The economics of childcare

Why don't babysitters make much money?

Supply and demand.

Supply side: it's not skilled labor. It make take talent (like the patience of a saint), but the actual skills of doing laundry, spooning formula into one's mouth, and changing a diaper are not hard to learn.

Demand side: The ratio of childcare workers to small children is necessarily very low--we don't want 20 infants being cared for by one stressed out woman. The economies of scale in toddler care are low, at least if we want the toddlers in one piece at the end of the day. Say you want to pay your childcare workers 40K plus bennies and payroll taxes, a nice but not extravagent salary. Even before any overhead, at a tax rate of 25%, an eight-to-one ratio of children to workers means that you need to earn about $10,000 a year pre-tax per child to cover just the salaries of your daycare workers.

Needless to say, day care facilities do, in fact, have overhead. Given the other expenses, almost any average family with two small kids would be better off having Mom stay home.

The government could subsidize it, of course. But then you'd have to bump all the salaries of those who teach older children, to cover the skill gap. This would be very pricey. It would be pricey even without the bump, because America has a lot of childcare workers. And you still wouldn't attract all that many higher quality workers, because wiping noses is not the sort of thing most women go to college for.