In the first lecture of every Principles of Microeconomics course, we discuss the difference between a positive statement and a normative statement. The former is a statement of what is or is not, and the latter is a statement of what should be or should not be. A positive statement can be tested and proven or disproven. A normative statement, since it is a statement of opinion, cannot be tested or proven.
One of the best things about being an economist is that we almost always stick to positive statements. We deal in data and do our best to analyze and interpret data to determine and describe what is or is not true. We leave to our policymaking friends the much more complex task of deciding how we should respond to that data.
But, today, I ask your forgiveness as I step out of that usual role and offer some policy suggestions to follow up on my recent column describing our lack of affordable child care in Brunswick.
My first thought is a question — why isn’t the market fixing the problem? I think I know at least part of the answer. First, the problem really is low supply, and the day care market is correcting in the best way a market knows how — by increasing prices. But, when prices (and profits) rise, one should expect to see more new day cares entering the market, which would have the effect of bringing those prices back down. Since that is not happening, there must be some significant barriers to entering the market.
These barriers are what we need to identify and address. I will identify a couple here, and I look forward to receiving your feedback to help identify others as we continue this important conversation in our community.
Two of the primary barriers to starting a day care center are obtaining initial licensing and covering liabilities associated with caring for children. If you want to become a licensed child care provider in the state of Georgia, the Georgia Department of Early Care and Learning provides a 22-page checklist of tasks that you must complete prior to licensing. And although liability insurance is not a requirement for child care centers in Georgia, it is highly recommended.
As promised, I have a potential solution for overcoming these barriers to entry in the child care market — employer sponsored child care. Checklists and liability may be overwhelming to an individual thinking of opening a center, but these are common occurrences in business and are much more easily tackled by firms.
And the benefit is not just to parents. According to a 2013 study by Horizons Workforce Consulting, employer sponsored child care, offered as a benefit to employees (not a bring your kids to work policy), enhances recruitment and retention efforts and improves workers’ productivity. A full report of their findings is available online.
So, for those of you who asked how I would fix our child care crisis, my first advice is to encourage employers to offer child care at or near their workplaces. They will be helping themselves, their employees, and our economy.