsidize full-day, year-round childcare up to six days a week from 1943 to 1946. More than a half million American children received care through these government-run facilities; the cost to parents was 50 to 75 cents per day per child.

But when the war ended, so did the public-funded childcare, despite protests.

It would be 25 years before the topic would be revisited again, when in 1971 Congress passed the Comprehensive Child Development Act.

The legislation would have ensured universal childcare by establishing nationally funded childcare centers across the country. However, President Richard Nixon vetoed the bill, arguing that it would “commit the vast moral authority of the National Government to the side of communal approaches to child rearing over against the family-centered approach.”

Falling behind the rest of the world

When it comes to public spending on families and children, the U.S. ranked 30th among 33 member nations of the Organization for Economic Cooperation and Development, according to a 2017 study by the Washington Center for Equitable Growth. A 2020 study by the Economic Policy Institute found that he U.S spends 0.2% of its GDP on children before they reach kindergarten. That’s less than one third of the world average (0.7%).

To put that in terms of dollars, data compiled in 2021 article in the New York Times estimates the U.S. spends an average of $500 in public money per year for childcare for a toddler, ranging from roughly $1,000 per year for low-income children to $200 for all others. Subsidized childcare varies by state. The vast majority of federal spending on childcare is administered in the form of tax breaks, not subsidies or cash benefits like in many other countries.

By contrast, Sweden, Germany, Denmark, Finland, Iceland and Norway each spend upwards of $18,000 annually per child, with Norway topping the list at $29,726.

Meanwhile, the average cost of center-based childcare for an infant in Ohio is $808 per month, and $658 per months for a 4-year-old, according to the Economic Policy Institute. Many parents pay significantly more, and spots can be hard to find.

Compare that to Denmark, where a spot in a center is guaranteed, and parents pay no more than 25% of the cost. If a parent there prefers in-home care, the government will subsidize that as well.

In France, the government pays for up to 85% of center or in-home care costs for working parents, depending on income.

And Finland offers government-subsidized low-cost care in private and public centers, in private homes of childcare workers, or by nannies in the family home. There are even 24-hour childcare centers for parents who work or go to school at night.

In both Finland and Norway, if a family decides to have one parent care for the children at home, they are entitled to a cash allowance.

A problem of politics

Matters of religion and morality are more politically divisive than ever, and when it comes to providing quality childcare for working families, some conservative lawmakers oppose any legislation that leads to better childcare on the basis that it is rooted in communism or threatens the family unit.

For example, when President Joe Biden announced his American Families Plan two years ago, Republican Sen. Marsha Blackburn of Tennessee tweeted, “You know who else liked universal day care?” followed by a link to a 1974 article in the New York Times about day care in the Soviet Union.

Meanwhile, Hillbilly Elegy author and Ohio Republican Sen. J.D. Vance tweeted that “‘Universal day care’ is class war against normal people.”

“Normal Americans care more about their families than their jobs and want a family policy that doesn’t shunt their kids into crap daycare so they can enjoy more ‘freedom’ in the paid labor force,” wrote Vance.

And just a month before Biden announced his plan to reform childcare, lawmakers in Idaho turned down a $6 million federal grant to support early childhood care and education because, according to Republican state Rep. Charlie Shepherd, that money would hurt “the family unit.”

“I don’t think anybody does a better job than mothers in the home, and any bill that makes it easier or more convenient for mothers to come out of the home and let others raise their child, I don’t think that’s a good direction for us to be going,” he said during a debate on the floor of the Idaho House of Representatives.

However, many mothers need to work to support their families, and the impact of losing childcare was felt deeply and had a lasting effect on women, especially poor women, in the workforce during the pandemic.

In September 2020, early during COVID-19, it was estimated that 865,000 women left the labor force. This is more than four times the number of men who left the labor force during the same time period. By January 2022, that number climbed to 1.1 million women, accounting for 63% of all jobs lost, according to an analysis by the National Women’s Law Center of the latest U.S. Bureau of Labor Statistics report.

Research indicates that job sectors that were most affected by the pandemic were low-paying jobs that required face-to-face contact, such as childcare workers, retail and food service employees, or low-skill healthcare workers. They also employed substantially more women than men.

What’s more, while the most recent data indicate overall levels of female employment have since recovered to pre-pandemic levels, the rebound is skewed toward women with higher levels of education. One reason for that may be that women in higher paying jobs are more able to afford the childcare they require to work.

“If you’re not able to attain childcare that’s affordable, even if there’s plentiful jobs, you can’t work in one,” Beth Almeida, a senior fellow at Center for American Progress told NBC news.

The evidence supports this. Studies have found that higher childcare prices depress maternal employment. Conversely, dropping childcare prices just 10% can increase the number of working mothers by the same proportion according to a report by the Department of Labor.

Yet, according to the U.S. Department of Health and Human Services, nearly two-thirds of parents, including 95% of low-income parents, spend more than 7% of the family income on childcare -- meeting the government’s definition of unaffordable. Millions of American families with young children spend more than a quarter of their income on childcare. In some cases, the annual costs exceed that of in-state college tuition.

It is not surprising then that a 2022 U.S. Chamber of Commerce report on women in the workforce shows that more than half of parents who left their jobs gave a lack of available childcare as the reason and a quarter of them said it was because they couldn’t afford it, making childcare one of the biggest obstacles for working parents.

A look to the future

Failure to address childcare has financial consequences: a lack of affordable childcare leads to a reduced number of working women, fewer working women means less family income, and, consequently, less tax revenue.

The liberal-learning Center for American Progress estimates that a 1% reduction in the maternal labor force rate would result in $2.6 billion in lost tax revenue, while a more extreme scenario where 20% of working mothers left the labor force would cut tax revenues by $32.8 billion. That would be more than half of what the federal government spent in 2019 on the Supplemental Nutrition Assistance Program, the program formerly known as food stamps.

Another study estimates that the annual economic cost of a lack of childcare at $57 billion in lost earnings, productivity, and revenue. Meanwhile, a White House fact sheet cites a Boston Consulting Group report which forecasts losses of $290 billion each year in gross domestic product in 2030 and beyond if the U.S. fails to address the lack of affordable childcare.

When Biden’s American Families Plan failed to get the necessary bipartisan support of Congress, the President instead signed an executive order that calls for agencies to make more childcare friendly policies through changes such as requiring applicants for federal job creation funding to expand childcare access, reducing or eliminating co-pays for the Child Development Block Grant Program, and raising wages for Head Start teachers.

“The actions we are taking today are about dignity, security, working families, caregivers all across the country,” Biden said at a ceremony in the White House Rose Garden. “And they’re good for the economy, as well.”

But will they be enough to make meaningful change?

The effect of universal childcare on the Quebec economy “was strong, it was immediate, and it was across classes,” said Cleveland. But a big reason it worked, he said was because the cost was both affordable and permanently fixed.

“It’s not just that childcare was subsidized. It’s that women know exactly what childcare is going to cost and can plan their lives based on being able to afford childcare. And that is so very different than it would be for a girl from the United States,” Cleveland said. “I think that certainty had a very big impact. It was really as if there had been an entire change in social expectations.”

The idea that the United States would adopt a program like the one in Canada is “almost impossible to believe,” said Cleveland, pointing out that it took Canada two and a half decades to come around to the idea that childcare should be treated as a public service.

“It’s a big leap,” he said. “And if Quebec hadn’t pioneered it, I don’t think that the rest of Canada would have been so sympathetic.”