This post originally appeared at https://www.badgerinstitute.org/wisconsins-dysfunctional-childcare-rules-hurt-parents-pockets/

New research quantifies states’ regulations and puts a number on the harm

Wisconsin, it turns out, is among the states working most diligently at making childcare more expensive.

Makes you wonder whether that’s deliberate.

We’re at the point that putting an infant full-time into a childcare center will cost more than University of Wisconsin tuition. It should be unsurprising, then, that on a new measure comparing states’ regulatory burden on childcare providers, Wisconsin was in the harshest quarter of states, with the 11^th most burdensome set of regulations.

It should be unsurprising since, as the researchers demonstrate, a state’s regulatory burden correlates to the cost of childcare in that state. By being strict, Wisconsin is making childcare expensive.

Or, as lead author and economist Anna Claire Flowers of George Mason University put it, “The unintended consequences of restrictive regulations include less transparency with parents, fewer new child care businesses, less flexibility in program hours, and of course, higher prices.”

Considerably higher: The researchers estimate that each one-point click toward stricter regulation on their index’s 10-point scale predicts $774 more in the average cost of full-time infant care in a formal childcare center. Between the freest state, Louisiana, and the most harshly regulated one, Massachusetts, that’s more than $5,600 a year.

The index ranks Iowa at 6.67 points, much freer than Wisconsin’s 2.79 points and predictive of a $3,000 difference in costs. Federal figures show gaps at least that large between Dane and Milwaukee counties (about $16,900 a year for center-based care for an infant) and the counties containing Des Moines and Iowa City (about $10,000).

The regulatory scale conveys a truth: Wisconsin is strict and pays the price.

And for what?

That might be worth it if the strictness correlated to higher quality childcare, but there’s no evidence of that, said Angela Rachidi, a scholar of public policy and Badger Institute visiting fellow who has documented the flaws in Wisconsin’s childcare regulation and the costs to parents.

Rachidi, who is not associated with the new regulatory index, noted that regulations tend to focus on things that can be readily measured, such as staff-to-child ratios and the college degrees of the staff. “It gives this perception of quality that’s very expensive but doesn’t lead to better outcomes for kids,” she said.

What it does, though, is change the sort of care available. “We’ve seen this huge decline in family care or informal child care,” Rachidi said, referring to small home-based operations —“in favor of childcare facilities,” more professionalized and school-like. Home-based care generally costs families less and, said Rachidi, is usually more flexible, something many parents say they appreciate.

But it’s hard for smaller operations to comply with a strict regulatory regime that includes 45 pages of criteria. So parents have fewer, costlier choices.

Two paths

What to do? One approach is to clear away some of the more senseless regulations, as a package of reforms last legislative session aimed at. Gov. Tony Evers’ opposed the reforms, and they stalled.

Another approach was that of Evers: More subsidies. When temporary federal money meant to keep childcare centers afloat during the pandemic was due to expire, Evers wanted the Legislature to continue the flow with Wisconsin taxpayers’ money. When lawmakers refused, Evers last October redirected other spare pandemic cash, keeping the subsidies going until next June.

After that? The governor seems to see the problem not as the cost of childcare but as where the cost falls — making it a matter of him rifling the taxpayers’ pockets to redistribute money to some providers, and not the ones many parents prefer.

This has been tried. Canada has plowed massive sums into subsidizing childcare. But only about 30% of parents who want the $10-a-day deal can get it — because even a country where the average household pays 45% of its income in taxes has a limit to what taxpayers are willing to kick in.

Supposing Wisconsin more heavily subsidized childcare, you’d still think everyone would want to maximize the effect, keeping costs reasonable by paring regulations to what can be strictly linked to health and safety outcomes.

But defenders of harsh regulations, even as those rules squeeze out small players and drive parents toward costly center-based care, seem motivated by how such a trend raises wages in the industry. They bring that up a lot.

“It’s an urge to professionalize the work of childcare and to increase wages and benefits of the workforce,” Rachidi said. “Progressives are very concerned about that.”

That’s an urge with costs for Wisconsin families, either in fees they pay if they even can find care that suits their needs, or in the taxes they’ll pay if Evers has his way.

Maybe we should show some mercy to those families and re-examine which regulations actually matter for kids. Maybe we shouldn’t be trying to make childcare costlier.

Patrick McIlheran is the Director of Policy at the Badger Institute.

Any use or reproduction of Badger Institute articles or photographs requires prior written permission. To request permission to post articles on a website or print copies for distribution, contact Badger Institute President Mike Nichols at mike@badgerinstitute.org or 262-389-8239.

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