Market Failure: Our Childcare System is Broken

September 24, 2019

In this country, the early childhood education system is in market failure. 

In recent years we have seen the greatest federal funding increases for early childhood education in history, and yet those significant investments just barely make a dent to tackle the need. 

In 2018, NASEM studied “how to fund early care and education for children…that is accessible, affordable to families, and of high quality, including a well-qualified and adequately supported workforce.” The report concluded that a financial windfall of around $54 billion would be required. 

That amount of money is not going to happen from just increasing public funding streams. Therefore, we need to think more critically about how we address some of the serious obstacles facing the early childhood education system, how we better leverage current funding levels, and how we partner with unlikely bedfellows to find creative and innovative solutions. 

So let’s identify the obstacles. Only after understanding the complexity of the situation we’re in can we address what’s broken together. 

In this four (or five)-part blog series we’re going to dive into the challenges and try to explain the complicated field of early childhood programs. We’ll also lean on research that others have already done, knowing that more research is always welcome and that we’re not experts on every nuance of this conversation. 

In our next post, we’re going to talk about the high cost of care. Right now, parents are mostly responsible for shouldering the burden of those costs. As a result, parents are going into debt to pay for childcare to ensure their children will be safe and cared for while at work. 

Other families are making the tough decisions to have one parent leave the workforce to save money in the short term on childcare without considering the high cost of that decision to one’s lifetime earnings. 

There are many examples of how different families are choosing to navigate these high costs. Everyone is doing the best with what they’ve got, just trying to find a way to make it all work. In our post we will continue to break these scenarios down, as well as try and get to the root of why care is so expensive and how those costs differ by the age of the child or the type of care.

The third post will explore the supply challenges that are preventing many families from accessing care in the first place. We’ll look at why there remains such low supply of childcare programs while the demand remains so high, defying the conventional principles of supply and demand.  

Lastly, we’ll discuss the many challenges facing early childhood education providers, which contribute to and exacerbate problems within the system as a whole. Providers are constantly balancing providing care that families can afford, while ensuring quality programming and adhering to the extensive regulatory and safety standards that by default increase the overall costs of operating a program. 

On top of that, the majority of these providers are small business owners who most often entered the field because they care about children and identified a need in their community, not because of their business savvy and entrepreneurial skills. 

Although we’re breaking the component parts of the system into separate posts to provide some in-depth coverage, these challenges are intertwined and changes to one aspect of the system has repercussions throughout the entire system. The bottom line is that solutions that don’t consider the system as a whole won’t result in sustainable change. We don’t have the answers, but we do think many of our current approaches are lop-sided and leaving employers out of crucial, decision-making conversations.