Disruptions caused by the pandemic have revealed deep flaws in our supply chain for physical goods. Certain market failures that have been left to fester for years were suddenly exposed. But some parts of the economy were broken long before the pandemic, particularly anything having to do with care work. Various forms of childcare, daycare, eldercare and healthcare have seen costs explode, with services unevenly distributed, even as those working in the care economy often remain poorly compensated. On this episode, we speak to economist Nancy Folbre, professor emerita of economics at UMass-Amherst and director of the Program on Gender and Care Work at the Political Economy Research Institute, about why such crucial services are so broken in America.
You can also view this episode on Bloomberg Originals , beginning Monday at 8 pm Eastern
Key insights from the pod:
Is the US childcare market broken? — 3:41
Childcare costs and inequality — 7:55
Impact of lack of childcare on working mothers — 18:01
What happened to childcare during the pandemic? — 20:46
How much is unpaid care work worth in the US? — 24:50
Who should bear the cost of childcare — 28:26
Why can’t we have public pre-schools? — 33:15
Countries with alternative childcare systems — 36:16
Social isolation as an economic cost — 38:43
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Joe Weisenthal: (00:10)
Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Weisenthal.
Tracy Alloway: (00:15)
And I'm Tracy Alloway.
Joe: (00:16)
Tracy. You know, we've spent the last, I don’t know, I guess it's like three years now, maybe even a little, actually it's been longer than three years now.
Tracy: (00:23)
It feels like a long time…
Joe: (00:25)
… Talking about many aspects of the sort of physical manufactured economy that broke or are broken in some way.
Tracy: (00:31)
Yeah. And I think it's because, I mean, obviously the pandemic exposed a lot of these fault lines with global supply chain for physical goods, primarily consumer goods, things like furniture and food and stuff like that. But on the other hand, there was also a lot of disruption to services, and we haven't really spoken as much about that.
Joe: (00:53)
Right. And the other thing that's really striking with services, so actually right now we're in this period where for the Fed, there's a lot of focus on services inflation and when is that going to come down, etc. But the other thing with a lot of services, particularly very crucial services, is that to the extent that we talk about certain industries being broken or market failures, which I think was a sort of recurrent theme of our work, many of the what's sort of broken, it seems in the services space existed long before. These problems were actually very evident even prior to Covid.
Tracy: (01:29)
No, totally. There was actually a chart I was looking at just last week that showed the long-term inflation trends in the US, broken into components. And if you look at it, the highest price increases are all in services. So things like healthcare, childcare, while all the consumer goods, the durable stuf,f has been going down. So it's much cheaper to buy a big screen TV than previously, but it's much more expensive to have a kid and send them to college and things like that.
Joe: (01:58)
Right. And so these are sort of deeper things. And so we're thinking about, okay, what are the bottlenecks? What are the you know, the so-called market failures, etc., that cause this? And we look at it in the manufactured world, but by and large, you know, TVs and refrigerators and air conditioning and cars, they get better and better. It seems like over time, by and large, they do get cheaper even with the recent disruptions. But why are there parts of this economy that I think everyone considers to be crucial -- and sort of things related to childcare care work, elder care, which is going to become a bigger and bigger crisis or issue for the economy as the baby boomer generation ages -- these have been broken for people for a long time and there's no end in sight, there's no like, “oh, it's going to finally normalize because the pre-Covid trend was so bad.”
Tracy: (02:44)
Yeah. Are we pivoting from goods to services? Is that what's happening?
Joe: (02:48)
I think we are, I think we are doing a little pivot. All right. Well, we need to talk about this more. And so I'm very excited about our guest today. We're going to be speaking with Nancy Folbre. She is a Professor Emerita of economics at UMass Amherst and director of the program on gender and care work at the Political Economy Research Institute. Professor Folbre, thank you so much for coming on Odd Lots.
Nancy Folbre: (03:09)
Thank you. I'm really looking forward to it.
Joe: (03:11)
So let's just start with the premise of this conversation because, you know, we discussed it as this is care work and that encompasses multiple things. It feels like an area that's been broken in some sense for long before the pandemic. But I'm curious, A) do you accept that premise, that “broken” is a good way to think about it? And how would you characterize the sort of, you know, what have we seen for years in this sector that feels wrong to people?
