A new study led by two economists from the University of Toronto Scarborough finds that three-quarters of families in Toronto can’t afford the cost of licensed child care.
The landmark study, authored by Associate Professor Gordon Cleveland and Professor Michael Krashinsky from U of T Scarborough’s Department of Management, is the first to link parent demand with the affordability of child care.
“If you were to ask most families in Toronto they would probably remark on the incredibly high cost of licensed child care,” says Cleveland, an expert on child care economics and policies.
“This report puts a number to that hunch. It makes ‘affordability’ into an operational concept that can guide policy reform.”
Using data from Statistics Canada and the City of Toronto, the report looked at three scenarios for affecting affordability. These include providing fee subsidies to all families that qualify, charging a max of $20 per child per day or capping fees at 10 per cent of household income.
It finds that when child care is affordable, demand for it soars from less than 30 per cent to more than 52 per cent of families, and more mothers are employed full-time.
“We’re not recommending which scenario is best, rather we’re saying when you run these through the model you can evaluate the strengths and weaknesses of each,” says Cleveland.
He points to the simulation of charging $20 per day and notes that while it would have a bigger impact on full-time employment among mothers than the other two, it will also be more of a benefit to high income families.
“As a policy-maker you can look at that approach and say it’s not doing enough for low-income families and you better have a complementary policy that helps those families,” he says.
He adds that the models are meant to be updated as new data becomes available and can help forecast how certain policies will impact affordability including what the distribution of those impacts will be.
“Sometimes we think of affordability in terms of affecting low-income families, but this report shows that is not the way to think about it because this issue affects many different income groups.”
Cleveland couldn’t say for certain what’s causing child care costs to soar in Toronto, that it’s likely caused by a host of factors, but adds that it is the most expensive in all of Canada. In the past 15 years the cost of child care in Canada has risen twice as fast as other prices according to consumer price index data.
“It’s an important research question that should be explored,” he adds.
There are also downstream impacts. If child care is unaffordable it results in fewer mothers in the labour force, especially in full-time employment. In fact, Cleveland says that for every 10 per cent reduction in the price of child care you get a three-and-a-half per cent increase in full-time employment among mothers.
Many families also end up looking after their children themselves even when both parents are working. This often results in part-time employment for mothers or mothers will work from home, sometimes running a small business while looking after their child.
“This places a tremendous amount of stress on the family,” says Cleveland.
“The decisions of families are pretty sensitive to the cost of child care, so when you change affordability, you change a whole set of family decisions as a result,” adds Krashinsky.
The issue of child care has been on the agenda for both the federal and provincial governments lately, but rather than simply adding more child care spaces the pair say governments need to also take a hard look at the affordability issue.
“We hope the model we’ve developed can be used as a powerful tool for governments to think intelligently about child care policies,” says Cleveland.