Odd Lots - Care Work in the United States Has Been Broken for Years

Episode Date: May 4, 2023

Disruptions caused by the pandemic have revealed deep flaws in our supply chain for physical goods. Certain market failures that have been left to fester for years were suddenly exposed. But some parts of the economy were broken long before the pandemic, particularly anything having to do with care work. Various forms of childcare, daycare, eldercare and healthcare have seen costs explode, with services unevenly distributed, even as those working in the care economy often remain poorly compensated. On this episode, we speak to economist Nancy Folbre, professor emerita of economics at UMass-Amherst and director of the Program on Gender and Care Work at the Political Economy Research Institute, about why such crucial services are so broken in America.See omnystudio.com/listener for privacy information.

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all investing is subject to risk vanguard marketing corporation distributor. Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Wisenthal. And I'm Tracy Allaway. Tracy, you know, we've spent the last, I don't know, I guess it's like three years now, maybe even a little, actually it's been longer than three years now. It feels like a long time. Talking about many aspects of the sort of physical manufactured economy that broke or are broken in some way. Yeah. And I think it's because, I mean, obviously the pandemic exposed a lot of these fault lines with global supply. chains for physical goods, primarily consumer goods, things like furniture and food and stuff like that. But on the other hand, there was also a lot of disruption to services. And we haven't

really spoken as much about that. Right. And the other thing that's really striking with services, so actually right now we're in this period where like for the Fed, there's a lot of focus on services inflation and when is that going to come down, et cetera. The other thing with a lot of services, particularly like very crucial services is that to the extent that we talk about certain industries being broken or market failures, which I think was like a sort of like recurrent theme of our work, many of the what's sort of broken, it seems, in the services space, just existed long before. Like these problems were actually very evident even prior to COVID. No, totally.

There was actually a chart I was looking at just last week that showed the long term inflation trends in the U.S. broken into sort of components. And if you look at it, the highest price increases are all in services. So things like health care, child care, while all the consumer goods, the durable stuff has been going down. So it's much cheaper to buy a big screen TV than previously, but it's much more expensive to have a kid and send them to college and things like that. Right. And so these are like these sort of like deeper things. And so we're thinking about like, okay, what are the bottlenecks? what are the so-called market failures, et cetera, that caused this? And we look at it in the manufacturer world, but by and large, you know, TVs and refrigerators and air conditioning and cars and they get better and better, it seems like over time,

and by and large, they do get cheaper even with the recent disruptions. But why are the parts of this economy that I think everyone considers to be crucial and sort of things related to child care, care work, elder care, which is going to become a bigger and bigger crisis or issue for the economy, the baby boomer generation ages. These have been broken for people for a long time. And there's no like end in sight. There's no like, oh, it's going to finally normalize because the pre-COVID trend was so bad.

Yeah. Are we pivoting from goods to services? Is that what's happening here? I think we are doing a little pivot. All right. Well, let is, but yeah, we need to talk about this more. And so I'm very excited about our guest today. We're going to be speaking with Nancy Folbray.

She is a professor emerita of economics at UMass Amherst and director of the program on gender and care work at the Political Economy Research Institute. Professor Fulbray, thank you so much for coming on odd lots. Thank you. I'm really looking forward to it. So let's just start with, like, the premise of this conversation, because I, you know, we discussed it as this is a care work. And that encompasses multiple things. It feels like an area that's been broken in some sense for long before the pandemic. But I'm curious, like, A, do you accept that premise that broken is a good way to think about it. And how would you characterize the sort of, you know, what is what, what have we seen for years in this sector that feels wrong to people?

You know, I kind of agree with the broken word. But I think that analyzing it completely in terms of markets, even in terms of market failure, is a little bit misleading. Because what's really interesting about care provision is it evolves a lot of paid work, but also a lot of unpaid work. and also a lot of government provision. And it's the way that all of those sources of provisioning interact, I think, that give it some very particular characteristics. In addition to the kind of characteristics of services in general that make it different for manufacturing.

Well, on that note, maybe talk to us about the landscape of child care in the U.S. and what it looks like now, because my impression is, you know, there is some government support, some families get subsidies, but for the most part, you're talking about a sort of network of primarily very small independent child care centers and or people who are doing this work for free for their families, if you have a family member who's maybe looking after your kid or a friend's kid or whatever. So talk to us about what it looks like currently. Well, right now it's pretty clear that people are having a hard time finding the child care that they need outside of the home and also that it's become increasingly expensive to do it. And it's clearly making life difficult for a lot of families and having some adverse effects on children as well.

