American Families Plan

This thread can be a place to discuss this topic. I really love the idea of child care, pre school, and some community college and/or trade school help. I am not so sure about more payments to people with children. I think the money is counterproductive and incentivize the wrong people to have children. I think paying for daycare and pre-school for working parents could be a huge boon to the economy and also encourage more working Americans to have children. It would also make a dent in the number of abortions performed every year which is a win in my book. I think corporations would reap more than the expected tax to fund these programs.

We have to get people working on our country and given wages are rising, jobs are posted, and they still aren’t being filled there has to be a hidden cost on the workers that they would encumber to go to work. Childcare seems like it could be one of the problems given it basically wipes out the wages of going to work for $10/hour.

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I posted in the Covid / school thread a NYT “The Morning” article that basically says just getting the existing schools and daycares to fully open would solve a significant portion of the issue.

Link to my post with the article pasted in: Opening schools increase the spread of COVID-19 ~24% - #131 by twig93

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Completely agree. And to pay for it using an overdue increase to capital gains for those making > $1m makes the plan hard to criticize imo (with an exception for cash transfers for kids which I agree aren’t ideal)

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One idea that would be fairly low cost but would help a little bit would be to make full-day kindergarten a no-cost option for families rather than charging tuition.

Give families the choice between half-day and full-day but stop charging extra for the ones who want full-day.

I don’t think there’s a serious shortage of kindergarten teachers out there.

Another idea is to increase the $5,000 cap on Dependent Care FSAs and the $6,000 cap on the Childcare Expense tax credit. Childcare costs way more than that and we could help out working families more by simply expanding the existing tools set up to help them.

Also, make at least a portion of the Childcare Expense tax credit refundable. Or maybe even fully refundable, dunno.

I just looked it up and you already can’t claim more in childcare expenses than your income, which seems like a sensible cap. And it’s a deduction, not a credit. :oops:

So make it a fully refundable credit instead (convert the deduction to an equivalent credit), I say.

And double it and the Dependent Care FSA. Maybe even triple.

This depends on the age of the children. Are we looking for after school care for fourth graders? or full time care for 0-2 year olds?

This random source says the average cost of infant daycare in a dedicated center is $1,230/month. Understanding the True Cost of Child Care for Infants and Toddlers - Center for American Progress

Presumably, that is mostly wages. Not just to the direct care givers, but also the administrators, the people who provide utilities, the people who built the center, etc.

Even if the gov’t picks up the cost so that the parent can work, we’ll use up other workers providing the daycare. The net benefit to “the economy” is just a fraction of the parent’s work.

If the parents using the daycare earn $10,000 month, maybe they are so productive that “the economy” has a net gain. But, those parents can afford the daycare without gov’t help.

The point of the gov’t picking up the cost is so that lower income people can use it.

If we believe that the staff of a quality daycare provide better quality child care than the stay-at-home parents, then taxpayer provided daycare might be justified by the improvement in quality.

But, the “we’ll have more productive workers” argument needs to allow for the drag of the people providing the daycare.

There are places that charge tuition for full day kindergarten? I’ve never seen that.

My neighbors mentioned they are paying $400 a month to keep their older kid in full-day kindergarten at the local public school.

That’s way less than daycare, but at $3,600 a year that’s not nothing.

Federal guidelines only say that schools must provide half-day kindergarten. No requirement for full-day.

And every district I’ve taught in (5 districts in 2 states) has charged tuition for full-day kindergarten.

I’ve actually never heard of free full-day kindergarten.

That’s true but I think a big loss is that women will have children, outright leave the labor force and then either have permanently left or seek to reenter later with a gap. Even if the women are making at or even less than the cost of the childcare it could be a net gain if we avoid the career gap and loss of human capital.

It’s hard remembering how far behind other places are from Indiana on opening. I forget those types of things.

Not sure I follow the drag of more workers engaged in childcare. A job is a job. If more people work because they can get childcare even if some of that work is providing childcare how does that diminish the returns of such a policy?

Also long term this allows more people to choose to have children that may not be doing that now. That increases the future population of workers which is good for the economy as well.

Our son went to kindergarten in Colorado, and they charged for full-day. I want to say it was something on the order of $200-$300/mo, give or take.

If the “returns” are more consumer goods – more hamburgers, healthcare, and haircuts – then replacing parents caring for children with unrelated adults providing childcare does not increase the amount of those other goods.

If the “returns” are better quality care, then that might or might not happen.

If the “returns” are “population growth without immigration”, then that might also happen.

We have free full-day kindergarten (suburbs of Boston, MA)

I allow for gains in economics beyond simple GDP increases. At some point, the happiness, security, and freedom of people can be factored in. Those can be gained, even if the accountants don’t measure it in dollars.

Simply giving parents more workable alternatives…well that’s a win in my book.

Lot’s of good economists have asked the question of whether $'s are the best measure of economic activity or just the easiest to use. I think you are hitting on that and it’s an excellent point, but very difficult to calculate.

More kids in paid daycare will certainly raise the GDP as we calculate it. That’s because child rearing provided by stay at home parents doesn’t generate cash movement and that’s what we use to measure GDP.

Giving parents another choice is a win. Taxing other people, including those who would prefer to stay home with their kids, to pay for it is a loss.

In cases where the parents just aren’t good at caring for kids, it’s probably a net gain. I’d prefer that people who aren’t good parents and don’t earn enough to pay for childcare just don’t have kids. But, I don’t know how to do that in a free society.

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Economically producing the need for more workers and also allowing more workers to pursue work can only add to the size of the pie. We have reached a time in history when the demand for work to be done is exceeding the supply of workers this is somewhat demographic in nature and somewhat a result of the expansion of the world economy over the last 40 years.

IMO we have effectively onboarded Chinese, Indian, and South American workers into the world economy. That had a 20ish year impact on wage suppression and inflation suppression. They are onboard as workers and are now consumers. The problem now is that the oldest generations in the first world are the largest generations and the working generations are the smallest. This trend will hit China and India about 20 years after us but the birthrate trends are already starting.

This is true: to do a fair comparison you’d have to add in something for the stay at home parents. But how much? Many parents stay home with only 1-3 kiddos. In daycares they’re staffing for at least 4-1. Infants require a 5-1 staffing ratio* and older kids can have more kids per staff member. They staff at a lower ratio than required so that they can have “floating” staff members to relieve another staff member during lunch break or so someone can go to the bathroom, or walk a sick kid to the office, or whatever. Still, most stay at home parents aren’t watching that many kids. A few might be watching more than daycare would allow, but on average I’m sure it’s fewer.

So even if we properly accounted for the value of the unpaid labor they are providing in the GDP (which I completely agree we are not currently doing), getting more parents to work and kids in daycare would still have a positive impact on GDP.

*This may vary by state… I’m speaking for Ohio where my mother was a headstart director for many years and I had to help her fill out a lot of her legal paperwork that she didn’t understand. I picked up a lot about Pre-K legal requirements during that time period!