If only we could have this kind of discussion here in Canada on the merits of universal daycare. Nope. Only in the USA. Turns out Californians will be going to the polls to decide whether to pursue a universal pre-school program.
This is not mere ivory-tower doom-mongering. This is what a sober assessment of a similar universal day care program in Quebec suggests.
If Reiner's initiative is approved in June, individuals making more than $400,000 a year ($800,000 for families) will face a 1.7 percent tax increase to raise $2.5 billion to finance three hours of free preschool a day for all of California's 4-year-olds -- even the 62 percent who already attend preschool without universal subsidies.
The final price tag for Quebec's day care program is 33 times what was originally projected: It was supposed to cost $230 million over five years, but now gobbles $1.7 billion every year. With this kind of spending, one would think that Quebec was offering top-notch day care to every tot, toddler and teen.
Much of the increased spending has gone not toward increased access, but increased costs. Day care worker unions, on the threat of strike, negotiated a 40 percent increase in wages over four years. The cost of care has doubled since the program began, with the annual per-infant cost now exceeding $15,000.
Besides unions, the other major reason for the skyrocketing costs is that when people don't pay the full price for a service, they consume more of it -- what economists call the problem of the moral hazard: Quebecois taxpayers pay 80 to 90 percent of the cost of care, requiring parents to pitch in only $7 a day.
Such low co-pays have encouraged mothers who might otherwise have stayed at home with their newborns to return to work. But any hope that the program would be able to meet the demand that it created was doomed right from the start, because it banned new centers and barred existing ones from participating, decimating the private day care market. (It has since reversed this policy). Literally overnight, long lines of desperate parents vying for a "free" day care spot emerged. Parents registered babies yet to be conceived. And when they did land a spot, they paid their $7-a-day to hold it -- even if they were months away from using it.
Many low-income parents, who lost their child care tax deductions in order to finance the program, have been crowded out by middle- and upper-income parents more savvy at negotiating the system. According to research by Peter Shawn Taylor for the Canadian Taxpayers Federation, half of Quebec's day care spaces are taken by families in the top 30 percent income bracket.
Read the whole thing.