The annual cost of higher education is enough to cover just four months of a toddler’s care in Toronto, or around five months in Calgary or Vancouver.
Child care in Canada is expensive – except in Quebec. There, parents pay less than $10 a day. In Vancouver and Calgary, the median cost for a toddler’s care in 2020 was about $50 a day. In Toronto it was more than $70.
In this week’s federal budget, the Liberal minority government pledged to rewrite that story. They’re promising $30-billion over the next five years, and permanent spending of $9-billion-plus thereafter. The goal is to halve the average price of child care by the end of 2022, and get it down to $10 a day, from coast to coast, by 2026.
The model is Quebec. The economic argument is that cheaper child care means more women working, which means a bigger economy and more taxes to the treasury. The Liberal budget asserted the evidence from Quebec is “incontrovertible” and that this program “pays for itself.”
The evidence is indeed promising, though not incontrovertible.
Based on the Quebec experience, low-cost child care does appear to lead more women to enter the work force. Until the introduction of its program, in the late 1990s, Quebec’s level of female labour force participation lagged the national rate by several percentage points. A few years later, the share of Quebec women working had risen to the national level. And it continued rising: The province’s rate of female work force participation in recent years has exceeded the Canadian rate by more than three percentage points.
Last month, Quebec had the country’s highest level of labour force participation among women aged 25 to 54. In Quebec, the male-female gap in labour force participation among people of prime working age was 4.7 percentage points. The national gap is 7.5 percentage points.
The Liberals’ argument that investing in child care pays ample dividends leans on a 2012 TD Economics study. The report reviewed an array of research and concluded that $1 invested in child care could return $1.50 to $2.80 in economic benefits.
The Liberals did not mention one of the TD study’s significant caveats: “Quantifying these benefits,” the report said, “is not an exact science.” Still, TD’s then-chief economist Craig Alexander concluded that benefits “far outweigh” costs. Mr. Alexander, in subsequent assessments, has since become more convinced, in work for the Conference Board in 2018 and Deloitte this year.
The idea that spending on a child-care program can pay for itself is predicated, in part, on it drawing more women into the work force. Most Canadian women, however, are already in the work force. In February, 2020, before the pandemic, 83.6 per cent of Canadian women aged 25 to 54 were in the labour force, versus 87 per cent in Quebec. If a national child-care program closed that gap, it would have a positive economic impact. But it would be relatively small. Perhaps that’s why the budget estimated that taking Quebec’s child-care program national would speed up economic growth by just 0.05 per cent each year for two decades.
Costs and returns are one thing, but what would the actual child care look like? It’s supposed to be early childhood education, meaning more than babysitting. Potential benefits rest on quality care, delivered by trained educators. In 2019, barely 40 per cent of Canadian four-year-olds were in full- or part-time programs in schools. In countries like Germany, double the kids are getting multiple years of early education.
Research suggests that a better and earlier start in a child’s educational life delivers lifetime returns, for individuals and society. Done right, and it’s especially a boost for lower-income kids. However, one study found that children’s school readiness in Quebec, measured by vocabulary, didn’t show improvement as a result of the child-care program. That’s not a knock against early childhood education; it may be a criticism of Quebec’s program for not doing a good enough job.
Child care in Canada is expensive, and not as educationally enriching as it could be. The Liberals say they want to change that. But the road to that goal goes through politics, and the provinces. More on that in the coming days.
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