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--:-- Jessica Mendoza: Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Friday, November 1st.
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--:-- Jessica Mendoza: Here in the U.S., if you have children, or even if you don't, you probably know that daycare is really expensive. How on earth are y'all affording daycare? I had somebody tell me $550 a week for a kid. Are you insane? Daycare is so high right now that me and my husband had to make the decision to take my son out of daycare for the summer. If you add in my third, it's going to come to about $6,800 a month for daycare that's only from nine to two a day. I need the freaking raise and a big one to be able to afford this. How would you describe the state of early child care in the U.S. right now?
--:-- Harriet Torrey: Well, one of the people who I spoke to described child care as a broken business model because child care is extremely expensive for parents to pay. At the same time, childcare does not make a lot of money. And the reason for that is because it is so labor intensive and they have to pay staff. You know, you can't get an algorithm to put a toddler down for a nap or change a diaper remotely. You need people to be in person.
--:-- Jessica Mendoza: My name is Harriet Torrey and I cover the U.S. economy. So why are you writing about childcare?
--:-- Harriet Torrey: I think it's an overlooked aspect of the U.S. economy because so many people struggle with childcare. This is not something new that the economy is suddenly facing. And this is something that really underpins the U.S. economy in so many ways. People need reliable childcare in order to participate in the labor force. For decades, there have been attempts to change the way childcare works in the U.S. Activists have called for reforms, and there have been bills introduced in Congress. But it's still really hard to find affordable child care. So more recently, some community groups and lawmakers have taken the fight to the state and local level. In this year's election, several places around the country have child care measures on the ballot. And one of those places is in Texas.
--:-- Jessica Mendoza: Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Friday, November 1st. Coming up on the show, what subsidized childcare could mean for one county in Texas.
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--:-- Jessica Mendoza: For many families, the high cost of child care can seem like a problem they have to solve on their own. Will they burn through their savings? Will a parent have to stop working? But our colleague Harriet says that there's a bigger economic issue going on.
--:-- Harriet Torrey: There is a market mismatch because child care is unaffordable for families and it's also not hugely profitable for businesses. And childcare educators themselves don't make particularly high wages at all. And it's hard for businesses to pay them more because they would have to pass on those costs to parents who are already struggling to pay for daycare in the first place in many cases.
--:-- Jessica Mendoza: What is the average cost of childcare for families for one child here in the U.S.?
--:-- Harriet Torrey: The Labor Department has done some research into the cost of childcare and it really depends on where you live. If you live in a big city, it's probably going to be more expensive than somewhere smaller, but it could be $17,000 a year. For a lot of people, their daycare bill is the same as their mortgage every month.
--:-- Announcer: This episode is brought to you by State Farm. Checking off the boxes on your to-do list is a great feeling. And when it comes to checking off coverage, a State Farm agent can help you choose an option that's right for you. Whether you prefer talking in person, on the phone, or using the award-winning app, it's nice knowing you have help finding coverage that best fits your needs. Like a good neighbor, State Farm is there.
--:-- [Discussion continues]
--:-- Jessica Mendoza: Harriet spoke to families about the issue in Travis County, Texas, where a child care measure is on the ballot. Travis County includes most of the city of Austin. One thing that's interesting is that in places like Austin, paying for a year of child care is now more expensive than paying for a year of in-state college tuition. But the very different thing between paying for your child's college and paying for your child's daycare is that you have the best part of two decades to prepare for college.
--:-- Harriet Torrey: To find out more about why that daycare bill can be so high, we talked to Jordan McClay. She's the director of the Ebenezer Child Development Center in Austin, which primarily serves lower-income families.
--:-- Jordan McClay: The other day, Jordan was in a classroom hearing from the toddlers about their Halloween costumes. I know. Do you want to wear your costume? You don't have to. I'm a princess. You want to be a princess? Maybe we can make a princess. Usually when I come in, they'll run over and give me a hug and offer me something they've made in the kitchen. It's usually a plastic lemon, which is fine. It's great. It's, it's joyful. You go in and it's a place where you want to be.
