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Why Is Preschool So Expensive?

written by: Rebecca Scudder • edited by: Donna Cosmato • updated: 9/11/2012

We are in a national crisis of childcare costs. Without affordable childcare, many parents cannot work, or have their working hours severely constricted. Childcare is often prohibitively expensive, and quality is uneven, depending on the caregiver. Why - and why should we care as a nation?

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    The True Costs of Chlldcare

    There is a severe crisis of early childhood care in the US and in a number of other first world countries. Early childcare costs on average more per child, per year, than average tuition in a public university in the US.

    According to the 2011 Study released by NACCRRA (the National Association of Child Care Resource & Referral Agencies), over 56% of the 23.7 million children under the age of 6 in the US have both parents who work. Over 75% of the seven million children under the age of six with single parents have a working parent. Some 14 million children under the age of 6 require regular child care. They also found that childcare costs are seen as more flexible than fixed costs such as housing and car payments.

    The study shows a range of annual childcare costs from $4,600 to $18,000 for fulltime infant care in a center and $3,900 to $14,000 for 4-year-old kids in a fulltime child care center. Costs were slightly lower for children in a Family Child Care Home (FCC). There, fulltime care for an infant ranged from $3,800 to $14,000 annually and care for a 4-year-old ranged from $3,600 to $11,300 yearly. They point out that the average yearly cost of tuition at a public university is $7,600.

    The families hit hardest by childcare costs are lower-income families, and many of them look for alternatives other than childcare centers as a way to save money. Childcare expenses are seen as a place where costs can be cut, and care in a private home or by a family member is cheaper than childcare centers.

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    At the same time, childcare workers and pre-K teachers are paid less than half, on the average, of an elementary or high school teacher's salary. In many states, the requirements for teaching pre-K or being a childcare worker are far less stringent. Costs for childcare are kept lower by not paying the caregivers well; classes are larger than ideal. It is still a large percentage of a lower-income family's expenses, and is not a negligible amount for the middle class family, especially if more than one child needs care.

    The US performs dismally in the worldwide ranking for education in math, the sciences and reading. We are also not well ranked for child health.

    A 15-year longitudinal study of children, beginning in early childhood, showed there is a direct correlation between those children who have early childcare and academic performance, likelihood of staying in school, schooling beyond secondary school, and the likelihood they will not become involved in criminal activities. Those children who do not have early childcare are all the more likely to have difficulties with academic performance, a lower chance of staying in school, a lower percentage getting schooling beyond secondary school, and an increased likelihood they will become involved in criminal activities.

    On average, yearly costs for someone in the state prison system average nearly twice as much as the cost for early childcare for a year.

    Governmental assistance does help some families with childcare costs, but there is a limited amount of money in government programs, and it has been cut already.

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    Government programs are not able to help numerous families, even if they are income qualified for assistance. Many families are likely to have to spend a disproportionate part of their income on childcare costs, and so will choose the least expensive option they can find.

    Childcare subsidies are likely to be among the new budget expenses cut in government spending. This translates to both fewer children receiving assistance for childcare, and increased costs borne by the families of children who are getting care. The annual amount allocated for childcare assistance was cut last year too.

    Additional studies have found that for every dollar spent on early childcare, the cost to society is amply repaid in increased earning power of those children as they grow up, and in the cost of criminal conduct society does not need to bear.

    The RAND corporation has done some studies, and in "What Does Economics Tell Us About Early Childhood Policy?" RAND says,

    Probably the most widely recognized intersection between economics and early childhood policy is in the analysis of the costs and benefits of early childhood programs such as home visiting and preschool. Such analysis typically compares the costs and benefits of early childhood programs to determine the “rate of return" the public will receive for money spent on such efforts.

    A growing body of program evaluations shows that investments in early childhood programs can generate government savings by, for example, reducing the need to provide social services later in life or by improving individuals' earnings, which then generates more tax revenue.

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    Fightcrime.org

    Fightcrime.org is a national bipartisan group of law enforcement officers with members from every state in the US. On the home page, the organization says Fight Crime: Invest in Kids. They look for information and "research about what prevents kids from becoming criminals and put that information in the hands of policymakers and the general public."