I think it's particularly consequential for women who are often more constrained by child care responsibilities than men are. You know, part of this has to do with just the nature of services that are different than, it's different than producing a good, a physical good. It's long been noted that services are not as susceptible to technical change. The very nature of care means you've got to have some face-to-face hands-on interaction. Maybe technology is going to improve the quality or change the nature of it. But it's basically a pretty labor-intensive and emotionally intensive kind of, kind of, provision. It's one that people really value that's really important in terms of their quality of life and child outcomes, but it's not easy to put it together with a world in which

most families have two need two income earners, so they need some help with child care outside the home. Another thing I think is worth mentioning is that it used to be that parents could rely on a pretty large network of neighbors and Ken to help them out with child care. That's much less true than it used to be. College educated workers in particular are pretty unlikely now to live in the same area as their parents. A lot of job requirements mean that people have to be willing to move. So, you know, there's just less available kin nearby compared to what there used to be, especially in large cities. And, you know, the fact that more women are working means that more sort of potential grandmothers are also working as well.

So that's another constriction and the kind of supply of informal care. So that's one of the things that's driving the problem. So one of the things that's really striking, and you mentioned, you know, particularly, say, in New York City, there's so many people face child care stress. People are tearing their hair out trying to find someone to watch their baby or a young child. and we see these charts of the prices going crazy, and the numbers that people have to pay are pretty astronomical. And yet my impression is that the actual wages of the people who work in daycare centers

or child care centers are low. And so there seems to be, you know, I know you're sort of the idea of a market failure is maybe perhaps not the best way of framing it. But this does feel very intuitively like how people think of a market failure. Why are the costs for the end consumer surging? At the same time, the workers do not seem to be reaping much of the benefit from it in terms of rapid wage gains. You know, one of the most basic market failures that often gets left out of the discussion of market failure is that people can't participate in a market unless they have enough money. So what's happened with child care is as inequality has increased, the demand for child care has gone up and the price of

it has gone up. And what's happened is a lot of low-income families have been just priced out of the market. So they're unable to buy it. So it's kind of like the housing market, which tilted very much towards high-end housing and left us with a huge growing population of homeless people that can't afford housing because low-income housing is so hard to find. So I think that's one of the factors that's driving the problem. But another one in New York City in particular is that, for For a long time, the kind of safety valve was low-wage immigrants who were willing to work under the table as nannies or as occasional babysitters or child care. We don't have very good statistics on what's happened to that supply.

But it's pretty clear that the combination of the pandemic and immigration policy and cultural change in the U.S. has kind of reduced that informal supply that was once kind of helping lubricate the market. But, you know, another factor is that the way the labor market's supposed to work is that when there's a shortage of labor, wages go up very rapidly. But it's really hard to raise wages in the child care industry for a couple of reasons. One is a lot of it at the lower end relies on government subsidies and government, you know, regulated rates and also on funding. And so if the funding stream doesn't increase, those subsidized centers can't pay higher wages, right? So that's one kind of sticky point in the whole process.

But then another one is the example that I was, you know, the point that I was making is that if you have enough money and there's a lot of scarcity, you can you can bid up the prices for kind of individual. providers like nannies, right, without really necessarily going through the daycare, center care system. So it's not, you know, I guess maybe a way to think about it is it's not a homogeneous product. You know, it's coming from all these different sources. And the market failure that you're referring to is kind of a function of a more complex institutional failure, I guess, that's aggravating things. Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute.

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So, I definitely want to talk about inequality inflation or this idea that you have, you know, more price inelastic. Consumers who might be driving up prices for other people. But just before we do, In terms of this idea of child care is expensive, and you might have someone who's paying two or $3,000 a month in New York City or elsewhere, where is that money going to if it's not going to the wages of the workers?

And if, you know, we were doing some prep on this before the episode, if profit margins for a lot of these child care centers are relatively low. Where does all that money go? Yeah. Well, yeah, it's always a good idea to follow the money, isn't it? But I guess one of the points I'm trying to make is that, you know, buying child care services on the informal market, like paying a nanny, probably those rates are going up a lot. Those aren't really part of the Establishment, you know, Bureau of Labor Statistics Establishment Survey. So what we're seeing with kind of low and stagnant wages is child care centers, right, including some that are subsidized through state and local funding. And yet there's this kind of boutique market where people are really, really paying super high prices. And that's not necessarily reflected in the aggregate statistics.

