Child Care MHPC

Child Care Regulations Price Low-Income Families Out of Market

May 24, 2016 Posted by Liam Sigaud - No Comments

For many families with young children, especially single-parent households, child care is critical to being able work and earn a living. In 2015, an estimated 53,000 young children in Maine needed child care services outside the home. The availability of affordable child care often influences the decision to seek employment or rely on welfare.

Despite its importance, the cost of child care is often prohibitive for low-income Mainers. In 2015, an analysis by Child Care Aware of America revealed that in Maine, “a single parent with two children pays 73% of their income towards child care. A married family at the poverty line with two children pays 68% of their income towards center-based child care. [The] annual cost of child care for an infant and a 4-year-old is $16,381, which exceeds the cost of the state’s four-year public college tuition.” Before- and after-school center-based care for a child averages $4,439 per year, while full-time services for an infant typically cost nearly $10,000 annually. Even family-based providers that generally charge lower prices cost between $3,765 and $6,870, depending on the age of the child.

Not only are child care services too expensive, many parts of Maine – despite high demand – are experiencing acute shortages of day care facilities. Chantel Pettengill, who runs a child care center in Lewiston, recently testified to the Legislature: “We are…in a childcare crisis, I have been open since November…my infant rooms are full (16 infants), my toddler room has only 2 slots left, and the same for my 2-year-old room.” Commenting on the Legislature’s recent efforts to impose additional mandates on child care facilities, Vicki Gordon – who owns a daycare in Freeport – stated: “As more and more daycare regulations are passed, more and more great home daycares are closing, because it is becoming almost impossible to comply with all the rules and regulations.”

As the Washington Examiner noted in 2014, “excessive regulation of daycare and preschool mostly hurts the poor and working class. For one thing, it makes daycare rarer and more expensive.” According to Jeffrey Tucker, a research fellow at the Acton Institute, “child care is one of the most regulated industries in the country,” discouraging entrepreneurship and raising prices. A 2011 study published in the American Economic Review found that “the imposition of regulations reduces the number of center-based child care establishments, especially in low income markets.” A paper by the RAND Corporation concluded, unsurprisingly, “that regulations have an economically significant effect on the price of childcare, which in turn affects both the demand of regulated care and the labor force participation choices of the mothers.”

Intuitively, strict regulations on child care providers may seem necessary to ensure the safety of vulnerable children and promote high-quality services that spur cognitive, emotional, and social development. Yet, according to a report by the National Center for Policy Analysis, “state and local regulations significantly affect the price of care without improving quality.” A 2015 study by the Mercatus Center points out that policymakers often focus their regulatory efforts on structural, easily-observable aspects of child care — such as group sizes, zoning restrictions, and program administration—despite evidence that developmental outcomes are more closely linked to the quality of the interactions between the caregiver and the child.

Indeed, “the literature on early childhood development, psychology, and education suggests that the quality of child care depends most importantly on the level of education of immediate care providers—that is, lead teachers and child care center staff.”

In Maine, about 200 pages of regulations apply to child care facilities, nursery schools, or family child care providers. Depending on the type of child care provider and the age of the children being cared for, the Department of Health and Human Services imposes strict staffing ratios. For instance, in a small child care facility (defined as a business that cares for 3-12 children under the age of 13), one staff member may not supervise more than 12 children over the age of 5. Similarly, child care centers – facilities with more than 13 children – may not allow one staff member to care for more than four infants.

Though it’s important to ensure that children receive the attention and supervision they need, these staffing ratios increase labor costs, have not been demonstrated to be beneficial to child development, and are often restrictive than many other states. Thirty-five states, for instance, allow staff members to supervise more 5-to-13-year-olds than Maine; while Maine limits the number to 13 children per staff member, some states – like North Carolina and Florida – allow 25 children.

It should come as no surprise that states with the most affordable child care – such as Mississippi – also have less restrictive staffing requirements. Using a limited dataset, a study by the General Accounting Office estimated that “decreasing the average child:adult ratio by one is associated with increased costs of roughly 4.5 percent. Thus if the average center, with 50 children and an average annual per-child cost of $6,500, were to reduce the child:staff ratio from 11:1 to 10:1, the annual cost per child would increase by about $306.”

In addition to the extensive regulations imposed by the state, many municipalities have enacted zoning and land use ordinances that create obstacles for entrepreneurs seeking to start a center- or home-based child care facility. In Rockland, for example, child care facilities are prohibited in residential zones unless the Planning Board grants permission. Similarly, Houlton requires Planning Board approval for day cares and nursery schools and imposes many limitations on those seeking to run a child care business from their home. Portland permits day care and home babysitting businesses located in residential areas, but imposes minimum lot size requirements, parking mandates and architectural regulations. These ordinances may help to explain why the percentage of child cared for in family day cares has declined sharply since 1995.

The motivation for tightly regulating the child care market—the desire to protect the thousands of children who rely on commercial child care from neglect or abuse—is laudable. Yet, despite extensive government involvement, the overall quality of child care in Maine remains mediocre while prohibitive costs prevent many poor families from pursuing professional or educational opportunities made possible by reliable child care. Carrie Lukas, writing in the National Review, offers the solution: “Reducing unnecessarily burdensome regulations would allow more entrepreneurs to enter the child-care arena and ultimately lead to more affordable options and a greater diversity in the kind of care arrangements that are available.