Quality and the True Cost of Child Care

Abstract

Professionals in early childhood care and education often claim that child care fees do not reflect the true cost of services, because of subsidies and in‐kind contributions. This paper reports results that identify the kinds of subsidies and estimate their importance in seven sites, representing four different kinds of child care settings, in the Denver‐Boulder metropolitan area. The study estimated the importance of five types of possible subsidies in the child care industry: from staff to clients due to abnormally low wages, from noncash and cash contributions, from philanthropic and government sources, and from subsidies implicit in fee schedules. In the average nonprofit center studied, resources that would cost $638 per month were reduced to a net cost (to the family) of $149 because of subsidies. Low wages were the primary factor holding down costs in child care, reducing costs an average of $186 per child per month. Contributions to the centers and subsidies to parents also played major roles. There was substantial variation among the sites, and the relations between cost, client socioeconomic status, and quality of care were complex and uneven.