So I mean, and you're sort of just putting together what you're saying. Part of the problem is to even talk about this as a market is there are so many different markets. So you have some people who work as nannies and probably getting paid very well. you have a lot of people who are not getting paid any nominal wage because they're taking care of their child or they're taking care of their grandchild or something in the family. And then you have daycare or child care workers. And so even talk about this as like a market or to say, well, we know that the average wage of a child care worker, it's X, is a flaw right from the beginning because there are just so many different types of ways with which child care is provisioned. Yeah, I think that's a really good summary. Thank you. I want to go back to the inequality aspect because I think I find that really interesting.

And do we have any sense of like the distribution or the distribution like how many, how many workers are moving from, say, working might have been working at a daycare or child care center and now working getting paid much more as a very rich family's nanny? Like what's sense? What is the distribution? and that flow of workers look like. And how much does this sort of extreme wealth of some people and the ability to hire a nanny, or obviously in many cases, or at least some cases, multiple nannies?

How much does that, in your view, sort of affecting the industry overall? Well, first of all, it's a really interesting empirical question. To answer it, you need, basically you need some administrative data that follows people longitudinally. And there's often a lag in our access

to that kind of longitudinal data. I recently worked on a study of human service workers in the city of Seattle, and we were able to get some administrative data showing that when people left human service jobs, including child care for another job, they got a really big pay increase. But that was pre-pandemic and not really very up to date. But another way to think about it is the issue is that there's some selection bias. that is like when you see what's happening to prices and wages, there's a lot, you're, you're not seeing the people that cannot afford to buy child care anymore.

Right. Right. So some people are paying a whole lot more for child care, but some people can't buy it at all. So what you're seeing is, yes, the price is going up because poor people can no longer afford to buy it. So that's why I think the analogy to housing is kind of helpful. You can actually make, you know, affluent families. are willing and able to pay a lot of money for child care and for other care services, right? But families at the bottom are not earning a wage that's sufficiently high to hire somebody to help them with that work

and still be able to pay their other bills. So it's really kind of about a selection bias in the market. That's why I think the housing analogy, you know, kind of works. I mean, how could we how can we have a shortage of housing and a country where we have actually pretty successful and efficient housing industry, but it's building homes for the affluent because the profit mergers hire there. Right. And both of these things, I mean, housing and child care would be considered essential services or things to have in order to live a full, normal economic life and human life. But talk to us a little bit about how we got here. What are the choices that the U.S. specifically made in order to, to create a sort of private child care industry or, I guess, informal economy network?

You know, I don't think there were explicit choices. I think it's kind of the chaotic result of a process of kind of collective bickering and negotiation over who should pay the costs of rearing the next generation. That's why I think it's really important to think about the big picture, like who should pay those costs. And the economics, profession like the social sciences in general has kind of treated child rearing as though it's sort of a, you know, a luxury good. It's a consumption good. You know, having a child that's like having a pet. It's your pet. You should take care of it. It's your business. And now we're beginning to realize that that's a terrible metaphor because raising children is actually a really

important component of economic sustainability, the future labor force, the people who are going to pay the taxes that are going to support us in our old age. So I think it's sort of coming, you know, I think this is becoming, there's more realization about this, looking at kind of the future of Medicare and Social Security, the implications of a below replacement fertility rate. It's like, oh, gee, you know, it's going to be a problem if we don't have a working age population that's big enough to help us meet our needs as we grow older. Can you talk through, suppose, a family that cannot afford child care, either a private nanny or even a sort of a more public option by public,

or a sort of commercially available option at like a child care or daycare center. What happens? I assume the burden of that in many families, you know, overwhelmingly falls on the mother. But what is the cost of that in terms of, okay, you have one mother who is able to find child care, another mother who can't find it or can't afford it in terms of what did the cost to them in terms of their life, in terms of earnings and so forth, from that unequal distribution of available child care? Well, I mean, first, one big manifestation of it is resorting to part-time or temporary work, you know, cycling in and out of the labor force. Like maybe you have an informal child care arrangement cob together with a working schedule and then your child gets sick. What do you do? You figure out a way, you know, you basically have to quit your job.