Nancy: (03:41)
You know, I kind of agree with the broken word, but I think that analyzing it completely in terms of markets, even in terms of market failure is a little bit misleading. Because what's really interesting about care provision is it involves a lot of paid work, but also a lot of unpaid work and also a lot of government provision. And it's the way that all of those sources of provisioning interact, I think, that give it some very particular characteristics, in addition to the kind of characteristics of services in general that make it different for manufacturing.
Tracy: (04:19)
Well, on that note, maybe talk to us about the landscape of childcare in the US and what it looks like now? Because my impression is, you know, there is some government support, some families get subsidies, but for the most part, you're talking about a sort of network of primarily very small independent childcare centers and/or people who are doing this work for free for their families. If you have a family member who's maybe looking after your kid or friend's kid or whatever. So talk to us about what it looks like currently.
Nancy: (04:54)
Well, right now it's pretty clear that people are having a hard time finding the childcare that they need outside of the home. And also that it's become increasingly expensive to do it. And it's clearly making life difficult for a lot of families and having some adverse effects on children as well. I think it's particularly consequential for women who are often more constrained by childcare responsibilities than men are.
You know, part of this has to do with just the nature of services that are different. It's different than producing a good, a physical good. It's long been noted that services are not as susceptible to technical change. The very nature of care means you’ve got to have some face-to-face, hands-on interaction. Maybe technology's going to improve the quality or change the nature of it, but it's basically a pretty labor-intensive and emotionally-intensive kind of provision.
That's one that people really value that's really important in terms of their quality of life and child outcomes. But it's not easy to put it together with a world in which most families have two, need two income earners. So they need some help with childcare outside the home.
Another thing I think is worth mentioning is that it used to be that parents could rely on a pretty large network of neighbors and kin to help them out with childcare. That's much less true than it used to be. College-educated workers in particular are pretty unlikely now to live in the same area as their parents. A lot of job requirements mean that people have to be willing to move.
So, you know, there's just less available kin nearby compared to what there used to be, especially in large cities. And, you know, the fact that more women are working means that more sort of potential grandmothers are also working as well. So that's another constriction on the kind of supply of informal care. So that's one of the things that's driving the problem.
Joe: (07:01)
So one of the things that's really striking, and you mentioned, you know, particularly say in New York City, so many people face childcare stress, people are tearing their hairs out trying to find someone to watch their baby or a young child. And we see these charts of the prices going crazy, and the numbers that people have to pay are pretty astronomical. And yet my impression is that the actual wages of the people who work in daycare centers or childcare centers are low. And so there is seems to be, I know the idea of a “market failure” is maybe, perhaps not the best way of framing it, but this does feel very intuitively like how people think of a market failure. Why are the costs for the end consumer surging, at the same time the workers do not seem to be reaping much of the benefit from it in terms of rapid wage gains.
Nancy: (07:55)
You know, one of the most basic market failures that often gets left out of the discussion of market failure is that people can't participate in a market unless they have enough money. So what's happened with childcare is as inequality has increased, the demand for childcare has gone up and the price of it has gone up.
And what's happened is a lot of low-income families have been just priced out of the market, so they're unable to buy it. So it's kind of like the housing market, which tilted very much towards high-end housing and left us with a huge growing population of homeless people that can't afford housing because low income housing is so hard to find.
So I think that's one of the factors that's driving the problem. But another one in New York City in particular is that for a long time, the kind of safety valve was low wage immigrants who were willing to work under the table as nannies or as occasional babysitters or childcare. We don't have very good statistics on what's happened to that supply, but it's pretty clear that the combination of the pandemic and immigration policy and cultural change in the US has kind of reduced that informal supply that was once kind of helping lubricate the market.
But, you know, another factor is that the way the labor market's supposed to work, is that when there's a shortage of labor, wages go up very rapidly. But it's really hard to raise wages in the childcare industry for a couple of reasons. One is a lot of it at the lower end relies on government subsidies and government-regulated rates and also on funding. And so if the funding stream doesn't increase, those subsidized centers can't pay higher wages, right? So that's one kind of sticky point in the whole, you know, in, in the whole process.
But then another one is the example, you know, is the point that I was making, is that if you have enough money and there's a lot of scarcity, you can bid up the prices for kind of individual providers like nannies, right? Without really necessarily going through the daycare center care system. I guess what maybe a way to think about it is it's not a homogeneous product. It's coming from all these different sources, and yet the market failure that you're referring to as kind of a function of a more complex institutional failure, I guess, that's aggravating things.
