The single most effective stimulus action the government could take to get everyone back to work is create universal affordable childcare schemes. Here’s how it could work:
Having kids is, apparently, nice. But while they offer joy and love alongside a host of other emotions, they are expensive. For anyone with kids, they insist it’s a sacrifice worth making (allegedly). Yet having kids costs money and time. If governments are serious about getting people back to work after this crisis, the single most effective step they could take is to use their money to buy more time for households. The best way to do that is to make childcare more accessible.
The Prime Minister and a number of top advisors have come out in recent weeks arguing there can be no recovery without investments in affordable child care. But child care is a provincial responsibility. If the federal government wants to support this, they will need to implement a number of policies to grow the care economy, give families the support they need, and help women get back to work.
The costs of child-care in Canada
Child-care costs households money. The 1988 Canadian National Child Care Survey found that 74% of all children in Canada between 18 months and 6 years old were in regular non-parental care arrangements, a figure that has increased in time with more women in the work force. In Toronto, those placements cost an average of $1758/month. For working poor and single parent households, the sacrifice required to pay for that is everything.
Government support for child-care varies based on where people live. Some supports buy time to be with family: Parental leave in each province and workplace differs by duration and flexibility. Other supports offer financial assistance to help you buy your own time by putting your kids in childcare. Those child-care benefits are structured as a mix of tax credits, subsidies and grants administered by all levels of governments that differ provincially in their coverage and level of assistance offered.
Advocates for more accessible or comprehensive child-care supports have been rightly pointing out for years that the current system is a mess. But in recent weeks, the COVID crisis has made this everyone’s problem. Parents staying at home with young kids are now caring for kids 26 hours a day, with the lucky ones being able to trade shifts with their partners to get some professional work done alongside their parental responsibilities. Since housework is unpaid, this shift in responsibilities doesn’t show up in GDP and employment figures – in fact, it registers as a loss.
This recession is also different. It’s the first service-driven downturn we have experienced, and women have been unemployed at higher rates than men for the first time in recent history. Economists (including noted expert Armine Yalnizyan) are calling it a “she-cession“. That means the unemployed workforce in need of support are mostly educated women, not construction workers (although there are some of those too). Getting the economy going again following this crisis means helping women enter or re-enter the workforce.
Why do we need child-care post-COVID?
If the government wants to get Canada’s economy going again, there is no single policy that would more effective at supporting households than affordable childcare.
For one, it would ensure mothers are able to return to work in higher numbers. Jennifer Robson, an economist, has calculated that the average household would lose 40% of its annual income if a mother left her job outside the home. If the average household with kids loses 40% of its income when mom stays home, and enough mothers choose to stay home, that is a macro-economic disaster waiting to happen. Governments who want the economy to recover in a durable and healthy way need to invest in policies that avoid that outcome, or household spending will simply not rebound and the economy will suffer.
Second, it would allow governments to buy the thing we will need most to fuel a resilient recovery: time. By freeing up hours in the work day, child-care will allow women to return to work and drive a recovery forward. The recovery from the 2008-2009 recession was primarily driven by higher levels of female workforce participation in part-time and full-time work . If we want to drive a recovery this time around, governments should invest in childcare to free up that time and accelerate the pace of recovery compared to last time. One indicator of the value of bought time can be seen in Figure 1 (analysis by Brendon Bernard). Women’s hours worked in professional jobs in the last month have decreased due to personal/family reasons. Men’s hours have not changed. If you want more women to work in the coming months, the easiest way to achieve that is to buy them more free time.
Figure 1: Working from home for women (orange) means less work, more home
Third, the jobs that will come back first exiting the crisis will be male-dominated – landscaping, golf course maintenance and car dealerships are all allowed to re-open in coming weeks. These “essential” professions are male-dominated. That means men will mostly be returning to work before women, further increasing the female share of the unemployed. It also means that women are now more likely to stay home for longer periods of time. If service-sector jobs come back offering reduced hours, and one parent has already returned to work, the cost of returning to work in a previous job while paying for child care may be too high for some families. That means, as one expert has put it, “there is no easy path for women returning to the workforce”. This time lag between returning to work for male-and-female dominated sectors will likely result in many more women not returning to work at all if they do not have a path to doing so.
Finally, any policy package that doesn’t lower this barrier to entry for female workforce participation will mathematically not be enough to drive a recovery. Stimulus can be thought of through the lens of “idle resources”: What resources are currently sitting on the sidelines that we are trying to re-integrate into the economy? If done correctly, stimulus can kick-start growth by finding ways to put these resources back in the economy in a way that creates jobs and spurs investment. In this recession, the idle resource is women. The federal government could spend tens of billions on new infrastructure, but it won’t create many new jobs if people who are currently unemployed have neither the skills nor the time to build it. If money doesn’t create opportunities for unemployed women to get back to work, it is not mathematically possible to drive a recovery – it is as simple as that.