You might hope that you get unemployment insurance. Then you have to kind of rely on friends and family. And then you go out and try and find another job where you can actually combine that with responsibilities for looking after your kids. Or you look for neighbors or kin who are willing to trade or exchange services for that. that's kind of a stressful and time-consuming process. And, you know, it has pretty significant consequences for lifetime earnings because anybody in the labor market who doesn't have a sort of consistent record of full-time job tenure, it gets stuck at the bottom.

And it's not a real candidate for moving up the occupational ladder. So I think it really contributes a lot to, you know, kind of a serious lack of income mobility from others. I mean, the paradox is that there's a lot of evidence that high-earning mothers actually pay a bigger, quote-unquote, cost for motherhood because when they take time out from their careers, the penalty is very high because their earnings are very high. So they're taking a bigger hit in terms of earnings, but almost all of those women are also married to high earners. and that provides a kind of buffer or safety net that reduces the impact of the motherhood penalty, whereas women who are stuck in very part-time kind of secondary labor market jobs are basically stuck there for life without much opportunity to, you know, once their kids grow up and leave home, they could look for a better job, but they have no employment, you know, their employment history and their employment record kind of condemns them to a pretty low,

trajectory. So just on this note, you know, Joe and I started the conversation talking about the supply chain disruptions that we saw during the pandemic. And of course, the pandemic was also extremely disruptive for the child care industry and for anyone who had, you know, younger children and suddenly had to figure out what to do with them while they were perhaps working from home and things like that. Talk to us about what the pandemic showed about this sort of economic trajectory. because I remember there's been a lot of high-profile research saying, for instance, that the gender wage gap went up during the pandemic because a lot of women had to reduce their hours in order to look after their children and things like that. Yeah, what we know from time use research is that women increased their hours of child care and housework significantly. I mean, men did too, partly because of being at home more, right, but the increase in women's work.

was clearly bigger than that of men. I think there's another finding from time-use research. You know, most time-use research is based on the American time-use survey, which is a really interesting representative sample of the U.S. population that just asks people, you know, what did you do when you woke up? What did you do after that? What did you do then? So it gives us a real sense of how much unpaid work was being performed both before

and after the pandemic. And the survey asked the question, a bunch of questions about active child care. Like, how much time did you spend, well, it's not asking these questions directly, but it's taking the responses that people give to the survey, and then it's coding them into categories. Like, here's the time that people reported feeding their children.

Here's the time that people reported, on average, transporting their children. Here's the time that parents reported, on average, reading aloud to their children. And those active child care responsibilities are pretty, they're pretty binding. But they're not really great that they're not really that high in terms of hours, average hours per day. What's really much greater for a much greater temporal demand for parents of young children is what's called supervisory time or in your care time. the fact that somebody has to be home and available or on call with children.

And so this difference really explains a lot. For instance, when parents utilize paid child care services, they're not really reducing their active childcare that much. They're coming home from work and they're engaging with their kids. They're getting their kids ready to go to school in the morning. There's still a lot of active care. What child care really reduces out-of-home child care, really does for parents is it reduces supervisory constraints.

Okay. It's literally against the law in most states to leave a child under the age of nine or even under the age of 12 alone in a house. So during the pandemic, here's what's interesting. A lot of people were working at home. What the time you survey shows is that supervisory time went way up. Active childcare actually went down. Huh. Huh.

Why is that? Well, I think it's because there's kind of a quantity quality tradeoff. And if you spend all your day with kids around and being available or on call, right, a lot of little small interruptions and a lot of interactions, right? Maybe you feel less need to dedicate two hours to them in the evening, reading aloud or playing games or something like that. It's sort of like childcare kind of spreads out into more diffuse. activities, then, you know, when they're working parents, the schedule is kind of like this huge

bustle in the morning to get the kids off. And then this pressure to pick them up after school, which is a pretty big temporal demand on working parents schedules. But then in the evenings, there's this very concentrated peak of time. Feeding the child, bathing the child, reading aloud to the child, it's sort of like baking up for not having seen the child during the day. there's this very concerted cultivation that takes place. Definitely relate to everything you just said there. I'm curious, though, the value of unpaid child care. And I'm curious, like, A, how do you go about trying to put a number on that?