Tracy: (10:49)
So I definitely want to talk about inequality inflation or this idea that you have, you know, more price inelastic consumers who might be driving up prices for other people. But just before we do in, in terms of this idea of childcare is expensive, and you might have someone who's paying $2,000 or $3,000 a month in New York City or elsewhere, where is that money going to if it's not going to the wages of the workers? And, you know, we were doing some prep on this before the episode, if profit margins for a lot of these childcare centers are relatively low, where does all that money go?
Nancy: (11:27)
Well, yeah, it's always a good idea to follow the money, isn't it? But I guess one of the points I'm trying to make is that, you know, buying childcare services on the informal market, like paying a nanny, probably those rates are going up a lot. Those aren't really part of the establishment, you know, Bureau of Labor Statistics Establishment survey. So what we're seeing with kind of low and stagnant wages is childcare centers, including some that are subsidized through state and local funding, and yet there's this, you know, there's this kind of boutique market where people are really paying super high prices, and that's not necessarily reflected in the aggregate.
Joe: (12:12)
So I mean, just putting together what you're saying, part of the problem is to even talk about this as a market is there's so many different markets. So you have some people who work as nannies and are probably getting paid very well. You have a lot of people who are not getting paid any nominal wage because they're taking care of their child, or they're taking care of their grandchild or something in the family. And then you have daycare or childcare workers. And so to even talk about this as a market or to say, “well, we know that the average wage of a childcare worker is ‘X’,” is a flaw right from the beginning, because there are just so many different types of ways with which childcare is provisioned.
Nancy: (12:56)
Yeah. I think that's a really good summary,
Joe: (12:58)
Thank you. I want to go back to the inequality aspect because I find that really interesting. Do we have any sense of the distribution, like how many how many workers are moving from, say, might have been working at a daycare or childcare center, and are now working, getting paid much more as a very rich family’s nanny. What is the distribution there and [what does] that flow of workers look like, and how much does the sort of extreme wealth of some people and the ability to hire a nanny, or at least some cases, multiple nannies, how much does that in your view sort of affecting the industry overall?
Nancy: (13:41)
Well, first of all, it's a really interesting empirical question. To answer it, basically you need some administrative data that follows people longitudinally. And there's often a lag in our access to that kind of longitudinal data. I recently worked on a study of human service workers in the city of Seattle, and we were able to get some administrative data showing that when people left human service jobs, including childcare for another job, they got a really big pay increase. But that was, you know, pre-pandemic and not really very up to date.
But another way to think about the issue is that there's some selection bias that is, when you see what's happening to prices and wages, there's a lot, you know, you're not seeing the people that cannot afford to buy childcare anymore, right? So some people are paying a whole lot more for childcare, but some people can't buy it at all.
So what you're seeing is, yes, the price is going up because poor people can no longer afford to buy it. So that's why I think the analogy to housing is kind of helpful. You can actually make, you know, affluent families are willing and able to pay a lot of money for childcare and for other care services. But families at the bottom are not earning a wage that's sufficiently high to hire somebody to help them with that work and still be able to pay their other bills.
So it's really kind of about an a selection bias in the market. That's why I think the housing analogy, you know, kind of works. I mean, how can we have a shortage of housing in a country where we have actually a pretty successful and efficient housing industry, but it's building homes for the affluent because the profit margin's higher there.
Tracy: (15:31)
Right. And both of these things, I mean, housing and childcare would be considered essential services or things to have in order to live a full normal economic life and human life. But talk to us a little bit about how we got here. What are the choices that the US specifically made in order to create a sort of private childcare industry or, I guess, informal economy network?
Nancy: (15:58)
You know, I don't think there were explicit choices. I think it's the chaotic result of a process of kind of collective bickering and negotiation over who should pay the costs of rearing the next generation. That's why I think it's really important to think about the big picture, like who should pay those costs?
And the economics profession, like the social sciences in general, has kind of treated child rearing as though it's sort of, you know, a luxury good. It's a consumption good, you know, having a child that's like having a pet. It's your pet. You should take care of it. It's your business. And now we're beginning to realize that that's a terrible metaphor because raising children is actually a really important component of economic sustainability, the future labor force, the people who are going to pay the taxes that are going to support us in our old age.
