Why Is Childcare Getting So Expensive?

Blame the regulators.


Children are a delight. They are our future. But sadly, hiring someone to take care of the noisy little bundles of love while you go to work is getting more expensive by the year.

Earlier this month, the advocacy group Child Care Aware reported that the cost of enrolling an infant or toddler at a childcare center rose a bit under 3 percent in 2012, faster than the overall cost of living. There are now large swaths of the country, shown in grey shades below, where daycare for an infant costs more than a tenth of the median married couple's income. In states like Oregon, New York, Minnesota and Massachusetts, it's more than 15 percent.

This is not necessarily a new trend, but it is a somewhat puzzling one. According to the Census, the price of professional childcare has been rising since the 1980s. Yet during that time, pay for professional childcare workers has stagnated. As the Census points out, care givers actually make less today, in real terms, than they did in 1990. Considering that labor costs are responsible for up to 80 percent a day care center's expenses, according to Child Care Aware, one would expect flat wages to have meant flat prices.

So who's to blame for higher child-care costs? The government, I suspect.

Child care is a carefully regulated industry. States lay down rules about how many children each employee is allowed to watch over, the square footage centers need per child, and other minute details. And the stricter the regs, the higher the costs. If a center is required by law to have 25 square feet of space for every kid in a program, it can't ever downsize its building when rents rise. If it has to hire a care giver for every two children, it can't really achieve any economies of scale on labor to save money when other expenses go up.  A comparative case in point: in Massachusetts, where child care centers must hire one teacher for every three infants, the price of care averaged more than $16,000 per year. In Mississippi, where centers must hire one teacher for every five infants, the price of care averaged less than $5,000.

Unfortunately, I don't have a state-by-state history of day-care-center regulations handy. But I wouldn't be surprised if as the rules have become more elaborate, prices have risen. The tradeoff might be worth it in some cases; after all, the health and safety of children should probably come before cheap service. But certainly, it doesn't seem to be an accident that some of the cheapest day care available is in the laissez faire South.