And B, like, how useful in terms of your analytical framework is trying to put some sort of dollar amount on how much of that exists in the economy? Yeah, I think it's really important because it kind of, of reveals the significance of the care sector of the economy as a whole, taking reports of the number of hours, spent an activity and multiplying them times a replacement wage cost, like what you would pay to hire someone to do that work. But obviously, there are a lot of decisions to make about how to define the time and what replacement wage to choose for that calculation. You know, what you get is not really an accurate estimate, but it's kind of a lower bound estimate. It's sort of saying at the very least, if parents withdrew their services and we had to

pay somebody to take their place, what would we have to pay? So I think it's really careful. I mean, I think it's really important not to suggest that it's, you know, you're capturing the value of parenting. No, no, no, no. You're just, you're capturing some kind of counterfactual question about what it would cost to replace the time that parents provide. And it just gives, well, one thing that it shows, I think is that really the market economy is a pretty, pretty, you know, big, but not that huge chunk of the total economy. So what do we talk about in terms of numbers or like a sort of like, what does it look like? Well, a lot of the estimates are kind of all over the place because they're using different wage rates and different definitions of time. But it's kind of

from between 25% and 40% of GDP is what a measurement of unpaid work comes to. In my work, I mean, I've actually spent a lot of time working with the American Time Use Survey on exactly this question. And what I found is that a lot of estimates only counted active childcare. And they basically ignored time that children were reported as being in my care, the supervisory constraints. And if you include, I mean, which doesn't make sense, what do you hire a babysitter for? You don't hire a babysitter to, you know, provide developmental care, and they're usually sitting there watching TV while or playing the video games while they're supervising kids.

So if you include that supervisory time, it really increases the total value of unpaid work. Or here's a really interesting, just to step back from child care a minute and just ask the question. Of all of the hours that people spend doing work in the United States today, how much of that happens in the labor market, how much of it is paid? And here, for this little mental exercise, we're just going to say, we're going to define work as anything you could pay somebody else to do for you. So it doesn't include leisure. You can't pay somebody to have a good time for you.

It doesn't include sleep. You know, it doesn't include bathing or a lot of personal care. cleaning, gardening, things like that. It's cleaning, it's gardening, it's managing, it's shopping, right? It's 50% of all labor hours in the U.S. Wow. So just on this note, you know, you made the point earlier that having children is important for both the economy and humanity, I believe, for a while. The children are our future.

Isn't that what they said? Yes. You're supposed to sing it. So, right. I won't subject all of our listeners. nurse to me singing. But just on that note, who should bear the cost of child care? I mean, this seems to be the ultimate question. Yes, it is. It is the ultimate question. And it's so seldom that anyone ever asks it outright. So I'm really glad. And I wish I could give you like a

really specific answer. But I think it's sort of a matter of kind of democratic deliberation. I mean, certainly parents should pay a very significant share of the cost of raising children because they're deriving a lot of satisfaction and enjoyments and a lot of, I think, improvement in their own kind of capabilities as a result of being a parent, right? But it's also true that fellow citizens and taxpayers and benefits recipients are also getting some really important benefits from kids. And there's some really interesting efforts to look at this what's called a fiscal externality. You know, like, okay, you're raising a child. We can project what that child is going to pay in taxes over their lifetime. And then we could subtract what we think that child is going

to get in benefits over their lifetime, right? And that net fiscal benefit in the U.S. is pretty high. So, Joe, if you're a parent, you're creating probably, a fiscal, a fiscal externality that in the sense that your child is going to grow up to pay more in taxes than they get in benefits. Setting aside parents versus non-parents or what about, you know, like how much of the answer is to put crudely, setting aside the specific design, higher taxes on the rich to fund the provision of public child care for everyone else, especially when talking about the fact that there's a number, more and more people who are priced out of child care overwhelmingly. You obviously have a growing but small

percentage of the people that can afford one or multiple nannies. How much of that is a simple, on some level, choice of like progressive taxation, either through income or the consumption of child care services to fund it on a more broad-scale basis? Oh, I think that's, you know, a very clear strategy, and it's one that I completely support and arguing for more, basically more public revision of care services and more support for unpaid care by increasing progressive taxes. And, you know, I think that was kind of the motivating force behind the bill back better legislation that was the Democrats proposed in the fall. And I think we can push for that without, you know, having a specific estimate. But there's also this kind of interesting, I think,

philosophical question, which is, well, just how much should the cost of raising children be socialized? We've already socialized them to some extent. The problem is we've socialized the benefits of raising children more than we've socialized the costs. Okay. So the social security system in Medicare has socialized the benefits. So your children aren't going to support you in your old age, but the younger generation as a whole is going to do that. Right. So it has literally, created a redistribution from parents to non-parents. And by non-parents, I don't mean, you know, biologically non-parents. I'm defining parents as people who devote a lot of money and time and effort to raising kids. They're, you know, they're creating a public, you know, a fiscal