So I think it's sort of coming, you know, I think this is becoming, there's more realization about this, looking at kind of the future of Medicare and social security, the implications of a below replacement fertility rate. It's like, “oh gee, it's going to be a problem if we don't have a working age population that's big enough to help us meet our needs as we grow older.”
Joe: (17:19)
Can you talk through suppose a family that cannot afford childcare, either a private nanny or even a sort of a more public option -- or a sort of commercially available option at like a childcare or a daycare center -- what happens? I assume the burden of that in many families overwhelmingly falls on the mother. But what is the sort of cost of that in terms of, okay, you have one mother who is able to find childcare, another mother who can't find it or can't afford it, in terms of what it costs to them in terms of their life, in terms of earnings and so forth from that unequal distribution of available childcare?
Nancy: (18:01)
Well, I mean, first one big manifestation of it is resorting to part-time or temporary work. You know, cycling in and out of the labor force. Maybe you have an informal childcare arrangement cobbed together with a working schedule, and then your child gets sick. What do you do? You basically have to quit your job. You might hope that you get unemployment insurance. Then you have to kind of rely on friends and family. And then you go out and try and find another job where you can actually combine that with responsibilities for looking after your kids, or you look for neighbors or kin who are willing to trade, or exchange services for that. That's kind of a stressful and time consuming process.
And it has pretty significant consequences for lifetime earnings because anybody in the labor market who doesn't have a sort of consistent record of full-time job tenure, gets stuck at the bottom and it is not a real candidate for moving up the occupational ladder. So I think it really contributes a lot to the, you know, kind of a serious lack of, of income mobility for mothers.
I mean, the paradox is, there's a lot of evidence that high earning mothers actually pay a bigger ‘cost’ for motherhood. Because when they take time out from their careers, the penalty is very high because their earnings are very high. So they're taking a bigger hit in terms of earnings. But almost all of those women are also married to high earners, and that provides a kind of buffer or safety net that reduces the impact of the motherhood penalty. Whereas women who are stuck in very part-time kind of secondary labor market jobs, are basically stuck there for life without much opportunity to, you know, once their kids grow up and leave home, they could look for a better job, but they have no employment. Their employment history and their employment record kind of condemns them to a pretty low trajectory.
Tracy: (20:05)
So just on this note, you know, Joe and I started the conversation talking about the supply chain disruptions that we saw during the pandemic. And of course, the pandemic was also extremely disruptive for the childcare industry and for anyone who had younger children and suddenly had to figure out what to do with them while they were perhaps working from home and things like that. Talk to us about what the pandemic showed about this sort of economic trajectory. Because I remember there's been a lot of high-profile research saying, for instance, that the gender wage gap went up during the pandemic because a lot of women had to reduce their hours in order to look after their children and things like that.
Nancy: (20:46)
Yeah. What we know from Time Use research is that women increased their hours of childcare and in housework significantly. I mean, men did too, partly because of being, you know, being at home more, right? But the increase in women's workload was clearly bigger than that of men.
I think there's another finding from Time Use research, you know, most Time Use research is based on the American Time Use survey, which is a really interesting representative sample of the US population that just asks people, you know, what did you do when you woke up? What did you do after that? What did you do? Then what did you do? So it gives us a real sense of how much unpaid work was being performed both before and after the pandemic.
And the survey asked the question, a bunch of questions about active childcare, like how much time did you spend… Well, it's not asking these questions directly, but it's taking the responses that people give to the survey, and then it's coding them into categories. Like, here's the time that people reported feeding their children. Here's the time that people reported on average transporting their children. Here's the time that parents reported on average reading aloud to their children.
And those active childcare responsibilities are pretty binding but they're not really that high in terms of hours, average hours per day. What's really a much greater temporal demand for parents of young children is what's called supervisory time, or in your care time. The fact that somebody has to be home and available or on call with children. And so this difference really explains a lot. For instance, when parents utilize paid childcare services, they're not really reducing their active childcare that much.
They're coming home from work and they're engaging with their kids. They're getting their kids ready to go to school in the morning. There's still a lot of active care. What childcare really reduces, out-of-home childcare really does for parents, is it reduces supervisory constraints. It literally against the law in most states to leave a child under the age of nine or even under the age of 12 alone in a house.
So during the pandemic, here's what's interesting, a lot of people were working at home, what the Time Use survey shows is that supervisory time went way up, active childcare actually went down.
Joe: (23:21)
Why is that?
