Economy

Why working parents are better for the economy: Marina Adshade

"Free" child care isn't free at all

baby and parents

In a widely-discussed report released last week the Fraser Institute argues that children raised on $3,000-$4,500 a year can be healthy, happy, and, eventually, productive adults. But can we say the same about parents who raise children at this poverty level of consumption?

According to the report, children are inexpensive to care for because the most important input to child rearing is absolutely free—a parent’s time. The report argues that: “it would not be appropriate to include time spent with children as part of the cost of a child. That time is best considered, broadly, as part of leisure (non-work) time.”

That argument might make sense if there were some consideration given to the fact most Canadian families divide their time between work and leisure, and that unpaid childcare by parents can only happen during non-work hours. The underlying assumption in this report, however, is that parents have unlimited time to care for their children and that paying for childcare is a frivolous luxury, as unnecessary to fundamental wellbeing as family trips to Disneyland.

Some Canadian families are able to raise their children without paid childcare either because parents sacrifice their earnings in the workforce, or because they can cobble together unpaid childcare from benevolent family and friends. But does either option make for a productive Canadian workforce?

Last year, the average Canadian employed full-time worked approximately 1,870 hours over the course of the year. Finding that much unpaid care for preschool children is a tall order, but even older children need care when they are not in school. So much care, in fact, that parents working full-time would need to find the equivalent of 40 around-the-clock days of volunteer childcare in order to be employed full-time.

What does this mean for Canadian workers raising children on incomes that do not afford paid childcare? The main problem is that they simply work less, or don’t work at all. But unemployment or underemployment has further knock-on effects: parents in that situation are less likely to invest in education and training, since they aren’t working or work sporadically. And the skills they had before are likely to degrade because they’re not being put to use. All these factors erode the total level of productive labour in the economy.

In media interviews last week, Christopher Sarlo, author of the report, described himself being saddened by the possibility that low-income couples have been dissuaded from having children in false belief that children require a hefty investment. The report itself makes no such claim and, in fact, its marginal-cost approach to parenting (that excludes fixed costs such as housing) reinforces its own stated neutrality on the issue of the decision to have, or not to have, children.

The real purpose of the report is to calculate an absolute poverty line for children that can be used to influence government policy on programs—such as the Canadian Child Tax Benefit (CCTB) and National Child Benefit (NCB)—that provide low- and middle-income families support for children under the age of 18.

With currently qualifying Canadian families receiving as much as $3,654 annually from these programs, what this report suggests is that Canadian taxpayers are paying the entire cost of raising a child in a low income family—even when that family has paid income.

The stated goal of these programs, however, is not to relieve parents of the responsibility of paying their own children’s expenses. Rather, they’re to create incentives for parents to participate in work. To that purpose, what matters is not the minimum expenditure needed to feed and clothe a child, but the level of income that allows parents to both meet their children’s basic needs and to hold productive jobs that contribute to the economy.

I would be the last person to suggest that parents should be paid to care for their own children. But it is naive to assume that time that parents spend with their children is without cost. If not to the parent themselves in terms of forgone wages, then certainly to society as a whole in terms of a diminished labour force.

Marina Adshade is a professor in the University of British Columbia’s Vancouver School of Economics and author of Dollars and Sex: How Economics  Influences Sex and Love