externality. And I think that, that provides a kind of, I think, an additional argument for more public support for parenting. Right. Just on this notion, I mean, my, my, my, impression of the existing system is that there are subsidies for low-income families for some child care services. But there aren't a lot, and again, correct me if I'm wrong, I don't think there are a lot of government-run child care centers. And I'm wondering, like, what form should government support for child care services actually come in? Because, again, in America, I can imagine, you know, if you put a proposal on the table saying, we're going to have government daycare centers, I feel like there is a portion of the population who would instinctively

find that dystopian or sinister in some way. And if I can just tack on to that question, why is it that from your view, we've sort of accepted this idea of like, we do have government child care basically starting at the age five. And so it's like once you hit kindergarten or whatever, like there is public school that goes through the end of high school, which, yes, of course, there is an educational component, but every parent knows. A big part of the value is that child care services. So just to tack on, why would it be so controversial to say, okay, we're going to have the equivalent of public school from birth or from three months or whatever? Well, I mean, I think that's a question kind of about the political and cultural climate

and the divisions that have emerged, you know, partly as a result of the very transient inequality that we started out kind of emphasizing. I think it's pretty clear. clear from international comparisons that integrating child care into the public school system is a really good idea. And if we think that the public school system is too inflexible or not responsive to the needs of parents, we should, that should be part of our process of changing the whole thing. I mean, one issue that often gets left out in this discussion is that, you know, ending the public school day at 3 o'clock in the afternoon is a tremendous inefficiency and anachronism as are long summer vacations. And so I think what we should be pushing for is kind of a bigger rethink

of public education and child care that is more kind of in keeping with the technological and economic changes that have occurred over the last 50 years. Or hear me out, we've reduced working hours to match school times. Yes, that should be part of it. And we all have summer vacation. I prefer that solution. Yeah, well, we just take off all. We just take off all. Yeah, I like the idea of everyone just getting it. I grew up with both of my parents were teachers, so it was like they had summer vacation. But yeah, I like this idea.

It is crazy, too, that like this major child care service that the government provides, like, oh, we're just going to take four months off. Parents, good luck, deal with it. Find a camp if you can afford it. It really is crazy. And, you know, yeah, children need time off, but why not give them time off in a different way than, you know, three and a half uninterrupted months? I think there's a lot of scope for thinking about that.

And I totally agree with Tracy's point about reducing, making it easier for people to choose lower working hours. And here again, this is why I think emphasizing the value of unpaid work helps that argument because when you reduce pressure for increased hours of employment, people aren't using that time to goof off or couch. A lot of times they're using that time to take care of their family, to take care of their communities, to volunteer for really good activities. And so this notion that any reduction in hours of employment is a kind of quote-unquote loss of output is just camouflage. You have the desire to help, to make a real difference?

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Context changes constantly. And now Bloomberg is the place to stay on top of it all. Hi, I'm David Gurra. every Saturday and Sunday for the new Bloomberg this weekend. I'm Christina Ruffini. We'll bring you the latest headlines, in-depth analysis, and big interviews, all the stories that hit home on your days off. And I'm Lisa Mateo. Watch and listen to Bloomberg this weekend for thoughtful, enlightening conversations about business, lifestyle, people, and culture. On Saturday mornings, we put the past

week's events into context, examining what happened in the markets and the world. That on Sundays, we speak with journalists, columnists, and key political figures to prepare you. for the week ahead. Join us as soon as you wake up and bring us with you wherever your weekend plans take you. Watch us on Bloomberg television. Listen on Bloomberg Radio, stream the show live on the Bloomberg business app, or listen to the podcast. That's Bloomberg this weekend. Saturdays and Sundays starting at 7 a.m. Eastern. Make us part of your weekend routine on Bloomberg television, radio, and wherever you get your podcasts. Caniske, you mentioned international comparisons about merging the sort of child care or daycare system with the public school.

Who stands out to you? When you look around the world, where is it being done right or where is it being done more equitably? Well, Scandinavian countries have a very integrated system. But the French system is also very appealing because it includes not just a system where preschool teachers earn the same as regular teachers and universal. It also includes all these things like summer camp experiences are built into the school system. And medical care and health checkups are kind of integrated with the school system.

