A Strong Economic Case for Federal Investment in Universal Preschool

February 02, 2022

By Mary King

During World War II, the federal government provided child care around the clock to enable more women to work in the war industries. In 1971, we came close to having a national child care program when President Richard Nixon vetoed legislation that had strong bi-partisan support. Now, as Congress prepares to vote on President Biden’s key legislation, the nation is presented with another opportunity to make a historic investment in our future.

While the bill faces opposition from members of Congress concerned over rising inflation and the federal debt, these concerns are unfounded and politically motivated. Notably, no such fears were expressed when the military budget was increased yet again in September, by $25 billion —nearly forty percent more than the $18 billion in average annual spending for universal preschool proposed in the Build Back Better Act.

Current inflation is not being fueled by government spending, but by supply chain issues, as consumer spending shifted from services to goods due to the pandemic, and also by the increasing monopoly power of highly profitable, large corporations with few competitors that might undercut their prices. Ultimately, we can rely on the Federal Reserve to take stronger action to hold back future price increases, should inflation linger.

Meanwhile, the U.S. is far behind other affluent – and even less affluent – nations, in the support it provides families with children. In 2017, the U.S. was 37th of the 38 OECD countries in its spending on family benefits including child care, at less than two-thirds of one percent of GDP. Only Turkey trailed us. Even Britain, a lot like us in many ways, spends more than five times as much as the U.S.

Yet the economic case for investing in early childhood education and care is strong and well-known, based on decades of evidence. Universal preschool is a two-generation, anti-poverty strategy that also benefits the middle class. It reduces inequality by gender, race, ethnicity and income. Children from families with lower incomes gain the most, but all children make gains, and universal programs are more sustainable than even the best programs designed only for impoverished children, enjoying much more political support. After fifty years, Head Start is still so underfunded that it too often provides preschool on a part-time and part-year basis, and for only a fraction of the children eligible because their families’ incomes fall below the federal poverty line.

Young children have the highest poverty rates of any age group in the country, because child care is so expensive that many parents, especially mothers, cannot afford to work, permanently lowering their lifetime incomes. Single mothers are particularly vulnerable, and are raising almost a quarter of American children. Women’s ability to work in the U.S. is falling behind other countries, including Germany, Canada and Japan, due to our weak family policies. But we don’t have to look too far to find successful examples of public investments in child care, Washington, D.C.’s universal preschool program has increased the labor force participation of mothers by ten percentage points, raising family incomes at the lowest point in their life cycle.

High quality, universal preschool focused on the social and emotional development that eases the transition to kindergarten; raises high school graduation rates, college attendance and incomes; and reduces unemployment, crime, incarceration and other social ills. The higher the education rate in a locality, the higher the wages for everyone, regardless of their education, because companies can be more productive with a skilled labor force.

And high quality child care means paying child care workers salaries comparable to elementary school teachers. The accumulated experience and ongoing relationships critical to quality care are harmed by high turnover rates among child care and preschool workers, a consequence of wages that can’t support even a two person family and barely rise with increasing skill. Nationally, only one in five employed women with a college degree in early childhood education work in the field, compared to nearly four-fifths of those with nursing degrees.

Federal investment in early childhood and care is long overdue and is the best economic development project we could undertake, with significant gains to the community as a whole, as well as to children, their families and preschool workers paid living wages. The rest of the wealthy world has far lower rates of child poverty, a critical predictor of future marginalization, than we do – largely because they invest much more in their children. Let’s not waste another fifty years before investing in our children, our families and our future.

Mary C. King is a Professor of Economics Emerita at Portland State University.

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This post was previously published on inequality.org under a Creative Commons License.

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