Journal Issue: Work and Family Volume 21 Number 2 Fall 2011
Where Do We Go from Here?
The United States provides relatively limited public support for the efforts of households with preschool-age children to balance the competing responsibilities of work and family life. Rights to parental leave are short and unpaid in all but a few states, in contrast to the paid and often lengthy work absences available in many other industrialized countries. The contrasts between the United States and the comparison nations are not quite as stark for the provision of ECEC. Nonetheless, in the United States ECEC is primarily a private responsibility, whereas most of the comparison nations have moved toward universal entitlements to public pre-kindergarten, beginning at age three or four, and many have much greater public involvement in child care at younger ages.
A first issue, therefore, is to determine the extent of any desire among Americans to raise the support for families with young children. The answer is not entirely obvious. The United States has long followed a path of "exceptionalism," where citizens have viewed differences between U.S. policies and practices and those of other countries with pride. This perspective complements a long tradition of limited government involvement, reliance on the free market, and suspicion of public efforts to solve social problems. There is nevertheless reason to believe that most Americans would like to see more comprehensive efforts to address issues of work-family balance. For instance, a poll conducted in 2009 by the Rockefeller Foundation and TIME revealed that 77 percent of adults think that "businesses should be required to provide paid family and medical leave for every family that needs it," with 73 percent stating that "business should provide their employers with more child care benefits," and 59 percent agreeing that "the government should provide more funding for child care to support parents who work."91 The remaining discussion therefore assumes that increased assistance is desirable and considers how such help could be provided.
Probably the first question to address is whether parental leave and ECEC policies should be universal or targeted. Observed practices vary across both countries and policies. All of the comparison nations provide universal entitlements to paid parental leave, although often with more extended rights for selected groups (such as those with birth complications or larger families). ECEC policies exhibit more variation. Expansions of pre-kindergarten programs and the integration of early day care into broader education systems suggest a movement toward universality. Yet several countries remain closer to the U.S. model of fragmented and mostly privately financed care, providing public support only to specific groups such as low-income or sole-parent families. Nor does the empirical evidence unambiguously indicate the desired direction for policy. Most studies suggest that children gain from high-quality ECEC immediately before school entry, but the results are less clear for care at younger ages (particularly if its quality is questionable). ECEC generally has the most positive consequences for disadvantaged children, a finding that suggests potential support for targeted interventions. However, universality may offer additional benefits, including increasing the political support for high-quality (usually more expensive) programs.
If greater assistance is to be provided to families with young children, it must be paid for. International evidence suggests that the costs are not overwhelming, particularly when compared with those of other programs targeting children (such as formal education) or seniors (such as public pensions and medical care). But these financing issues are nontrivial in the current era of large budget deficits and rising costs of other public programs. Once again there are two main alternatives: public versus private funding. In nations with strong traditions of social insurance, parental leave policies and ECEC programs are viewed as a national responsibility, and the costs are largely borne by the general public. At the other extreme, the expenses can be directly covered by individuals or their employers or through taxes whose incidence falls largely upon the affected groups.
"Employer mandates" have often been implemented in the United States and are attractive because they do not impose costs directly on the government. However, they are likely to result in wage decreases for groups most likely to use the benefits (such as women of childbearing age) as employers attempt to pass the costs through to their employees.92 Moreover, if institutional barriers are enacted to prevent reductions in earnings for these workers, companies may become reluctant to hire persons likely to use the benefits, leading to an overall decline in their employment.
From an economic perspective, broad payment systems have the substantial advantage of reducing the incentives employers might otherwise have to avoid employing (or investing in) groups with high levels of expected program use. Such systems also provide insurance, in the most fundamental sense, for the costs of expensive and not fully predictable outcomes. Moreover, to the extent that children represent a "public good," it is appropriate to spread these costs throughout the economy.
Public financing can be provided through either broadly distributed payroll taxes or general revenues. Payroll taxes reduce incentives to work because they decrease the net (after-tax) wage, although when program expenses are spread across all workers, the effect on incentives may be fairly small. In addition, payroll taxes can be quite regressive (that is, the tax rate is greater for low earners than for high earners) if the taxes are paid only up to an earnings threshold, as currently occurs for Social Security but not Medicare.93
The use of general tax revenues has several advantages. First, it is the broadest-based source of funding and so provides the fewest incentives to discriminate against high-use groups. Second, financing comes from unearned as well as earned sources of income, implying that work disincentives are minimized. Finally, such financing is consistent with the perspective that parental leave and ECEC represent social investments in children and families. Conversely, the use of general revenues may engender particularly strong political opposition, particularly in an era of tight budgets and limited political support for federally funded social programs. It may also encourage some individuals to "game the system" (by working just long enough to qualify for public benefits, for example), and may sometimes crowd out efficiently operating private arrangements.
The United States faces many challenges in supporting the efforts of households with young children to balance the competing needs of work and family life. Any policy change designed to ease the difficulties in balancing these needs will be controversial, requiring a careful effort to weigh both the costs and benefits of possible interventions while respecting diverse and at times conflicting American values. That said, previous research suggests that policies establishing rights to short parental leaves increase time at home with infants and slightly improve the job continuity of mothers, with small, but positive long-run consequences for mothers and children. Therefore, it probably makes sense to provide moderate extensions of existing U.S. leave entitlements (up to several months in duration), with some form of payment during the leave period being necessary to facilitate its use among less-advantaged parents. The consequences of lengthy paid leaves are much less certain, but there is little realistic possibility that these will be considered in the United States in the foreseeable future.
Reaching consensus on desired changes in policies related to early care and education may be still more complicated, given the often ambiguous results of previous research. However, efforts to improve the quality of care provided, while maintaining or enhancing affordability, are almost certainly desirable. The most obvious method of achieving these twin objectives is to provide increased government support through subsidy arrangements or the direct provision of services. In an ideal world, such efforts would probably be most efficiently targeted toward low-income and disadvantaged parents, for whom the need and benefits are probably the greatest. However, the history of social programs in the United States and Europe suggests that there may be greater benefits from universal programs that build a stronger base of political support both for financing and the maintenance of quality.