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This is a classic case of Baumol's cost disease. There isn't really a way for productivity to increase in the child care sector, you're always going to need a s

This is a classic case of Baumol's cost disease. There isn't really a way for productivity to increase in the child care sector, you're always going to need a similar ratio of workers to children, but those workers also need their wages to keep up with inflation. The way it plays out in the US is everyone loses: the employees are underpaid, the employers are low-margin, and it is still too expensive for families. Child care companies can't pay the workers a fair wage while remaining profitable and keeping prices low enough for families, so we end up in this awful equilibrium where it sucks for everyone.

Rafuino 4y ago
Sounds like it's an industry that should be provided as a public service then (or at least subsidized), not something that a free market can sustain. https://www.nytimes.com/2021/10/06/upshot/child-care-biden.html https://www.nytimes.com/2021/10/06/upshot/child-care-biden.h...
- blactuary 4y ago
  I agree, given what I laid out it's not something the market can provide
anonymouskimmer 4y ago
> Baumol's cost disease. I don't think wages in the childcare industry are increasing noticeable relative to wages in other sectors. As a person mentioned elsewhere, other factors such as rental prices and insurance probably add more to the cost than wages.
- blactuary 4y ago
  Of course they aren't, like I said above the workers are way underpaid. The Baumol effect means that wages have risen more than the underlying increase in productivity, which like I said can't really increase in child care, you need X workers for Y kids, there's no productivity gains to be had. And that's not on the workers themselves, it's just basic arithmetic. Needing to increase the wages of the workers beyond any increase in productivity either means higher prices for parents or lower profits for the business. In this case we have both, which is why the market can't really sustain itself. Daycare companies have to give their workers some increase in wages over time, without getting more work out of them, but in order to charge parents even more than the already insane prices, they've held them down to some extent. So like I said, everyone loses.
  - anonymouskimmer 4y ago
    I just think the term "Baumol's cost disease" may not be appropriate, as it seems much of the rise in wages in the childcare industry is due to minimum wage laws. I'm probably being overly pedantic.
    - blactuary 4y ago
      If that is the case that min wage laws are a major cause then it is definitely a case of baumol, because the wages would be increasing beyond the underlying productivity due to external factors. We expect wages to rise with gains in productivity, but the sectors of the economy that don't have any gains will necessarily increase along with the ones that do, because of labor market competition, minimum wage laws, etc. It puts a strain on those industries, just like we are seeing in child care
blactuary 4y ago
Who is down-voting a simple description of the economic phenomenon that plagues the industry, a description noting that it doesn't work for anyone?
- Balgair 4y ago
  Generally here at HN, if you complain about downvotes, people downvote you more. The karma points are more seriously taken as totally imaginary and not something to even really consider in discussion. Numbers on a screen aren't the thing HN really values.

Rafuino 4y ago

Sounds like it's an industry that should be provided as a public service then (or at least subsidized), not something that a free market can sustain. https://www.nytimes.com/2021/10/06/upshot/child-care-biden.html https://www.nytimes.com/2021/10/06/upshot/child-care-biden.h...

blactuary 4y ago
I agree, given what I laid out it's not something the market can provide

anonymouskimmer 4y ago

> Baumol's cost disease. I don't think wages in the childcare industry are increasing noticeable relative to wages in other sectors. As a person mentioned elsewhere, other factors such as rental prices and insurance probably add more to the cost than wages.

blactuary 4y ago
Of course they aren't, like I said above the workers are way underpaid. The Baumol effect means that wages have risen more than the underlying increase in productivity, which like I said can't really increase in child care, you need X workers for Y kids, there's no productivity gains to be had. And that's not on the workers themselves, it's just basic arithmetic. Needing to increase the wages of the workers beyond any increase in productivity either means higher prices for parents or lower profits for the business. In this case we have both, which is why the market can't really sustain itself. Daycare companies have to give their workers some increase in wages over time, without getting more work out of them, but in order to charge parents even more than the already insane prices, they've held them down to some extent. So like I said, everyone loses.
- anonymouskimmer 4y ago
  I just think the term "Baumol's cost disease" may not be appropriate, as it seems much of the rise in wages in the childcare industry is due to minimum wage laws. I'm probably being overly pedantic.
  - blactuary 4y ago
    If that is the case that min wage laws are a major cause then it is definitely a case of baumol, because the wages would be increasing beyond the underlying productivity due to external factors. We expect wages to rise with gains in productivity, but the sectors of the economy that don't have any gains will necessarily increase along with the ones that do, because of labor market competition, minimum wage laws, etc. It puts a strain on those industries, just like we are seeing in child care

blactuary 4y ago

Who is down-voting a simple description of the economic phenomenon that plagues the industry, a description noting that it doesn't work for anyone?

Balgair 4y ago
Generally here at HN, if you complain about downvotes, people downvote you more. The karma points are more seriously taken as totally imaginary and not something to even really consider in discussion. Numbers on a screen aren't the thing HN really values.