The economy of child care in the Yukon – Yukon News
Early learning and child care are hot topics in economics. And it’s not because the profession has put aside its quantitative models and its obsession with economic growth.
Early learning and care is essential for faster growth.
Canada’s total economic output per hour worked was US $ 53 in 2019 according to the OECD, a club of rich countries. The average American worker produced US $ 72.
Ouch. It is not good for income or for tax revenue.
Our growth was also not something our delegation to the OECD could boast about. Last week’s federal budget predicted that our long-term potential growth rate would drop from over 2% per year over the past 20 years to around 1.5% in the future. This may sound insignificant, but remember that an additional percentage point of growth over the next 10 years would increase Canada’s economic output by about $ 6,000 per Canadian.
We have many problems that undermine growth. Our population is aging. Interprovincial trade remains non-free. Besides Shopify, the big global tech winners seem to be emerging from other countries. Climate change will put pressure on our oil and gas industry. Love it or hate it, it’s our biggest export sector and it employs some of our higher value-added jobs.
To drive growth, we need Canadians to work more hours or produce more per hour of work.
Which brings us back to early learning and child care. Numerous studies show that early learning, when done effectively, dramatically improves educational outcomes and long-term earnings. Access to affordable child care can enable more parents, mainly mothers, to find employment.
Currently, only 66 percent of Canadians are in formal employment, although the figure is higher in the Yukon, at 73 percent.
Economists have studied child care programs in Sweden and Quebec in particular. The Swedish system, for example, is comprehensive, inexpensive for parents and flexible to accommodate parents who do not have traditional (and increasingly scarce) jobs 9-5. Meanwhile, the Quebec program is recognized for having increased the number of mothers in the labor market.
The Biden administration offers universal child care for three and four year olds. A new Canadian early learning and child care proposal was one of the highlights of last week’s federal budget. Federal economists believe their new childcare proposal will allow 240,000 workers to join the formal workforce, increasing our economy by 1.2% by 2040. They call it one of the changes in economic policy. the most positive since the NAFTA free trade agreement.
On a pro rata basis, this would allow 265 Yukoners to join our workforce.
A big change is underway. In addition to the new federal proposal, which still requires negotiating agreements with the provinces and territories, the three parties in the last Yukon election proposed important new child care programs. There was a tragedy when the Liberals called the election before passing their budget, which contained funding for their new child care proposal. But thanks to the NDP’s acceptance to support the Liberals until 2023, funding is now very likely to flow to the Legislature.
The Yukon budget proposal provides $ 13 million for universal child care. This is in addition to existing programs. The total for early learning and child care at the Department of Education is now $ 25 million. The exact number of children currently enrolled is not public, but consider this estimate to be very rough. If 75 percent of the 2,413 Yukon children aged four and under participated, the budget is $ 14,000 per child. This compares to the $ 150 million the government budgeted for 5,675 K-12 public school students, or $ 26,000 per student.
As the negotiations unfold, there are a few issues to watch out for.
First, there is federal-provincial cost sharing. Keep in mind that the federal share of health care costs declined dramatically following the arrival of universal health care in Canada. The provinces are wary of another program where the federal government gets the glory and ends up with a large and growing long-term bill.
Fortunately, in the Yukon we receive such a generous transfer payment that the $ 25 million for early learning and child care is only a small portion of the $ 1.4 billion we receive each year from Ottawa. The Transfers from Canada line in the Yukon budget is increasing by $ 66 million this year alone. Now we’re going to get even more money specifically for early learning.
The second problem is quality. Some serious economic studies have highlighted problems with the Quebec program. Child care needs to be adequately funded so that it is truly early learning and not child care. The difference between public school and early childhood budgets per child raises the question of whether the early childhood budget should be even higher. It will also be essential to index it to keep up with inflation.
Then comes participation. Politicians talk about “universal” child care. But currently, far less than 100 percent of Yukon children are enrolled. The new programs will make it significantly cheaper for parents, but the percentage of children actually enrolled will be a real indicator of the success of the new government program.
The median monthly cost for a toddler in Whitehorse is $ 850. The proposed territorial grant of $ 700 would reduce this amount to $ 150 per month.
The laws of supply and demand tell you that every time the government significantly subsidizes something, there will be an increase in demand. In a sector like early learning, where it takes time to train staff and create new spaces, this leads to shortages.
In 2020, the Auditor General of Quebec criticized the province’s system for having a waiting list of 46,000 children. And that’s 23 years after the system was introduced.
Yukon’s early learning service providers are working hard to be prepared for soaring demand. We will see how quickly parents react to the lower price.
Finally, not all parents want childcare in an institution, do not live close enough to an institution or work hours that overlap with nearby institutions. It is therefore important to maintain other supportive policies, such as tax credits for childcare expenses.
Various childcare proposals have been on the Canadian political agenda for 50 years. There are good economic reasons to finally do something big now. And, if we want to do it, we have to do it right. This means funding it sufficiently, including investing in training a sufficient number of early childhood educators to meet long-term demand.
It’s a big investment, but it won’t be cheap. Since we don’t have infinite resources, it also means that in the long run, governments in Canada will either have to raise taxes or spend less on something else.
Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon Historical Children’s Adventure Series. He won the Ma Murray Award for Best Columnist and received the Bronze Medal for Outstanding Columnist at the 2019 Canadian Community Newspaper Awards.