--:-- Jessica Mendoza: Daycares like Jordan's typically serve children from the time they're infants until they're about four years old when they start kindergarten. And like a lot of daycares across the country, Ebenezer Child Development Center is wrestling with the economics of the child care market. The center charges around $1,000 a month for each child. With just 23 kids enrolled, Jordan says there's not a lot to work with.
--:-- Jordan McClay: What are you spending money on primarily? I would say at least 80% goes to teachers, goes to salaries. And then we are not a new building. Example, you know, we had a plumbing issue, completely unexpected. And that is $10,000. Bye. And nevermind, you know, the normal air conditioning. We live in Texas. Our air conditioning is running, I would say easily nine months of the year. And when it's not, the heat is running. And we also have a janitor that comes every night, which is about $2,000 a month. And so generally breaking even is great. I've never worked at a center where it was a moneymaker.
--:-- Jessica Mendoza: In a typical business, in order to increase revenue, a business owner might cut back on expenses or raise prices. Jordan can't do either of those things. She can't trim staff, her primary expense, because there are regulations about the ratio of adults to children in a daycare. In Texas, for instance, there's got to be at least one caregiver for every four infants. At the same time, Jordan can't raise her prices because parents are already struggling to pay the tuition.
--:-- Jordan McClay: We have to have a tuition that's high enough to pay our teachers, right? But then it's also allowable for parents. And you can't charge any less at this point, right? Much less increase the tuition to help you pay for what you need to pay for to keep the place running.
--:-- Jessica Mendoza: Exactly. And it's that fine line. There's this gap. On top of all this, it's hard to attract people for child care jobs. It's a demanding role that doesn't pay a lot. The average nationwide wage for child care workers is less than $15 an hour. As you can imagine, being in a classroom alone with four infants is really hard. And it takes a really special person. Not a lot of people want to do that or have the gift that it takes to be with infants.
--:-- Jordan McClay: And so Jordan's in a catch-22. There a huge demand from families for affordable care but she can afford the staff to meet that demand.
--:-- Harriet Torrey: Harriet has seen the scenario play out over and over in her reporting. So based on what you've seen, what you've reported on, what do families do when they aren't able to get child care? What happens?
--:-- Jordan McClay: Well, often one person, you know, if it's two parents, one of them will stop working. And for some people, that's a choice. And they want to be at home with their kids. And that's great. But for other people, it is not they leave the workforce because they can't find reliable childcare that they can afford.
--:-- Harriet Torrey: And for the economy as a whole, what this means is that it just means that fewer people are available in the labor force. Or they can't take the jobs that they want, you know, they might not be able to take certain hours, They might not be able to take a promotion. So it can hinder people's ability to work.
--:-- Jessica Mendoza: Why does it matter that the labor force supply is reduced? What is sort of the overarching effect that we'd see?
--:-- Harriet Torrey: The economy's growth potential depends on the supply of workers. You need people to perform jobs that move the economy forward. The result is a nationwide child care crisis. And in Travis County, it's led to a ballot measure that would raise property taxes to subsidize child care. How that would work is next.
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--:-- Jessica Mendoza: This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On Brand with Jimmy Fallon. Series premiere Tuesday on NBC.
--:-- Announcer: This episode is brought to you by State Farm. Checking off the boxes on your to-do list is a great feeling. And when it comes to checking off coverage, a State Farm agent can help you choose an option that's right for you. Whether you prefer talking in person, on the phone, or using the award-winning app, it's nice knowing you have help finding coverage that best fits your needs. Like a good neighbor, State Farm is there.