    They are strong advocates of early childhood education, and produce reports for every state in the union about childcare costs, and increased criminal behavior among those who did not have early childcare, with statistics to back up their position.

    Law enforcement leaders recognize that early childhood education programs are among the most powerful weapons to prevent crime and violence.

    While these programs go by many different names and vary in their focus, Head Start, child care, pre-kindergarten and early education programs can all offer high-quality learning environments that prepare kids for school and help them avoid a life of crime.

    As well as Early Care & Education, FightCrime .org also tracks and acts on information about Child Abuse & Neglect, After School & Mentoring, and Troubled Kids.

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    Childcare Issues in Other Countries

    This article was sparked by an article in an Australian newspaper, the Newcastle Herald, reporting reaction to local government requiring a 400% increase in contributions from parents for daycare. Some commenters pointed out the increase was actually from $5 to $20 dollars a day, and said people were upset because they were not receiving something for nothing anymore, or it was taking from the pockets of the middle class, or didn't compare to government schooling. Another commenter, who had been affected by the increase, said yes, the cost was much less than private care, but she had budgeted and made her employment decisions based on the costs at the time she signed up and four times the cost did make a difference to her. Yet another commenter, who was not affected, said the percentage increase was not reasonable and comparing it to government school fees was also not realistic.

    Tammy Schirle, a labour economist, in the Canadian newspaper Globe and Mail blog, discussed the economic benefits of quality childcare. She said,

    First, what impact do inexpensive child care programs have on the employment and career opportunities of parents? We know that providing inexpensive child care will significantly increase the employment rates of secondary earners in the family -- and these are typically women.

    She went on to refer to a study done in Quebec on the effects of $5 a day daycare, which showed employment of women in two parent families increased over 7% with the low-cost care. She also discussed the impact of childcare on the types of employment taken by women, especially in summer when school is out.

    The Dutch government commissioned an official study and report, with suggested policy changes - Background report to the OECD-project Thematic Review of Early Childhood Education and Care Policy. In the executive summary they said,

    The foundations for lifelong learning are laid during each child’s early years. This highlights the importance of good quality child rearing and the developmental conditions during these years for a child’s future life. As more and more women participate actively in a booming economy, and as ECEC facilities for their families grow in number and quality, we are concerned for those at risk, especially among specific groups such as some ethnic minorities. This concern calls for additional policy measures.

    They also referred to the academic achievements of Dutch children, and the positive effects of early childcare on at-risk children.

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    Implications

    RAND Corporation reports and studies focus on the economic benefits of quality early childcare. FightCrime.org looks at how early childcare can encourage at-risk children to avoid criminal activity and stay law-abiding. Both of them are strong advocates of government assistance for childcare when parents find costs difficult or impossible.

    MercedSunStar.com published an article, Cannella, Morse, Andrade and Pazin call for high-quality preschool programs, about California State Senator Anthony Cannella, along with District Attorney Morse and law enforcement officials Andrade and Pazin, visiting a school in Merced, CA. Morse was quoted as saying “Decades of research have shown that an effective preschool experience is one of the best crime-prevention tools around,"

    The article says that in a news release about the visit, “It’s important for us to remember that even during tough economic times, investing wisely and early in our young people is the best way to keep kids in school and out of jail," Andrade said. “From a public safety perspective, giving kids early learning opportunities ultimately saves money and lives."

    The article goes on to say that in California, only 35% of the children who are eligible for programs receive state and federal funding for their childcare costs. The four called for protecting funds from cuts, and eventually increasing those funds, as an investment in public safety.

    On 11/29/2011, there were seven comments on the article from readers. Almost all the commenters were against the idea of spending government money on the childcare programs, and none commented favorably on the idea of the money helping prevent criminal behavior. One said the money for the programs should be taken from the law enforcement and justice system budgets.

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    What's Not to Like about Early Childcare?

    It perturbs me that the commenters equated the programs with political corruption, taking from taxpayers and providing welfare benefits, as well as dissing the educational system.

    Early childcare program benefits are intended for low-income families who need assistance with childcare costs incurred, usually while they work. They also do benefit some families that are not working to cover childcare for their children, but the intent is to defray expenses that occur because the parents are working and cannot watch their children at the same time. When parents are working, they are contributing positively to the economy.

