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For the sake of the children

Study shows day care may not be best option for kids and taxpayers

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Proponents of universal day care often claim that institutional care is good for children, and meets the needs of parents. Further, they argue that it makes good fiscal sense, because it gets parents back into the paid workforce sooner and grows the economy. A decade after Quebec instituted universal, heavily subsidized care, an analysis from MIT makes clear that none of these assertions stand up to reality. With home day cares in that province preparing to unionize and further increase the cost of this program to taxpayers, the findings of the study deserve a close look.

Research on very young children in full-time care has always revealed at best mixed outcomes. Minor gains in school readiness come at the cost of more aggressive behaviour and disobedience, and more frequent physical illness. MIT's assessment of Quebec's new child-care regime shows that young children there are significantly more likely, compared with kids in other provinces, to show signs of hyperactivity and anxiety, and suffer more nose and throat infections. This is bad news for these children and their families, and it also signals higher health-care costs, and increased strain on schools as they face a wave of children with more behavioural problems.

It isn't only the children in day care who are affected. Parenting practices are worse in families that use Quebec's day-care system. Using widely accepted measures of parent-child interactions, the researchers found a decline in consistent parenting, and a rise in hostility between parents and children. Surveys of parents after the new policy took effect also show "striking evidence of an increase in depression" for mothers, and decreased satisfaction in spousal relationships for both parents.

Why would parents want a child-care system that increases problem behaviour in their kids, worsens their own parenting practices, and contributes to maternal depression and tension in their marriages? Not surprisingly, they don't. When researchers ask parents how they would like their children to be cared for, formal institutional child care is consistently the last-choice option. A new British study shows that more than half of parents prefer never to use formal care for children from infancy to 14 years old, and the majority of families surveyed who had a parent at home did so by choice, not because they couldn't find a day care spot.

This pokes some serious holes in the economic argument for universal daycare. According to day-care advocates, parents -- usually mothers -- of young children would like to rejoin the paid workforce, but can't because they lack available or affordable child care. If the state took it upon itself to arrange child care for such parents, this reasoning goes, they would return to work and boost tax revenues.

Quebec's experience disproves this theory. The number of children in formal day care increased by about a third after the policy was implemented, but the workforce participation of married mothers of young children increased by less than half that amount. A significant number of households using this highly discounted day care aren't doing so to enable a parent to transition back to work. In many cases, working parents simply changed their child-care provider from an informal arrangement to a subsidized day care, crowding out existing providers.

Another economic distortion of Quebec's universal day-care policy is the way in which it has become a subsidy for the well-off. Previously, Quebec provided a means-tested subsidy for child care, and offered refundable tax credits designed to make child care affordable for low-income households. These targeted benefits were replaced by the universal day-care scheme. Now, a family struggling to afford necessities pays as much per day for child care as a household earning six figures a year. While the labour supply did rise after the new policy took effect, this increase was smaller than expected, making universal day care a net loss for Quebec.

There is no perfect solution to the child care needs of Canadian households. The Universal Child Care Benefit is a good start, since it frees families to choose the care that works best for them, but it must be supplemented by additional family-friendly policies. Increasing tax deductions for dependent children, for example, and allowing income splitting for tax purposes would both help parents with young children. Quebec's universal day-care plan, which has caused child outcomes to deteriorate, increased stresses on parents, and worsened the province's finances, should not be the model for other provinces, or for federal child-care policy. Children deserve better, and so do parents and taxpayers.

Rebecca Walberg is a Winnipeg writer and policy analyst.

Republished from the Winnipeg Free Press print edition December 7, 2008 b4

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