Nancy: (23:23)
Well, I think it's because there's kind of a quantity quality trade-off. And if you spend all your day with kids around and being available or on call, a lot of little small interruptions and a lot of interactions. Maybe you feel less need to dedicate two hours to them in the evening reading aloud or playing games or something like that.
It's sort of like childcare kind of spreads out into more diffuse activities. You know, when they're working parents, the schedule is kind of like this huge bustle in the morning to get the kids off and then this pressure to pick them up after school, which is a pretty big temporal demand on working parent schedules. But then in the evenings there's this very concentrated peak of time -- feeding the child, bathing the child, reading aloud to the child. It's sort of like making up for not having seen the child during the day. There's this very concerted cultivation that takes place.
Joe: (24:26)
Definitely relate to everything you just said there. I'm curious though, the value of unpaid childcare and, and I'm curious A) how do you go about trying to put a number on that? And B) how useful in terms of your analytical framework is trying to put some sort of dollar amount on how much of that exists in the economy?
Nancy: (24:50)
Yeah, I think it's really important because it kind of reveals the significance of the care sector of the economy as a whole. Taking reports of the number of hours spent on activity and multiplying them times a replacement wage cost -- like what you would pay to hire someone to do that work. But obviously there are a lot of decisions to make about how to define the time and what replacement wage to choose for that calculation.
You know, what you get is not really an accurate estimate, but it's a kind of a lower bound estimate. It's sort of saying, at the very least, if parents withdrew their services and we had to pay somebody to take their place, what would we have to pay?I think it's really important not to suggest that it's, you know, you're capturing the value of parenting. No, no, no. You're just, you're capturing some kind of counterfactual question about what it would cost to replace the time that parents provide.
And it just gives, well, one thing that it shows, I think, is that really the market economy is pretty, you know, big but not that huge a chunk of the total economy.
Joe: (26:03)
So what do we talk about in terms of numbers? What does it look like?
Nancy: (26:09)
Well, a lot of the estimates are kind of all over the place because they're using different wage rates and different definitions of time, but it's kind of from between 25% and 40% of GDP is what a measurement of unpaid work comes to. In my work, I've actually spent a lot of time working with the American Time Use survey on exactly this question.
And what I found is that a lot of estimates only counted active childcare, and they basically ignored time that children were reported as being in my care, the supervisory constraints, which doesn't make sense. That's what you hire a babysitter for, right? You don't hire a babysitter to provide developmental care. And they're usually sitting there watching TV while, or playing the video games while they're supervising kids. So if you include that supervisory time, it really increases the total value of unpaid work.
Or, here's a really interesting [exercise] -- just to step back from childcare a minute and just ask the question of all of the hours that people spend doing work in the United States today, how much of that happens in the labor market? How much of it is paid? And for this little mental exercise, we're just going to say, we're going to define work as anything you could pay somebody else to do for you. So it doesn't include leisure. You can't pay somebody to have a good time for you , it doesn't include sleep, you know, it doesn't include bathing or…
Tracy: (27:44)
Cooking, cleaning, gardening. It's cleaning, gardening, things like
Nancy: (27:46)
It's cooking. It's cleaning, it's gardening, it's managing, it's shopping. Right? It's 50% of all labor hours in the US.
Tracy: (27:55)
Wow. So, just on this note, you made the point earlier that having children is important for both the economy and humanity. I believe the children are our future, isn't that what they said? Yes.
Nancy: (28:09)
You're supposed to sing it.
Tracy: (28:12)
I won't subject all of our listeners to me singing. But just on that note who should bear the cost of childcare? I mean, this seems to be the ultimate question.
Nancy: (28:26)
Yes, it is. It is the ultimate question. And it's so seldom that anyone ever asks it outright. So I'm really glad, and I wish I could give you like a really specific answer, but I think it's sort of a matter of kind of democratic deliberation. I mean, certainly parents should pay a very significant share of the cost of raising children because they're deriving a lot of satisfaction and enjoyments and a lot of, I think, improvement in their own kind of capabilities as a result of being a parent.
But it's also true that fellow citizens and taxpayers and benefits recipients are also getting some really important benefits from kids. And there are some really interesting efforts to look at this, what's called a fiscal externality. You know, like, okay, you're raising a child, we can project what that child is going to pay in taxes over their lifetime, and then we could subtract what we think that child is going to get in benefits over their lifetime. And that net fiscal benefit in the US is pretty high. So Joe, if you're a parent, you're creating probably a fiscal externality, in the sense that your child is going to grow up to pay more in taxes than they can get benefits.
