Is there a market failure in child care? • Hacker News Board

Re: Is there a market failure in child care?

#31

Post by denimnerd42 » Wed, Feb 22, 2023, 5:05 PM UTC

mindvirus wrote: post #18

A few thoughts: 1. Waitlists are a scam. In NYC, it's ~$150 non-refundable just to apply, and daycares won't tell you how long their waitlist is (and per the article, are often over subscribed). I wish there was legislation that these are refundable, or capped at ~$20 or so. 2. The cost of daycare here is around $2500/kid. So with two kids, you're looking at $60k/year, which is $100k pre-tax. And so if you have two k…

I think people do work to break even or even worse. You only need childcare for 4 or 5 years until the kid is old enough to go to public kindergarten. If you are 25 and take a break from the workforce for 5 years you are going to obliterate your career. meanwhile if you had been working at say 25 in NYC at 100k/year and kept working w/ the support of childcare then by 30 you could be making 150 or 200k/year. If you had stopped working 5 years you would be lucky to find that same 100k/year job again. By 30 you still have about 35 years of your career left. I wouldn't want to stunt that growth early on.

Re: Is there a market failure in child care?

#32

Post by protonbob » Wed, Feb 22, 2023, 5:06 PM UTC

texaslonghorn5 wrote: post #30

kube-system wrote: post #20

> Suppose that the parents have two children who need child care. That is $540 per week. The parent salary has to be at least $540 per week to make the choice of child care economical. But that does not take into account taxes. Even worse than that, it doesn’t take into account commutes, and the opportunity cost of not spending time with your own kids. If you make just enough money at work to pay for childcare, what…

> If you make just enough money at work to pay for childcare, what the heck are you doing? $540/40hrs = $13.5/hr. Any number of jobs pay this little.

That's take home pay. With taxes it's much higher.

Re: Is there a market failure in child care?

#33

Post by [deleted] » Wed, Feb 22, 2023, 5:06 PM UTC

ch4s3 wrote: post #23

burneraccountt wrote: post #11

Lol. Yes. The failure is treating child care like a market.

Is it not a service that can be provided by someone outside of the immediate family? Should those caregivers not be paid? If yes to both, that is a market. If you provide it as an entitlement, you still need some mechanism to know how many (coarsely put) units of child care to produce. [*edit] for the down-voters, I'm curious what is your disagreement here?

[deleted]

Re: Is there a market failure in child care?

#34

Post by monero-xmr » Wed, Feb 22, 2023, 5:06 PM UTC

notch898a wrote: post #29

monero-xmr wrote: post #25

We paid a lot of money for childcare when there was a (possibly illegal) daycare a few apartments down with a lady watching a bunch of kids. She only wanted $500 a month but we paid $2000 to an expensive one. Imagine advocating for cut rate care for your own children . Considering I’m leaving my most priceless thing with strangers it isn’t crazy to me that it’s expensive.

A significant part of what you were paying out is liability insurance etc and not necessarily better care.

I don’t mean to say I want the illegal daycare outlawed. I’m sure the lady was fine. I just think it’s absurd that we expect daycare to be cheap when you are entrusting the most valuable thing in your entire life to strangers. People think this should be free?

Re: Is there a market failure in child care?

#35

Post by alocasia-1 » Wed, Feb 22, 2023, 5:07 PM UTC

kube-system wrote: post #20

> Suppose that the parents have two children who need child care. That is $540 per week. The parent salary has to be at least $540 per week to make the choice of child care economical. But that does not take into account taxes. Even worse than that, it doesn’t take into account commutes, and the opportunity cost of not spending time with your own kids. If you make just enough money at work to pay for childcare, what…

I know you're being rhetorical, but often, just trying to avoid a gap in your resume. It sucks but there can be a greater long-term cost to trying to reenter the workforce after taking years off to raise kids.

Re: Is there a market failure in child care?

#36

Post by secabeen » Wed, Feb 22, 2023, 5:07 PM UTC

This is a pretty good distillation of the math. Child care has often been done on the backs of underpaid lower-class workers. Unlike most businesses, childcare doesn't scale well at all, and it's very hard to make the math work to pay the staff a living wage without it being prohibitively expensive.

Even in the example given, the $22.50/hour rate is just the break-even rate with child-care workers at the minimum wage. If you push them up to a living wage of 75k/yr, the listed cost doubles. Add again people wanting child care costs to not just be break-even but to make working feel worth it, and it probably doubles again.

It's just a very hard business with difficult scaling. It gets better after age 2, when you can increase your student/staff ratios, for what that's worth.

Re: Is there a market failure in child care?

#37

Post by cperciva » Wed, Feb 22, 2023, 5:07 PM UTC

mindvirus wrote: post #18

A few thoughts: 1. Waitlists are a scam. In NYC, it's ~$150 non-refundable just to apply, and daycares won't tell you how long their waitlist is (and per the article, are often over subscribed). I wish there was legislation that these are refundable, or capped at ~$20 or so. 2. The cost of daycare here is around $2500/kid. So with two kids, you're looking at $60k/year, which is $100k pre-tax. And so if you have two k…

who would work to just break even on childcare

I've seen the argument made that even if childcare is cash flow negative it can be profitable if prevents an interruption in career progression and thereby allows for higher future earnings.

Re: Is there a market failure in child care?

#38

Post by Rafuino » Wed, Feb 22, 2023, 5:07 PM UTC

oh_sigh wrote: post #4

How about just a tax deduction for qualified childcare costs up to a certain amount? Parents usually want to vet their child care and not just ship their child to whichever person is offering the lowest rates for the day.

You can fund a dependent care flexible spending account with pre-tax dollars up to $5000 per household currently. That will cover ~2 months of care where I live, but I guess it's better than nothing at all...

Re: Is there a market failure in child care?

#39

Post by ljf » Wed, Feb 22, 2023, 5:07 PM UTC

kube-system wrote: post #20

> Suppose that the parents have two children who need child care. That is $540 per week. The parent salary has to be at least $540 per week to make the choice of child care economical. But that does not take into account taxes. Even worse than that, it doesn’t take into account commutes, and the opportunity cost of not spending time with your own kids. If you make just enough money at work to pay for childcare, what…

I agree - but have seen many families have to make this choice, as having too big a gap in your CV (to look after their kids) will impact there employability down the line.

It is also hard to stay current and to retain confidence in your ability when you are out of the working world.

Don't get me wrong - stay at home parents have amazing skills and learn loads, but few employers see that as a benefit when you are looking to return to work. In the UK there is a movement called 'Pregnant then Screwed' which is trying to address this.

Re: Is there a market failure in child care?

#40

Post by anonymouskimmer » Wed, Feb 22, 2023, 5:08 PM UTC

notch898a wrote: post #21

mindvirus wrote: post #18

A few thoughts: 1. Waitlists are a scam. In NYC, it's ~$150 non-refundable just to apply, and daycares won't tell you how long their waitlist is (and per the article, are often over subscribed). I wish there was legislation that these are refundable, or capped at ~$20 or so. 2. The cost of daycare here is around $2500/kid. So with two kids, you're looking at $60k/year, which is $100k pre-tax. And so if you have two k…

There are a number of people who will never admit this on a public forum, but they are taking their kid to some illegal immigrant in the ghetto and paying 1/3 of that.

When I was a child my daycare was the house of a person who lived in the neighborhood. I wonder how much this sort of thing is regulated away now.