Child Care

Government intervention in child care continues to hamper its affordability

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Expanding access to affordable child care is of pressing concern to many Maine families. As we’ve noted in the past, Maine lost more than 600 child care providers between 2008 and 2018, most of them in family child care. This is typically the most affordable option for parents, meaning their exit from the market has hurt the affordability of this service. According to Child Care Aware of America, in 2018, the annual cost of center-based care for a four-year-old in Maine was $8,776.

Legislators are often asked to tackle this problem, but more often the not, the so-called solutions end up making matters worse. One such effort this legislative session is LD 1012, sponsored by Sen. Rebecca Millett, a bill that would tweak subsidies for families who qualify for assistance through DHHS and prioritize public funding for providers that have a higher rating on Maine’s quality rating scale.

However, imposing additional restrictions on child care providers and tweaking subsidy rates are not solutions to Maine’s affordability problems. Government intervention in child care is largely responsible for creating the severe shortages and exorbitant costs parents face today, and this bill entrenches those misguided policies instead of allowing a market-based system to thrive.

In regulating the child care industry, Maine is out of step with national averages, and policymakers have failed to provide convincing evidence that stricter requirements translate to higher quality care without unduly jeopardizing access for working families. The average unlicensed provider in the U.S. can watch four children, but in Maine, an unlicensed provider may watch only two. Similarly, staff-to-child ratios in Maine for children four years of age and older is 1:8 for a group of 24 children or 1:10 for a group of 20. In Florida and North Carolina, a single provider may watch up to 20 children of the same age in a similar care environment.

These onerous regulations have had a devastating effect. Over the last decade, every county in Maine has lost at least one-fifth of their licensed family child care providers. During this span, Maine passed several new regulations, including fingerprinting, outdoor “safety” measures and other modifications to child care licensing rules, and as a result, dozens of providers have left the profession. This reduces the availability of child care and creates greater demand for these services, making care under a licensed provider even more expensive.

And while Maine’s overall capacity stayed about the same due to an expansion of larger facilities, the decimation of our small child care businesses means that the market is less competitive, particularly in rural areas where parents may now need to travel further — and pay more — to find a provider.

A paper by the RAND Corporation concluded, unsurprisingly, “that regulations have an economically significant effect on the price of child care, which in turn affects both the demand of regulated care and the labor force participation choices of the mothers.” And working-class families are hardest-hit: A 2011 study published in the American Economic Review found that “the imposition of regulations reduces the number of center-based child care establishments, especially in low income markets.”

Deregulation is often accompanied by concerns that quality will plummet, putting childrens’ well-being at risk. Yet, as recent experience in Maine has shown, government oversight is no guarantee of quality. Other states with fewer government requirements enjoy much lower rates with no noticeable loss of quality. Researchers at the National Center for Policy Analysis found that “state and local regulations significantly affect the price of care without improving quality.”

Encouraging competitiveness among providers through a light-touch regulatory approach is the fairest and most cost effective way to achieve quality in child care. Government mandates do not create quality. It’s time for our elected officials to understand this and legislate accordingly. LD 1012 will only reinforce the inefficiencies that already make child care cost prohibitive in Maine.

About Liam Sigaud

Liam Sigaud is a former policy analyst at The Maine Heritage Policy Center. A native of Rockland, Maine, he holds a B.A. in Biology from the University of Maine at Augusta and has studied policy analysis and economics at the Muskie School of Public Service at the University of Southern Maine. He can be reached by email at liam.sigaud@maine.edu.

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