Because this blog is about the economics of media, sometimes we have to talk about the dismal science of economics.
The talk among economists these days is about getting people back to work and re-starting the world’s economies. And one of the many discoveries of the covid-19 crisis has been that a huge part of the work force can’t go back to work unless they have someone to watch the kids.
It really hit home for me as my wife and I talked with some young working moms with full-time jobs, toddlers at home, and child-care disrupted by covid-19.
Stay-at-home parents don’t count
On a personal level, we understand the value of child care. But as a society, we undervalue the contribution of child care to the overall economy. Child care frees parents to work and keeps the economy moving, and two-income households depend on child care.
But we don’t measure its value when stay-at-home parents or relatives care for our children. It’s not counted in GDP, although the service is critical to supporting GDP. (And a lot of child care is paid for with cash to escape taxes, often to immigrants, and that is another story.)
Not calculating the value of child care and its contribution to a country’s gross domestic product is like not counting the value of manufacturing or banking or health care. Is there any service more valuable than looking after the health, safety, welfare, and character development of the next generation of citizens?
When we don’t count child care as part of the economy, we don’t value it properly, and then we don’t provide the resources to deliver it. If we did so, there would be better public support to ensure that working parents could leave their kids in a safe environment, either a day-care facility or an after-school program.
When will our economies recover? Well, they won’t recover very quickly if we don’t figure out ways to provide more money for quality child care.
The market model fails
One big economic problem, which becomes a social problem, is that we rely on a market model to supply child care for workers. In general, we in the U.S. tend to prefer market solutions to social needs. We don’t like government intervention.
But sometimes, the market cannot provide an essential service, such as police protection or fire protection. You can’t make money providing this service for everyone in a community. The market solution fails.
It can be argued that child care–both for pre-schoolers and after-school programs–is an essential service for the economy to function, and that the market cannot provide all the service needed.
The domino effect
Economies in the developed world depend on people buying the products and services that other people make. And for many households, both parents need to work to pay for everything–food, clothing, shelter, education, and health care, among other things.
For a lot of families, both parents have to work, or the single parent has to hold more than one job. A sick kid means a parent has to stay home, maybe loses income, maybe loses their job.
This is even worse for single parents who are trying to support a family on their own. If they don’t have day care, they can’t work. If they can’t go to work, a restaurant loses business, or a hospital has to pay someone else overtime. The lack of day care has a cascading negative impact on the economy.
Many of the front-line jobs defined as “essential”–grocery store clerks, nurses, health care workers, social workers, meat packers–are held by people with kids.
Many working parents can’t work from home. They have to take public transit or drive to work. If they don’t work, they don’t get paid and lose their health insurance, if they are lucky enough to have it. And these are the people who are most at risk of getting infected.
An economic engine
How do these front-line workers find someone to care for their kids when babysitters and relatives are in quarantine?
And we are not even talking about how this affects kids, their development, their health. The stay-at-home mom or dad is often looked down upon in a society that celebrates economic achievement and acquiring more and better stuff. Do we have enough stuff?
Working parents contribute to the prosperity of the country as a whole. Shouldn’t we find a way to contribute to their prosperity?