NCPA - National Center for Policy Analysis

Hidden Barriers to Achieving Both Quality and Profit in Early Care and Education

July 12, 2012

Today, more than 12 million (or 62 percent of) U.S. children under five years old are regularly cared for by someone other than a parent. From a policy perspective, early care and education programs for these children serve two broad purposes: they help children develop in ways that support educational and economic success, and they facilitate parents' full participation in the workforce, says Todd Grindal, a doctoral candidate at the Harvard Graduate School of Education.

Currently, public-sector entities such as state prekindergarten programs are often able to meet much of the developmental need. However, they are largely deficient in enabling parents to return to the workforce, especially for parents of children age three or younger. The private sector can be instrumental in filling this void.

The private sector has been undercut in this endeavor, however, by an oversaturation of the child care market by cheap, public-sector options.

  • It is difficult for formal for-profit centers to compete with free or reduced-cost public options for four-year-olds, as they lack the financial reserves made available by government funding.
  • This is further exacerbated by the largely unregulated home-based informal care, which also limits the size of the market available to the private sector.
  • The problem with this status quo is that these sources of services do not adapt to the needs of working parents: they are resistant to expanding care for three-year-olds and younger, and often have other conditions that undermine parents' efforts to return to work.
  • By offering extended hours or convenient work-site locations, for-profit private sector options have shown themselves to be more adaptable in this regard.

Additionally the private sector has suffered because public policies have not offered parents sufficient oversight into their operations. The implementation of such measures would further stimulate their entry into the market.

  • Because parents are often unable to effectively discern program quality, some providers may not invest in some essential but subtle elements of program quality.
  • Lawmakers can provide parents with a clearer picture of program quality through quality ratings systems (QRS), which measure key indicators of program value.
  • These QRS indicators could then be linked to tiered public reimbursement for quality improvement efforts while simultaneously offering insight for parents.

Source: Todd Grindal, "Unequal Access: Hidden Barriers to Achieving Both Quality and Profit in Early Care and Education," American Enterprise Institute, June 27, 2012.

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