Joe: (29:49)
Setting aside parents versus non-parents, how much of the answer is -- to put it crudely, setting aside the specific design -- higher taxes on the rich to fund the provision of public childcare for everyone else? Especially when talking about the fact that there's a more and more people who are priced out of childcare overwhelmingly, and you obviously have a growing but small percentage of the people that can afford one or multiple nannies. How much of that is a simple, on some level choice of progressive taxation, either through income or the consumption of childcare services, to fund it on a more broad scale basis?
Nancy: (30:32)
Oh, I think that's, you know, a very clear strategy. And it's one that I completely support and arguing for basically more public provision of care services and more support for unpaid care by increasing progressive taxes. And, you know, I think that was kind of the motivating force behind the Build Back Better legislation that was the Democrats proposed in the fall. And I think we can push for that without, you know, having a specific estimate.
But there's also this kind of interesting, I think, philosophical question, which is, well, just how much should the cost of raising children be socialized? We've already socialized them to some extent. The problem is we've socialized the benefits of raising children more than we've socialized the costs. So the social security system and Medicare has socialized the benefits. So your children aren't going to support you in your old age, but the younger generation as a whole is going to do that.
So it has literally created a redistribution from parents to non-parents. And by non-parents, I don't mean, you know, biologically non-parents, I'm defining parents as people who devote a lot of money and time and effort to raising kids. They're creating a public fiscal externality. And I think that that provides a kind of, I think, an additional argument for more public support for parenting.
Tracy: (32:02)
Right. Just on this notion, I mean, my impression of the existing system is that there are subsidies for low income families for some childcare services, but there aren't a lot -- and again, correct me if I'm wrong -- I don't think there are a lot of government run childcare centers. And I'm wondering what form should government support for childcare services actually come in? Because, in America, I can imagine, you know, if you put a proposal on the table saying we're going to have government daycare centers, I feel like there is a portion of the population who would instinctively find that dystopian or sinister in some way.
Joe: (32:41)
If I could just tack onto that question, why is it that it, from your view, we've sort of accepted this idea of like, we do have government childcare basically starting at the age five. And so once you hit kindergarten or whatever, there is public school that goes through the end of high school, which yes, of course there is an educational component, but every parent knows a big part of the value is the childcare services. So just to tack on, why would it be so controversial to say, “okay, we're going to have the equivalent of public school from birth or from three months or whatever?”
Nancy: (33:15)
Well, I mean, I think that's a question kind of about the political and cultural climate and the divisions that have emerged, you know, partly as a result of the very transient inequality that we started out kind of emphasizing. I think it's pretty clear from international comparisons that integrating childcare into the public school system is a really good idea. And if we think that the public school system is too inflexible or not responsive to the needs of parents, that should be part of our process of changing the whole thing.
I mean, one issue that often gets left out in this discussion is that, you know, ending the public school day at three o'clock in the afternoon is a tremendous inefficiency and an anachronism -- as are long summer vacations. And so I think what we should be pushing for is kind of a bigger rethink of public education and childcare that is more kind of in keeping with the technological and economic changes that have occurred over the last 50 years.
Tracy: (34:16)
Or -- hear me out -- we reduced working hours to match school times?
Nancy: (34:21)
Yes. That should be part of it.
Tracy: (34:23)
And we all have summer vacation. I prefer that solution.
Joe: (34:26)
We just take off all [summer]. I grew up with, both of my parents were teachers, so it was like they had summer vacation. But yeah, I like this idea. It is crazy too that this major childcare service that the government provides, is like, “oh, we're just going to take four months off. Parents, good luck. Deal with it, find a camp if you can afford it.” It really is crazy.
Nancy: (34:49)
And, yeah, children need time off, but why not give them time off in a different way than, you know, three and a half uninterrupted months? I think there's a lot of scope for thinking about that. And I totally agree with Tracy's point about reducing [work hours], making it easier for people to choose lower working hours.
And here again, this is why I think emphasizing the value of unpaid work helps that argument. Because when you reduce pressure for increased hours of employment, people aren't using that time to goof off or couch surf. A lot of times they're using that time to take care of their family, to take care of their communities, to volunteer, you know, in really for really good activities and sort of this notion that any reduction in hours of employment is a kind of ‘loss’ of output is just camouflage.
