The Spending Bill Is an Attack on Work and Marriage

Casey Mulligan argues there are significant disincentives to marriage written into the current Build Back Better proposal, "...A single mother earning 75% of the median household income in her state would pay nothing for child care, regardless of how much the child’s father earned. But the father’s income counts if he is legally part of the family. A husband and wife who each earned about 75% of the median income would have to pay thousands for the same daycare. In 2022-24, the married couple would pay full price, which would likely exceed $15,000 a child a year—$30,000 for two children under 5....Meanwhile, more kids will come home from a regulated child-care facility to an unmarried parent who is out of work. More families will be willing to tolerate this kind of care, regardless of the quality of cognitive or social development, since the price is “free.” Quebec imposed “quality” regulation on its child-care market, which, a landmark study found, led to “increases in early childhood anxiety and aggression” with “little measured impact on cognitive skills.” Kids exposed to the program suffered “worse health, lower life satisfaction, and higher crime rates later in life.” The Affordable Care Act taught us the hard way that nice-sounding bill titles don’t necessarily translate to sound public policy. Anyone looking inside Build Back Better will see incentives that work against Americans who want to build stable families...."

Casey Mulligan, "The Spending Bill Is an Attack on Work and Marriage,"Wall Street Journal, October 31, 2021, https://www.wsj.com/articles/spending-build-back-better-marriage-single-mother-unemployment-welfare-childcare-11635706221

The Spending Bill Is an Attack on Work and Marriage

America’s children have suffered from ill-advised public-school closings. Now Democrats want to compound the damage with their welfare spending bill, which would push fathers out of family life and move mothers and fathers alike onto unemployment rolls.

Take Section 23001 of the latest draft of the Build Back Better bill, released on Thursday. It would create a large new federal child-care program. For each year that a couple has children under 5, being unmarried could easily save them over $10,000 annually in child-care costs compared with being married.

That’s because of how the subsidies are structured. A single mother earning 75% of the median household income in her state would pay nothing for child care, regardless of how much the child’s father earned. But the father’s income counts if he is legally part of the family. A husband and wife who each earned about 75% of the median income would have to pay thousands for the same daycare. In 2022-24, the married couple would pay full price, which would likely exceed $15,000 a child a year—$30,000 for two children under 5.

Child care is one of several provisions that would encourage even middle-income people to think seriously about single parenthood. Several Republican senators wrote to Majority Leader Chuck Schumer to object to the new marriage penalties built into Democrats’ proposed reforms to the Earned Income Tax Credit. There inevitably will be marriage penalties baked into the $150 billion the bill would spend on “affordable housing,” details to come.

Democrats will claim that their new bill at least encourages work by making child care free, but that refers only to a narrow slice of the population. Most families, especially those that don’t qualify for a full subsidy or that have older children, will pay more for child care. One reason: Under the heading of “quality regulation,” the bill requires that child-care workers be paid a “living wage” and that their earnings be “equivalent to wages for elementary educators with similar credentials and experience.”

The precise meaning of that would be left to regulators, but according to the Bureau of Labor Statistics, elementary-school teachers earned an average of $63,930 annually in 2019, compared with $25,510 for child-care workers. By that benchmark, child-care facilities would need to pay workers 151% more. Perhaps child-care workers would be required to hold master’s degrees, or be represented by unions that could otherwise limit supply as they do with kindergarten teachers.

The new child-care program and various additions to major safety-net programs such as Medicaid and “affordable housing” also discourage work. As one’s income from working increases, the amount offered by these benefit programs decreases. The marginal tax rate on working an extra hour, day or week, or improving your skills, can be extremely high.

The revised bill also allows even America’s highest-income households to receive subsidized ObamaCare insurance as long as they can’t get coverage at work. Some Americans will retire earlier or spend more time between jobs. Much of the lost wages will be replaced by more-generous ObamaCare subsidies at taxpayer expense.

I estimate that the several implicit employment and income taxes in the revised bill would increase marginal tax rates on work by about five percentage points. I expect that such a change, over five years, would reduce full-time equivalent employment by about 4%, or about five million jobs.

Meanwhile, more kids will come home from a regulated child-care facility to an unmarried parent who is out of work. More families will be willing to tolerate this kind of care, regardless of the quality of cognitive or social development, since the price is “free.”

Quebec imposed “quality” regulation on its child-care market, which, a landmark study found, led to “increases in early childhood anxiety and aggression” with “little measured impact on cognitive skills.” Kids exposed to the program suffered “worse health, lower life satisfaction, and higher crime rates later in life.”

The Affordable Care Act taught us the hard way that nice-sounding bill titles don’t necessarily translate to sound public policy. Anyone looking inside Build Back Better will see incentives that work against Americans who want to build stable families.