A Benefit-Cost Analysis of Expanding Access to Child Care in La Crosse County
At the request of La Crosse County, we completed a benefit-cost analysis of three potential alternatives to current policy to increase the availability and affordability of child care. Two of these alternatives involve creating new employer-sponsored child care facilities and one entails a wage subsidy for child care providers. Ultimately, on average, none of the alternatives to current policy considered in this report yielded positive net benefits. However, improved access to and affordability of child care potentially promotes equity and other social goals that should be considered along with economic efficiency. A multi-goal analysis could better weigh equity implications and other social values alongside our economic efficiency findings.
La Crosse County’s child care industry faces three primary challenges. First, there is an insufficient number of licensed child care slots available to meet the needs of the county’s families with young children. Second, families with access to child care in La Crosse County are often burdened by the cost of care. Third, child care programs have difficulty retaining and recruiting adequate numbers of staff to meet their full licensed capacity because of low wages.
To address La Crosse County’s child care challenges, we analyzed three alternatives to current policy. Under Alternative 1, La Crosse County would provide grants to incentivize the creation of an employer-assisted child care cooperative. Under Alternative 2, La Crosse County would develop and operate a child care program for use by county employees. Under Alternative 3, La Crosse County would provide grants to child care programs to subsidize staff wages and benefits.
Based on our Monte Carlo simulation, we find negative average net benefits of approximately-$259,000 for the first alternative, with values ranging from -$586,000 to $102,000, approximately -$264,000 for the second alternative, with values ranging from -$591,000 to $97,000, and approximately -$3,717,000 for the third alternative, with values ranging from -$6,359,000 to -$756,000. Accordingly, we recommend La Crosse County consider other policy alternatives to increase the availability and affordability of child care.
Notably, the net benefit estimates would be substantially larger if children from low-income families were targeted under Alternatives 1 and 2. We did not analyze this modification fully; however, it appears that with complete targeting of low-income children, it would be very likely that the first two alternatives would generate positive net benefits. Therefore, this modification to Alternatives 1 and 2 would be worthy of further analysis.
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