NC deserves a bold approach to address ‘child care crisis’

As the state legislature gears up to tackle the biennial budget, they’ll be implored to extend expanded subsidies for child care in North Carolina. But there is an alternative to further embedding government in yet one more facet of our economy; lawmakers should take the road less traveled, driving in the direction of policies that increase supply, toward a freer childcare market.

The era of pandemic policies that commenced in 2020 was marked by — in addition to the ineffective and unconstitutional lockdowns — unprecedented profligacy from our nation’s capital. The panic of crisis inspired politicians to spend trillions of deficit dollars on forgivable loans, personal protective equipment, and direct cash payments to Americans, among countless other things, fueling historic inflation thereafter.

Amid that flood of federal spending was a dramatic increase in subsidies for child care centers. The “stabilization grants,” originally set to expire in December 2023, were extended to June 2024. With a sunset of the grants on the horizon, anxiety about the coming billion-dollar benefit cliff in North Carolina began to proliferate last spring.

“Without access to affordable, safe child care, a parent cannot go to work,” the NC Chamber wrote in April 2024. “Additionally, high-quality early care helps families raise healthy, capable children and build strong communities.”

Subsequently, the NC General Assembly appropriated millions in tax funds in June 2024, as part of the budget modification session, to extend the stabilization grants for another six months.

Now 2025, lawmakers have returned to Raleigh to construct a new two-year budget, and the pandemic-era federal subsidies have dried up.

It’s a safe bet that said lawmakers will be lobbied heavily to extend and expand these child care subsidies during budget negotiations. Such policies, however, not only run afoul of the controlling party’s stated mantra on free markets and limited government — they won’t work, either.

That’s not to say there isn’t a real problem with child care access and affordability. Results of a survey conducted last spring by the NC Chamber reveal an industry stuck between a rock and a hard place:

• Three in 10 programs are expected to close when the stabilization grants sunset. That is more than 1,500 programs — an estimated 30% of family child care and 28% of child care centers.
• The survey found 88% of programs expect to increase parent fees.
• About two-thirds of programs expect difficulty in hiring comparably experienced and educated staff.
• More than half of the respondents have already raised tuition fees in anticipation of the sunset of the grants.
• More than four in 10 expected to close or combine classrooms.

As a father of three young children, and tens of thousands of dollars spent on their daycare thus far, I have plenty of corroborating anecdotes to reinforce these common pain points. Child care tuition can easily dwarf a mortgage as a family’s largest monthly expense, only to rise again next year. Even so, the providers themselves struggle to retain quality staff at reasonable compensation, while amenities and flexible allowances are truncated to manage rising costs.

The Chamber is correct, too, in warning of the negative economic impacts on the North Carolina of a workforce facing dwindling or unaffordable child care options. But the knee-jerk reaction to subsidize the industry in the face of such adversity, though predictable, is not an effective or appropriate line of attack.

President Ronald Regan once famously quipped, “No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we’ll ever see on this earth!”

Further extending extra child care subsidies this budget cycle may just make them immortal, enshrining another big government, socialist policy in the legacy of Republican rule in North Carolina. State lawmakers slipped down this slope a bit already with their aforementioned two-quarter extension of the subsidies, but they’re still close enough to level ground to get a grip and halt further descent.

Though our economy has changed over time, the basic laws of economics have not. To lower the costs and boost access to childcare, government must aim toward enabling a significant increase in supply as a first-order policy.

Granted, I realize that’s easier said, than done. There is no magic bullet to remedy the myriad headwinds facing providers and parents. There isn’t a single law or regulation to repeal or reform that will lift the yoke in its entirety off the back of facilities and families. As famed economist and social commentator (and North Carolinian) Thomas Sowell said, “There are no solutions. There are only trade-offs.”

Families, providers, stakeholders, lawmakers, and employers must earnestly examine the trade-offs necessary to address this problem without succumbing to the misleading allure of an expensive “government solution.”

Instead of reflexively approving more government subsidies, robbing Peter to pay Paul, lawmakers owe it to both families and taxpayers to reinvigorate joint study committees tasked specifically with examining the economics and regulatory burdens of childcare in North Carolina in search of trade-offs for a better future. By honestly identifying those critical trade-offs, lawmakers can work with the NC Child Care Commission to determine how best to implement them, and breathe life into the market for child care.

Buoying families, businesses, and the economy by improving child care doesn’t require (nor deserve) more income redistribution; it demands bold regulatory trade-offs that allow parents and providers to meet where they may.