When I constructed my Family Fun Pack agenda, which consists of seven universal welfare benefits for families with children, I included a couple of things that should in theory neutralize center-right policy types who like to write about supporting families.
The first thing I did was give families the option of free public child care or a home child care allowance, which kills the argument that child care benefits are unfair to those who prefer to care for children at home. The second thing I did was end the child-related aspects of the EITC, which effectively quadruples its value for childless workers, something conservatives have been saying we need to do to make working class men more marriageable.
Given this, I was curious as to how these people who insist they are not the anti-tax, anti-welfare ideologues that control the Republican party would respond.
Pascal-Emmanuel Gobry was the first conservative I saw who produced more than a tweet about the report. In his PolicySphere newsletter, Gobry seemed excited by it, writing that its “torching theoretical critique of the way a market-based economy treats children and families” is something conservatives should have produced “first, louder, and earlier.” But then he also vaguely says he “finds much to disagree with” in the FFP and calls it “extremism.” No elaboration of his objections is provided beyond these conclusory statements.
Writing at the conservative Institute for Family Studies, Patrick Brown is the first person I’ve seen lay out concrete issues he has with the Family Fun Pack but those objections all miss the mark in rather obvious ways.
In my paper, I point out that people have children in their 20s and 30s but their incomes are highest in their 40s and 50s, something I call the lifecycle income problem. In response, Brown says this problem may not be as pronounced as I suggest by pointing out that rich families spend more money on their teenage kids than they do young kids (the same is not true of poor and middle class families).
This response is initially confused about what the lifecycle income argument is about. It is not about the distribution of costs across childhoods. It is about the distribution of children across adulthoods: they come too early to amass savings and before incomes are high. Empty nesters are the richest age group in the country while parents with newborns are around the poorest.
The point is also technically flawed because it does not properly account for child care expenses. The USDA’s account of how much money people spend on child care is way too low given what we know of the national average cost of child care. Why is it so low? Because it only counts money people are actually spending on child care, meaning that it counts the large amount of home child care done in this country as if it is costless. But it is not. There is an obvious opportunity cost to doing home child care, the flipside of which is the imputed value of that home child child care, which Brown himself takes pains to emphasize in a National Review article released last week.
Brown then makes the classically confused argument that means-tested programs are better than universal ones:
Universal programs, while presumably thought to be more politically palatable, would leave well-off parents with even more resources to spend on opportunity-hoarding endeavors, particularly as children get older. If we care about opportunity and economic mobility, the relative disadvantage poor children face in school quality and enrichment programs may get worse.
The mistake here is that, to the extent that you want to cram down the resources available to the rich, you can take care of that on the tax side. Charging affluent parents child care fees as a way to drain their income is not distributively different from simply upping their tax bill by a similar amount, except that using the means-tested child care fees instead of across-the-board taxes disadvantages affluent people who have children relative to affluent people who don’t have children.
Does Patrick Brown really want to make it so that there is no cross-transfer between an affluent family with 3 kids and an affluent family with 0 kids? Does he want the affluent family with 3 kids to have a much lower standard of living than the one with 0 kids simply because they had kids? I’d guess not, but that’s precisely what his objection to universality amounts to in the case of family benefits.
There is clearly some kind of centralized brochure they give to conservative pundits on this topic because everyone of them somehow makes the exact same mistake about something called Baumol’s cost disease, and Brown is no different in this regard.
Baumol’s cost disease is a rather simple idea that is nonetheless widely misunderstood. What it says is that, when overall economic productivity increases, the wages of workers in productivity-constrained sectors have to rise along with the wages of the non-productivity-constrained sectors. So even though teachers keep instructing 20 kids per class year after year after year, their wages need to go up if the wages in other sectors go up, or else you risk having all of the teachers quit to work in the higher-paying sectors.
Another way to think about it is to say that, if you want high-quality child care, then you need to be able to hire from, say, the 30th percentile of the wage distribution. If the 30th percentile wage goes up due to general productivity growth, then the child care wages have to also go up in order to maintain the pool of child care workers.
What’s important about this insight for our purposes here is that it has nothing to do with whether the government is funding child care or not. Baumol’s cost disease is going to ensure that child care wages march up in lock step with the overall wage level no matter what. If the government does not cover them, then parents will have to.
Brown might think home child carers gets you out of this conundrum, but that too is untrue. Baumol’s cost disease afflicts them as well. As productivity increases year over year, the opportunity cost of stay-at-home caring marches in lock step with those increases even though home carers do not increase their productivity.
Contrary to what Brown says, there is nothing “unsustainable” about sectors that are afflicted by the cost disease. All you have to do is dedicate a fixed share of GDP to them, understanding that as GDP rises, so too must the absolute amount of pay flowing into those sectors. In the case of child care, setting aside something like 1 to 1.5 points of GDP would get the job done, and indeed will be what we have to do regardless of how we finance it.
Although Brad Wilcox promoted Brown’s piece with the claim that it contained a better alternative, the totality of the alternative proposed in the piece is:
Bruenig’s goal of making having children “easy and affordable for all” likely can’t be met solely through new government entitlements but would be better achieved through targeted interventions and cultural shifts. Reforming corporate practices to prioritize parents re-entering the labor force after a lengthy break, for example, could make it less scary for would-be parents to take time away.
This of course is a totally inadequate approach that does not address the basic problems that family benefits need to solve: the fact that market income is concentrated in later years while child-bearing is concentrated in earlier years and the fact that adding children to your family increases your resource needs without any corresponding increase in the resources you receive. These problems can only be solved through a transfer regime because their cause is the perversity of market income distributions.
After I pointed out this was not a serious alternative, I was directed to look at Brown’s National Review article from last week, which was not about the Family Fun Pack. The article is very long but ultimately just says that we should provide a home child care allowance to home child carers. Yet the FFP does precisely this.