Joe: (36:04)
You mentioned international comparisons about merging the sort of childcare or daycare system with the public school. Who stands out to you? When you look around the world, where is it being done right or where is it being done more equitably?
Nancy: (36:16)
Well, Scandinavian countries have a very integrated system, but the French system is also very appealing because it includes not just a system where preschool teachers earn the same as regular teachers, it also includes all these things like summer camp experiences [that] are built into the school system and medical care and health checkups are kind of integrated with the school system. So it's kind of a particular triumph of the French system.
But, you know, there's also a lot to learn from what's happened in New York City with de Blasio’s expansion of childcare, which has raised a lot of interesting questions and points. And it's a really valuable lesson for the rest of the country. I'm not an expert on the particular features of it, but I know that it's contributed significantly to increasing the wages of childcare workers in the city. And that there's been sort of, it's been easier for them because it's now a city mandated, you know, it's now part of the public sector in a sense it's made it easier for those daycare workers to bargain for higher wages.
Tracy: (37:24)
This is the Universal Preschool program, although I think there was some criticism of it that it actually ended up with some preschool businesses closing, because it sort of sucked away a lot of the older kids that preschools actually make money on.
Nancy: (37:42)
Yeah. It's not a total success story, but it is like a really important learning experience. I mean, I think they've also had, they in some ways seem to have overestimated the constituency for all day childcare. And so they have a little bit of idle capacity right now, so, yeah. But talk about a really good theme for a podcast , you know, that would be a really great one. Just what has happened in the city? What have people learned in the city from this really important experiment?
Tracy: (38:19)
So just going back to the premise of this conversation, and the intro where we were talking about inflation in services versus inflation in consumer goods and things like that, and wages as well, what do you think childcare says about the overall direction of the economy? Or can you sort of draw out some big picture economic points based on the childcare example?
Nancy: (38:43)
Well, I think we should direct more attention to what I would call the care sector, not just childcare, but what childcare and elder care and healthcare all have in common and how important they are to the economy. And all three of those sectors involve collaboration between family members and paid workers, for-profit businesses and government.
And they've all evolved in this very ad hoc way that often kind of, you know, rigidifies into kind of in institutional inertia that makes them very difficult to change. But one of the things that's been happening, for instance, in the healthcare industry is that hospitals and doctors have begun paying a lot more attention to who the at-home caregiver is. And when they send somebody home from the hospital, who is the person who's going to be helping with medication, who is the person who's going to be organizing the post-operative care and so forth.
And they have really realized that this is a crucial part of the overall landscape of care provision that, you know, you can do a really great surgery on somebody and if they go home to a situation where there's nobody there to help them figure out how to take care of themselves and to kind of meet their needs, then they're back in the hospital the next day. So there's so many different synergies.
And there's so little, relatively little, attention to the care sector and what it means. We know that there are these really significant changes in mortality in the US -- the so-called deaths of despair, deaths from suicide deaths, from drug overdose, deaths from alcoholism. And it's so indicative of a kind of toxic effect of something that's going on in the economy.
And it's very consequential. It's not just a huge loss of human life. It's also, you know, just a tremendous loss to families and communities to have this kind of, I think I would describe it as a destruction of the social climate. There's something about the social climate that's just creating a lot of stress and mental illness. And I think care provision, you know, ineffective care provision is part of that. Part of it is that families are less stable. Part of it is that families get less support. Part of it is that people are just very much isolated and, and, you know, disembedded from their families and communities. And it's so important to see that as an economic, as well as a social, problem.
Joe: (41:34)
I just have one last question. You said something interesting about workers, with public provision of childcare workers, able to gain more bargaining power. And a theme that we've talked about recently is that bargaining power sometimes comes when you have a sort of single purchaser of the labor. And so whether it's workers in Amazon warehouses being able to organize the warehouse sector because they can point to Amazon, or even tenants being able to organize because of institutional landlords on Wall Street, the fact that childcare is so fragmented, the fact that many of them are in people's living rooms or small businesses with five employees and so forth, how much does that make it harder for workers to organize and sort of, whether it's collectively bargain or just push for higher wages in some manner, because the industry is just so fragmented?