    In addition to providing low-income working parents quality childcare, there are the benefits pointed out in the RAND studies, the FightCrime fact sheets and findings that correlate academic performance with quality early child care.

    Making quality childcare programs available to everyone regardless of their income is a win-win situation. Stinting children of quality childcare produces adults who don't perform as well academically - an already growing issue in the US; who are less likely to receive the education they need to make a good living - and pay taxes; are more likely to behave criminally; and more likely to be a drain on society through additional law enforcement and judicial costs, and costs of the prison system.

    As well as producing more productive adults who contribute economically and intellectually, there are benefits in reduced costs to employers from employees not taking additional time off for childcare reasons.

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    Access to quality early childcare should be available to everyone, regardless of his or her income. Both economically and from the point of view of avoiding the encouragement of criminal behavior, provision for quality early childcare makes sense. As well, America is both downgrading and denying the educational achievement of a significant segment of the population - and our intellectual pool is what the US needs to stay a world-class provider of intellectual property and keep its position as an innovator. Wealth has become concentrated in a significantly smaller percentage of the population over the last couple of decades, and that means the middle class is increasingly starting to feel the economic pinch of daycare costs.

    Quality is an important component of childcare, if positive results are desired. When childcare workers are paid significantly less than other teachers are, there are fewer reasons for people to want to become childcare workers. At the same time, there are no coherent regulations or widespread standards for certification, so there is no guarantee of quality. Early childcare classes are often larger than they should be for quality education. The government needs to make an investment in the nation's children, with certification standards, pay that encourages childcare workers to enter and stay in the field, and class sizes that provide quality care. The care should be available to every child - just as public elementary and secondary education is provided to everyone.

    America cannot afford to neglect the nation's childcare.

    What do you think?

References

  • Early Childhood Education and Care Policy in the Netherland - Background report to the OECD-project Thematic Review of Early Childhood Education and Care Policy http://www.oecd.org/dataoecd/48/54/2476092.pdf
  • Early Care & Education - FightCrime.org http://www.fightcrime.org/page/early-care-and-education
  • MercedSunStar.com, Cannella, Morse, Andrade and Pazin call for high-quality preschool programs, http://www.mercedsunstar.com/2011/10/18/2087372/cannella-morse-andrade-and-pazin.html
  • Newcastle Herald Preschool fees to rise 400 per cent http://www.theherald.com.au/news/local/news/general/preschool-fees-to-rise-400-per-cent/2349901.aspx
  • Most Recent Child Care Data by State http://www.naccrra.org/randd/state_by_state_facts.php
  • THE STATE OF AMERICA’S CHILDREN 2011 Children's Defense Fund http://www.childrensdefense.org/child-research-data-publications/data/state-of-americas-2011.pdf
  • M. Rebecca Kilburn, Lynn A. Karoly, What Does Economics Tell Us About Early Childhood Policy? - Web accessable report - http://www.rand.org/content/dam/rand/pubs/research_briefs/2008/RAND_RB9352.pdf
  • Eunice Kennedy Shriver National Institute of Child Health and Human Development, NIH, DHHS. (2006). The NICHD Study of Early Child Care and Youth Development (SECCYD): Findings for Children up to Age 4 1/2 Years (05-4318). Washington, DC: U.S. Government Printing Office http://www.nichd.nih.gov/publications/pubs_details.cfm?from=&pubs_id=5047
  • TAMMY SCHIRLE, Globe and Mail Blog, Small changes to daycare policy has big impact on jobs http://www.theglobeandmail.com/report-on-business/economy/economy-lab/the-economists/small-changes-to-daycare-policy-has-big-impact-on-jobs/article2249401/
  • CHILD CARE IN AMERICA 2011 State Fact Sheets NACCRRA http://www.naccrra.org/publications/naccrra-publications/publications/ChildCareInAmericaFacts%20Full%20Report-2011.pdf
  • Reynolds AJ, Temple JA, Robertson DL, Mann EA. Long-term Effects of an Early Childhood Intervention on Educational Achievement and Juvenile Arrest A 15-Year Follow-up of Low-Income Children in Public Schools, JAMA.2001;285(18):2339-2346. doi:10.1001/jama.285.18.2339 http://jama.ama-assn.org/content/285/18/2339.full.pdf+html