Daycares Can't Actually Rake Prices by Too Much

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If you raise wages from say $10 to $12 an hour in the fast food industry, if a hamburger was originally $2, then maybe it would go up to $2.10. Whereas with child care, if you were originally paying $2,000 a month for care, that would raise prices by probably about $250 a month. A lot more than in other industries. But daycares can't actually raise prices by too, too much because it would drive away like a big chunk of their market.

Anyone who has tried shopping for day care knows that it is tough out there.

For one, it is hard even to get your hands on information about costs, either online or over the phone – day cares will often only share their prices after you have taken a tour of their facilities. Even once you find a place you like, many day cares have waitlists stretching 6 months, 9 months, a year.

Waitlists are a classic economic sign that something isn't right, that prices are too low. But ask any parent and they will tell you that prices for day cares are actually too high. According to a recent report from the U.S. Treasury, more than 60% of families can't afford the full cost of high quality day care. Meanwhile, day care owners can barely afford to stay open. No one is happy.

On today's show, we get into the very weird, very broken market for day care. We will try to understand how this market can simultaneously strain parents' budgets and underpay its workers. And we will look at a few possible solutions.

This show was produced by Sam Yellowhorse Kesler. Emma Peaslee helped book the show. It was mastered by Gilly Moon. Keith Romer edited this episode. Jess Jiang is our acting Executive Producer.

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