5 thoughts on “Childcare: how to price the poor out of the market, and then subsidise them back in again”

  1. Posted 28/01/2013 at 16:45 | Permalink

    “Perhaps the most obvious example is staff ratio regulations: childcare providers have to have at least one adult per three children.”

    Kristian, the ratio varies with the age of the children. This ratio is only true for the youngest children.

    Regardless of whether it should be regulated, this ratio isn’t unreasonable. The idea that one adult could safely look after more than three very young children at the same time is mistaken. My wife wouldn’t want to and I can assure you that she is an expert both through training and experience.

    Where costs have risen especially is that the regulatory and inspection regimes have raised the cost of childcare (we have to pay for all those inspectors) and these have also reduced the number of people willing to be childminders. Childminders were always relatively cheap because they don’t have to pay for special premises and all the other costs than come with formally employing people.

    The thing that we have to remember is that it makes little sense to subsidise childcare beyond a certain point. Looking after children is labour intensive and you’d want someone reasonably educated to do it for you if you aren’t doing it yourself. So why do we expect someone who doesn’t earn very much themselves (which is the case for most people) to be able to pay, our of their modest wages, someone else to look after their multiple children and for that to make any economic sense? Economically, it makes as much, possibly more, sense for them to do it themselves – they can only conceivably benefit financially to the extent of any subsidy that is applied.

  2. Posted 28/01/2013 at 16:52 | Permalink

    Kristian – I should add that raising personal tax allowances substantially would help the situation. If you don’t have to pay tax (or much tax) on your earnings, then it becomes much more feasible to pay someone else out of your wages to look after your children. It also becomes more worthwhile for someone to become a childminder, for example. The need for subsidies is partly a consequence of high income tax rates.

  3. Posted 29/01/2013 at 10:24 | Permalink

    HJ, it is the ratio for the 1-5 year olds; for the very youngest, the ratio is 1:1.
    I have no idea what the ‘optimal’ ratio would be, because I know nothing about the specifics of the service, so I’ll accept that you’re right on more than 3 children being too many for 1 adult. But I’d be surprised if that was a linear relationship. You may need 1 adult for 3 children, but do you need 5 adults for 15 children? Does it take 10 adults to look after 30 children? I don’t know the answer, but I thought the use of economies of scale was the whole point of nurseries (among others).
    Agreed on the cost of inspectors and the impact of income tax, of course.

  4. Posted 29/01/2013 at 11:00 | Permalink

    Kris – You’ve got the ratios a bit mixed up. Easily done because childminders, of course, may have have children of different ages cared for by just one person. The 1:1 ratio for babies is actually for childminders who also have other, older, children at the same time.

    Normally, it has been 1:3 for children from 0-2 (in a nursery setting, for example), 1:4 for 2-3 year olds and 1:8 for children aged 3 to 5.

    I’m really not sure that, when it comes to childcare, there are any real economies of scale. This is because, for the youngest, nurseries tend to work on a ‘key worker’ basis (this is simply proven good practice, it is not imposed by regulation). Each child has a key worker assigned to them, so there really isn’t much scope for a non-linear relationship of carers in larger settings.

    People don’t use day nurseries because of economies of scale. Those that prefer them generally do so because of facilities, they don’t have to worry if their childcarer is sick or on holiday, as others can cover, etc..

  5. Posted 02/10/2015 at 15:15 | Permalink

    Poor people can not afford to much price for the child because they do not have money. Poor child struggle and do the work with the new thinking and get the position on the base of talent.

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