Eakinomics: Stay Calm, Support, and Recover

Eakinomics: Stay Calm, Support, and Recover “Where Is the American Child Care Bailout?” screams the Bloomberg headline, followed by the breathless reporting, “There is no economic recovery without child care, that’s the best way to put it....As a nation, we haven’t realized how critical child care is to all facets of our lives,” one expert commented. The story continued, “According to providers, researchers, and advocates, it’s no exaggeration to say that without government investment and assistance — from local sources, but most importantly, state and federal governments — the U.S. child care system as we know it may collapse.” This story is consistent with my view of the press coverage of the COVID-19 pandemic and recession – a collective needle skipping across the phonograph of life, discovering that something new has been impacted, panicking, and making dire predictions. Here’s a quick tip: Everything has been affected; stop being surprised. Here’s another quick tip: Everything can be dealt with; it just takes clear thinking and some time. It’s not that child care is not a real issue. It is. AAF’s Isabel Soto wrote a nice piece on the issue and Eakinomics covered this territory about a month ago. Most important, the “bailout” – is that really the term one wants to use? – has already happened. The first issue is whether households have the wherewithal to pay for child care costs. Using a rough annual cost of $13,000 per household and Soto’s upper bound estimate of 21 million households puts the annual price at $270 billion. Despite the recession, 138 million individuals still have a job, and the governments have distributed checks and unemployment bonuses more than double that upper-bound price. The money may not have gone to every household for every need, but the money has been sent out. What about supply? This has been the perennial bugaboo, because it is the absence of adequate supply that leads to high prices. In the recession, the first rule should be to keep existing supply in place, something that has been a genuine concern. But the policy has been in place to do so through the Paycheck Protection Program (PPP). According to the CLASP website, “Nonprofits (specifically with 501(c)(3) or 501(c)(19) status) and for-profit child care programs with 500 or fewer employees (defined as anyone employed on a full-time, part-time, or other basis) are potentially eligible for relief. This would apply to both center- and home-based programs. Self-employed family child care providers are also potentially eligible, but they must submit documentation (potentially including payroll tax filings and income and expenses) to verify their eligibility.” I’m not arguing that either the demand subsidies or the supply preservation has worked perfectly. But I am arguing that just because there isn’t a Child Care Costs Program (CCCP) in every piece of legislation doesn’t mean that the policy efforts have not been made. Indeed, because the coronavirus hit the entire economy, it is fairer to use programs with broad eligibility, such as PPP, instead of a million targeted efforts. The policy lesson going forward is the same. While the emphasis has moved from stopping the fall and supporting firms and workers to recovery and growth, policies should continue the broad-based efforts that help every individual, firm, sector, and organizational form without tilting the playing field.