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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 produ
by 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 agoI 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 agoIf 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