Market Power

Musings by an academic economist on the power of markets and the power over markets.

Friday, February 25, 2005

To Use or not To Use Day Care. That is the Question

My better 3/4ths went into work early this morning, so I took my durables to "school" (i.e. daycare). My 4 year-old durable went into his classroom first and then I walked my now 3 year-old durable to his classroom. On the way back, my eldest was the leader in the "potty train", a line of 4 year-olds getting ready to go to the can. They left in a big hurrah... lots of noise and activity. One "teacher" was left in the room after the rest had left. She was exasperated. I asked "Is it always like this?"

"Yes," she replied. "My friends ask me 'Why don't you get paid $20 an hour to work here?' "

"Because," I thought to myself, "if you and the rest of your coworkers were paid that much and gave the same sort of care, your 'students' parents wouldn't use the service." The reason we use daycare is because it is our lowest-cost form of caring for our kids. My wife is a pharmacist and I am an assistant professor, and the opportunity cost of one of us staying home and caring for our kids during the day is very high. But if our daycare costs tripled or quadrupled, then one of us (probably me) would stay home with the kids.

A second reason why day care workers are low paid is because many people have the requisite skills to work in daycare - the supply of potential workers is high.