The left's fuzzy math on child care subsidies

Tumar / Shutterstock.com

Article Highlights

  • The way gross domestic product is calculated doesn't include the value of household production.

    Tweet This

  • The shift from in-home to paid employment increased GDP but reduced the value of home production.

    Tweet This

  • I'm for making child care easier for families, by letting parents keep more of their tax dollars to use on that or any other purpose.

    Tweet This

A recent study from the Center for American Progress, a liberal research group, says that the economy would be 11 percent smaller if women worked outside the home at the same rate as they did in the late 1970s.

Bryce Covert, the center's economic-policy editor, argues that subsidized child care would increase women's participation in paid employment even more. And (indirectly citing other work) she says that if women were represented in the workforce at the same rate as men, the economy would be 5 percent larger.

It stands to reason that more people in the paid workforce will make for a larger economy. These numbers, though, probably overestimate how much Americans' livelihoods have improved -- and how much they would improve if women worked more hours outside their homes.

The way gross domestic product is calculated doesn't include the value of household production: the value of unpaid cooking, cleaning, child care and related services in the home. (Pay someone to do it, and it gets counted.) But that value is substantial. One study found that GDP would be 26 percent higher today if such work was figured in, and it would have been 39 percent higher in 1965.

The shift from in-home to paid employment increased GDP but reduced the value of home production. You'd have to net the figures to determine the total effect on living standards. And you'd have to do a similar calculation to determine if higher child-care subsidies would do more than just shift production from the home to the workplace.

I'm for making child care easier for families, by letting parents keep more of their tax dollars to use on that or any other purpose. But if parents could use the money as they like, some of them will use it to reduce hours away from home.

We should remember that GDP isn't everything, especially when it comes to these issues.

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Ramesh
Ponnuru

What's new on AEI

To secure southern border, US must lead international effort to stabilize Central America
image The Ryan pro-work, anti-poverty plan: Thomas Aquinas 1, Ayn Rand 0
image Does SNAP support work? Yes and no
image Obama Democrats lose their big bet on health exchanges
AEI on Facebook
Events Calendar
  • 28
    MON
  • 29
    TUE
  • 30
    WED
  • 31
    THU
  • 01
    FRI
Tuesday, July 29, 2014 | 10:00 a.m. – 12:00 p.m.
Is Medicare’s future secure? The 2014 Trustees Report

Please join AEI as the chief actuary for Medicare summarizes the report’s results, followed by a panel discussion of what those spending trends are likely to mean for seniors, taxpayers, the health industry, and federal policy.

Friday, August 01, 2014 | 10:30 a.m. – 12:00 p.m.
Watergate revisited: The reforms and the reality, 40 years later

Please join us as four of Washington’s most distinguished political observers will revisit the Watergate hearings and discuss reforms that followed.

No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.