So it's kind of a particular triumph of the French system. But, you know, there's also a lot to learn from what's happened in New York City with de Blasio's expansion of child care, which has raised a lot of interesting questions and points and like a really valuable lesson for the rest of the country. I'm not an expert on the particular features of it, but I know that it's contributed significantly to increase the wages of child care workers in the city and that there's been sort of it's been easier for them because it's now a city mandated, you know, it's now part of the public sector in a sense that's made it easier for those daycare workers to bargain for higher wages. Interesting. This is the universal preschool program, although I think there was some criticism

of it that it actually ended up with some preschool businesses closing because it sort of sucked away a lot of the older kids that preschools actually make money on. Yeah, it's, you know, it's not a total success story, but it is like a really important learning experience. I mean, I think they've also had, they in some ways, seem to have overestimated the constituency for all-day child care. And, So they have a little bit of idle capacity right now. So, yeah, but, you know, we should be, you know, talk about a really good theme for a podcast. You know, that would be a really great one, right?

Just what has happened in the city? What have people learned in the city from this really important experiment? So just going back to the premise of this conversation and the intro where we were talking about, you know, inflation in services versus inflation in consumer goods. and things like that and wages as well. What do you think child care says about the overall direction of the economy? Or can you sort of draw out some big picture economic points based on the child care example? Well, I think we should direct more attention to what I would call the care sector, not just child care, but see what child care and elder care and health care all have in common

and how important they are to the economy. And all three of those sectors involve collaboration between family members and paid workers, for-profit businesses, and government. And they've all evolved in this very ad hoc way that often kind of, you know, rigidifies into kind of institutional inertia that makes them very difficult to change. But one of the things that's been happening, for instance, in the health care, care industry is that hospitals and doctors have begun paying a lot more attention to who the at-home caregiver is. And when they send somebody home from the hospital, who is the person who's going to be

helping with medication? Who is the person who's going to be organizing the post-operative care and so forth? And they have really realized that this is a crucial part of the overall landscape of care provision. that, you know, you can do a really great surgery on somebody, and if they go home to a situation where there's nobody there to be helping them figure out how to take care of themselves and to kind of meet their needs, then they're back in the hospital the next day. So just there's so many different synergies. Right.

And there's so little, relatively little attention to the care sector and what it means. You know, we know that there are the, these really significant changes in mortality in the U.S., the so-called deaths of despair, deaths from suicide, deaths from drug overdose, deaths from alcoholism. And it's so indicative of a kind of toxic effects of something that's going on in the economy. And, you know, it's very consequential. It's not just a huge loss of human life. It's also, you know, just a tremendous loss to families and communities to have this.

kind of, I think I would describe it as a destruction of the social climate. There's something about the social climate that's just creating a lot of stress and mental illness. And I think care provision, you know, ineffective care provision is part of that. Part of it is that families are less stable. Part of it is that families get less support. Part of it is that people are just very much isolated and, you know, disembedded. from their families and communities. And it's so important to see that as an economic as well as a social problem.

I just have one last question. You said something interesting about workers with public provision of child care, workers able to gain more bargaining power. And a theme that we've talked about recently is that bargaining power sometimes comes when you have a sort of single purchaser of the labor. And so whether it's workers in Amazon warehouse is being able to organize the warehouse sector because they can point to Amazon or even tenants being able to organize because of institutional landlords on Wall Street, the fact that child care is so fragmented, the fact that many of them are in people's living rooms or small businesses with five employees or so forth, how much does that make it harder for workers to organize and sort of, whether it's collectively bargain or just push for higher wages into some manner because. the, because the industry is just so fragmented. See, it's a good question.

I don't really know exactly how to, how to parse it. I mean, I would say first that there are some evidence that public schools are kind of a monopsony, and then one reason that teachers are so poorly paid overall in the U.S. And their pay has declined in relative terms recently. It's partly that, you know, political, the political climate has led to cuts and funding that have made it very difficult for them to bargain, even though there are. very effectively unionized. And even though they've had a few kind of union successes. So I think, you know, there's sort of a big question mark about the efficacy of public sector unionism if