Recommendations for federal policy to support child-care
Lucky for everyone involved, the Prime Minister has already acknowledged that there can be no recovery without investments in early learning and child care. So – how could the federal government make that happen? The first step to remember is that child-care is constitutionally a provincial responsibility. Provinces and municipalities design and implement child-care programs. But, as noted by numerous experts, the federal government can still make child-care more accessible and affordable across Canada. Here are four options for the federal government to do just that:
#1: In the short-term, offer financing supports to existing child-care centers so they don’t close forever. Childcare centres have mostly been closed nationally. In order for them to be around when things re-open, they will need additional support. This goes beyond extending family benefits. It means working with provinces and territories (P/Ts) to create emergency support funding through existing bilateral fund-transfer agreements. A paper released through the First Policy Response initiative details a strategy for this: work with P/Ts to amend fund transfer arrangements, allowing them to create funding streams for licensed child care operators. These should be large enough to cover operating costs during closures so they can re-open once this all ends.
#2: Use these newly created funding streams to direct more funding during the restart. Amended arrangements are also useful for the next step: the federal government can use these new channels as the basis for more sustained funding programs for provinces and municipalities moving forward. This could involve funding to convert shuttered spaces into child care facilities, or increase hiring in the early education and child-care industry. This 2018 paper details some useful approaches for improving accessibility and growing the number of child-care spaces provincially. Importantly, it would also allow money to be spent in ways that address regional concerns. Cutting cheques to P/Ts is constitutionally sound, and helps them be more flexible in addressing the needs of their cities, towns and rural areas.
#3: Create a national child-care secretariat in collaboration with provinces and municipalities. If the federal government is going to create new funding streams, it should establish some form of governance structure to ensure common standards for child care across the country. One option recommended is the development of a Childcare Secretariat for Recovery. This could be developed under ESDC’s purview, and might include education and child-care ministers from each P/T to help identify which core principles should become common standards across Canada (similar to the four principles underpinning universal health care). Discrete funding programs and a national framework should then be created to support the development of the physical and social infrastructure required to build the system that meets these new standards across the country.
#4: Help remove the red-tape to growing the sector. Much debate around child care in Canada has equated the need for quality child care to having expensive, state-run systems. While setting minimum standards is critical, it is important to note that over-regulating this industry will raise costs and harm the lower-income families who need it most. That would equal a combination of lower levels of female workforce participation, and grow demand in the unlicensed childcare industry (where there are not nearly as many standards).
The question becomes how government can raise the average quality of care while allowing the supply of workers to be large enough that the licensed sector can grow its capacity at the rate required to meet demand (otherwise demand will simply surge for unlicensed operators, and the average level of quality will likely be negatively affected). One option is lowering the barriers for home licensing. Creating individual licensing streams for households to offer childcare, along with expanding oversight, would make an enormous difference in the accessibility of licensed care. Another option is allowing for licensing to be done online. For parents stuck at home, especially if there is an extended restart period that lasts many months, this online option would allow for job training to occur within the household (which is handy for socially-distanced folks). This, in tandem with expanding licensing to households, would allow for capacity to grow in the short-term while longer-term investments and decisions are made through the secretariat.
Caring for kids
None of this discussion even touches on the benefits to children, communities, societies and gender equality involved in these investments. Every part of life is improved upon by having better childhood education and care. This investment has long made sense. In the crisis we are currently in, this has gone from being a good idea to being Smart Stimulus. There is no path to economic recovery that does not put affordable child-care at the forefront of everything. Women fueled the last economic recovery and they will also fuel this one. If we can’t buy them more time to do so, we will all pay a heavy price.
Update: Dr. Jennifer Robson, an Associate Professor at Carleton University and Advisor to the Prime Minister, was kind enough to offer feedback and some additional thoughts on the recommendations made in this article. I’ve included them below:
Here are some of the articles referenced here that inform the discussion about childcare policy design for stimulus:
Child care Canada. “Child-care and COVID-19: Information on the situation in Canada.” May 5th, 2020.
Sarah Kaplan, Michal Perlman, Jamison Steeve, Petr Varmuza & Linda White, 2018. “Early childhood education and care – Transition briefing“.
Bengt Petersson, Rodrigo Mariscal, and Kotaro Ishi, Women Are Key for Future Growth: Evidence from Canada, IMF Working Paper, July 2017
Laurie Monsebraaten, “Parents want child care to be provincial election issue,” Toronto Star, February 21, 2018.
Gordon Cleveland. “Our Children’s Future: Child care policy in Canada“. 2001.