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--:-- Jessica Mendoza: When Texans in Travis County go to the polls on Tuesday, they're going to see an option on the ballot about funding child care. And Central Texans are talking about the big issues on the ballot. Notably, one proposition has to do with child care. Voters will decide whether to approve spending money to make it more affordable. Across the state, there are almost 84,000 families wait-listed to get subsidized child care. 5,000 of those children are in Travis County. To help increase access to that funding, the county commission introduced a ballot measure called Proposition A.
--:-- Harriet Torrey: Proposition A is a ballot initiative to increase property taxes. You know, that money would be used to fund affordable daycare by creating several thousand new spots in daycares and also expanding after-school programs. And the idea is that this money is for lower-income households and it will help people to re-enter the workforce.
--:-- Jordan McClay: This proposal would create 1,900 new child care slots for babies and toddlers from low-income households. It also has the goal of raising pay and creating new positions for daycare workers.
--:-- Harriet Torrey: Proposition A would be funded through property taxes, an increase of about $125 a year for the average homeowner. Using property taxes for education is similar to how public schools are funded. And Harriet found that Proposition A would make a big difference for daycares in the area. It means that they will receive more funding. That will allow them to hire more staff, potentially raise wages, and hopefully get more kids in the door because the subsidies will help low-income families. You know, it'll be producing the money that will pay for their care.
--:-- Jessica Mendoza: So I think for daycare owners, it is definitely a good thing.
--:-- Harriet Torrey: Prop A does have some detractors. Some Republicans against the measure would rather reduce regulations on businesses than raise taxes. Here one critic being interviewed by a local television station in Austin.
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--:-- Jessica Mendoza: What's interesting to you about this effort or this ballot measure?
--:-- Harriet Torrey: I think just the fact that this is being taken to the people to decide. Austin is an interesting city. It has seen a lot of growth in recent years, but at the same time, it has seen a big jump in the cost of living. So, you know, people who don't have kids might be thinking, why should I support this measure? Why is this my problem? But I think a lot of people realize that, you know, the more people that are able to work, the better it is for the economy overall. And, you know, in order for the city to remain a magnet and for businesses to move there, they do need to have reliable childcare in place.
--:-- [Discussion continues]
--:-- Jessica Mendoza: If these pass... It will be an acknowledgement that this is an issue that needs action, that communities need to kind of come together and do something about. because it is a real problem in a lot of places, and we've seen that.
--:-- Harriet Torrey: If it does pass, like, is there a chance that it could be heralding, like, the beginning of a broader shift, whether within Texas, maybe some other cities might be interested in trying something like this out or beyond?
--:-- Jordan McClay: I think we are already seeing that shift, what we've seen in Vermont, what we've seen in Florida. I think these are all pointing towards a bit of a sea change in the way that communities think about childcare and the need for affordable childcare.
--:-- Jessica Mendoza: The fact that there's any kind of movement on public funding for daycare feels really significant to Jordan McClay. She's the director at Ebenezer Child Development Center. She remembers when she first heard about Prop A.
--:-- Jordan McClay: I cried because I think having, just having a proposition on the ballot that has to do with early childhood is huge. This is huge. Why is it huge? It's never happened. You know, it's not just our circle of early childhood professionals. This is now showing everybody, like, this is big enough that this is on the ballot. And that's amazing, you know, and I'm glad it's happening in Travis County. And I hope that it continues to spread. I wish it had happened sooner, but you know what? It's happening now. And I do think, I like to think that it's encouraging, you know, there's some help on the horizon.
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--:-- Jessica Mendoza: That's all for today, Friday, November 1st. The Journal is a co-production of Spotify and The Wall Street Journal. The show's made by With help from Trina Menino Our engineers are Griffin Tanner, Nathan Singapak, and Peter Leonard. Our theme music is by So Wiley. Additional music this week from Katherine Anderson, Griffin Tanner, Peter Leonard, Bobby Lord, Emma Munger, Nathan Singapak, and Blue Dot Sessions. Fact-checking by Mary Mathis. Thanks for listening. See you on Monday.