Nancy: (42:28)
That's a good question. I don't really know exactly how to parse it. I mean, I would say first that there’s some evidence that public schools are kind of a monopsony, and then one reason that teachers are so poorly paid overall in the US and their pay has declined in relative terms recently, is partly that, you know, the political climate has led to cuts in funding that have made it very difficult for them to bargain, even though they're very effectively unionized. And even though they've had a few kind of union successes.
So I think, you know, there's sort of a big question mark about the efficacy of public sector unionism, if voters and people in general aren't convinced that spending on care provision is going to pay off for them and for the economy as a whole. So I think that's why, I tend to hammer on the “look, everybody would benefit. Everybody would benefit.”
But I think for workers in small childcare or family daycare centers, I think a bigger obstacle for them is that they know that the demand is very elastic. They know that if they ask for higher wages, that the center they're working for is going to lose clients or lose customers. And a lot of studies of the childcare workforce, show that they feel very caught by this dilemma, like, gosh, I really need higher wages, but if they paid us higher wages, these families wouldn't be able to afford to pay to pay for these services. And I think that's a particular dilemma of providing services for a low to middle income population.
Joe: (44:17)
Well Nancy Folbre, thank you so much for coming on the podcast. Fascinating discussion. Huge topic that I'm sure we will revisit and yeah, appreciate you joining us.
Nancy: (44:28)
Yeah, it was fun to talk. Thanks.
Tracy: (44:30)
Thanks so much, Nancy. That was great,
Joe: (44:44)
Tracy. I thought there were a number of really interesting themes from that. I mean, one is, I think just simply this idea of like how hard it is even to talk about a childcare market or a childcare wage or a price that people pay for childcare, just given the plethora of different options available, whether it's nannies, public centers, private centers, you know, subsidized centers, family work, et.. It just like, even describing what the industry is, is clearly a challenge.
Tracy: (45:13)
Totally. And I feel like we actually need to speak to a preschool manager or something, because I'm still confused. I met one
Joe: (45:19)
I met one recently, so I think we have a guest.
Tracy: (45:19)
Well, I'm still confused about where the money is going. You know, people are paying thousands a month. Where is that actually going, if not to the wages of the carers? I suspect it's going on things like rent and maybe regulation and things like that. But I would love to talk more about it.
And then the other thing that stood out to me was this idea of inflation inequality, which is something that's been coming up a lot recently. I think the New York Times called it the gentrification of the economy. So this idea that businesses are increasingly catering to -- as the wealth gap gets bigger -- a portion of the population that is more price inelastic and that can afford these services. And that kind of gets to Nancy's point as well about how we're only really seeing part of the data set, right? Because people who cannot afford these prices are just not paying for childcare.
Joe: (46:11)
Yeah, Nancy brought up the comparison, but the comparison to housing seems really apt. And we've done episodes, it's like no one wants to build a ‘starter home’ because there's just so much more money to build premium houses to build you know, premium multi-family apartments. And so things like that.
And so, one of the things that it sort of drives home: inequality is costly. It's costly for society, and you know, people in our system we sort of celebrate getting rich, etc. And, you know, that seems fine, but there is a cost to having so much concentration of wealth in certain hands such that it, you know, can diminish the pool of available childcare. Which then gets to Nancy's other key point, which is, part of the reason it's not a market is because there is a social positive externality towards raising children that everyone benefits from, I think she called it a fiscal surplus, was that it?
Tracy: (47:06)
Fiscal externality.
Joe: (47:07)
Fiscal externality, that is just sort of not there in most things that we call a “market.”
Tracy: (47:13)
The other thing I wish we'd been able to talk a little bit more about, but the choices that go into the current system. And I totally take Nancy's point that probably there wasn't anyone, you know, thinking about this specifically over the course of 50 years and coming up with a coordinated holistic approach. But I do also think one of the reasons we got to the current system is because of let's say complicated attitudes towards women actually working, you know, 30 or 40 or 50 or 60 years ago.
Joe: (47:43)
Yeah, there's so much. And even just this question of like, “well, what counts as labor?” which I thought was an interesting sort of discussion that I hadn't really thought of in terms of like, okay, there are things that we call “active childcare” as parents, and then there are things where you're just there to sort of supervise them. Pretty deep questions that are sort of intensely cultural that perhaps inform how the system evolved in the way it did.
Tracy: (48:10)
Absolutely. Shall we leave it there?
Joe: (48:12)
Let's leave it there.
You can follow Nancy Folbre on Twitter at @NFolbre.