voters and if, you know, people in general don't, you know, aren't convinced that spending on care provision is going to pay off for them and for the economy as a whole. So I think that's why I'm, you know, I tend to hammer on the look like everybody. would benefit, everybody would benefit. But I think the biggest, for people, for workers in small childcare or family daycare centers, I think a bigger obstacle for them is that they know that the demand is very elastic. They know that if they ask for wages, that the company, for higher wages, that the center they're working for is going to lose clients or lose customers. And a lot of studies of the child care workforce show that they feel very caught by this dilemma. Like, gosh, I really need

higher wages. But if they paid us higher wages, these families wouldn't be able to afford to pay for these services. And I think that's a particular dilemma of providing services for a low, you know, a low to middle income population. Well, Nancy Fulbright, thank you so much for coming on the podcast. Fascinating discussion. Huge topic. that I'm sure we will revisit. And I appreciate you joining us. Yeah, it was fun to talk. Thanks. Thank you.

Thanks so much, Nancy. That was great. Tracy, I thought there were a number of really interesting themes from that. I mean, one is, I think, just simply this idea of like how hard it is even to talk about, like, a child care market or a child care wage or a price that people pay for child care. Just given the plethora of different options available, whether it's nannies, public centers, private centers. you know, subsidized centers, family work, et cetera, just like even describing what the industry is is clearly a challenge. Totally. And I feel like we actually need to speak to a preschool manager or something because I'm still confused. I met one recently. Oh, really? Yeah, I think we have a guest. I'm still confused about where the money is going. You know, people are paying thousands a month.

Where is that actually going, if not to the wages of the carers? I suspect it's going on things like rent and maybe like regulations and things like that. But I would love to talk more about it. And then the other thing that stood out to me was this idea of inflation inequality, which is something that's been coming up a lot recently. I think the New York Times called it the gentrification of the economy. So this idea that businesses are increasingly catering to, as the wealth gap gets bigger, a portion of the population that is more price inelastic and that can afford these services. And that kind of gets to Nancy's point as well about how we're only really seeing part, of the data set, right? Because people who cannot afford these prices are just not paying for child care. Nancy brought up the comparison, but the comparison to housing seems really apt. And we've done episodes, it's like no one wants to build a, quote, start her home, unquote, because there's just so much more money to build premium houses, to build, you know, premium multifamily apartments. And so things like that. And so, you know, one of the things is that it sort of drives home, like,

inequality is costly. It's costly for society. And, you know, You know, people, like I think, you know, in our system, we sort of celebrate getting rich, et cetera, and, you know, that seems fine. But, like, there is a cost to having so much concentration of wealth in certain hands such that it, you know, can diminish the pool of available child care, which then gets to Nancy's other key point, which is, like, part of the reason it's not a market is because there is, like, a social positive externality towards, like, raising children that, like, everyone benefits from. I think she called it a fiscal surplus. Fiscal externality. Fiscal externality that is like just sort of not there in most things that we call like a market. The other thing, I wish we'd been able to talk a little bit more about, but the choices that go into the current system. And I totally take Nancy's point that probably there wasn't anyone, you know, thinking about this specifically over the course of 50 years and coming up with the coordinated, holistic approach.

But I do also think one of the reasons we got to the current system is. is because of, let's say, complicated attitudes towards women actually working, you know, 30 or 40 or 50 or 60 years ago. Yeah, there's so much. And just even this question of like, well, what is, what Congress is Labor, which I thought was an interesting sort of discussion that I hadn't really thought of in terms of like, okay, there are things that we call like active child care parents? And then there are things that's like, are you just there to like sort of supervise them? pretty like deep questions that are sort of intensely cultural that sort of perhaps inform like how these, how the system evolved in the way it did. Absolutely. Shall we leave it there?

Let's leave it there. All right. This has been another episode of the Odd Lots podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway. And I'm Joe Wisenthall. You can follow me on Twitter at the stalwart. Follow our guest, Nancy Fulbray.

She's at N. Fulbray. follow our producers, Carmen Rodriguez at Carmen Armin and Dashel Bennett at Dashbot, and check out all of our podcasts at Bloomberg under the handle at podcasts. And for more Odd Lots content, go to Bloomberg.com slash Odd Lots, where we post transcripts, we have a blog and a newsletter, and you can even check out our Discord where we chat 24-7 listeners hanging out. Go to Discord.g.g. slash oddlots. Really fun conversations there. Thanks for listening. You can get the news whenever you want it with Bloomberg News Now. I'm Amy Morris. And I'm Karen Moscow here to tell you about our new on-demand news report delivered right to your podcast feed.

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