If child care is so expensive, why are child care workers paid so little?

Make Me Smart July 13, 2022 transcript

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Amy Scott: How much longer are you caretaking? Oh hey, sorry.

Kimberly Adams: Hey, I’m Kimberly Adams, welcome back to Make Me Smart where we make today make sense.

Amy Scott: And I’m Amy Scott, in today for Kai Ryssdal. Thanks for joining us for Whaddya Wanna Know Wednesday, which means it’s time to answer some of the questions that you, our dear listeners send us.

Kimberly Adams: And if you have a question about the economy, business, technology, email us at makemesmart@marketplace.org or leave us a voicemail, our number is 508-U-B-SMART.

Amy Scott: All right. Let’s go to the first question of the day, shall we?

Mark: Hello there, Make Me Smart team. This is Mark calling from northern Idaho. And I would like you to make me smart on money in politics as in money equals speech. I believe that there were Supreme Court rulings that basically codified money is speech. In light of Justice Thomas’s opinion about revisiting various precedents. Would this be a good one for us to revisit? Thanks for making me smart!

Kimberly Adams: That’s interesting. So just a little bit of context there. What he’s referring to is Justice Clarence Thomas’s opinion in the Dobbs decision that overturned Roe v Wade. In his concurring opinion, where he agreed with the ruling but had different reasons, he said that he thinks there are lots of established precedent cases that the Supreme Court should revisit. And he listed a few which freaked people out. But not this one, oddly enough… because the decision you’re probably talking about is known as Citizens United versus the Federal Elections Commission. And that was in 2010, when the Supreme Court said that corporations and unions could basically spend as much money as they’d like on political candidates, as opposed to having sort of campaign contribution limits the way that you and I do or some other groups do. And at the time, there was a lot of hype over the decisions treating corporations as people, and Mitt Romney very famously said, corporations are people, I believe. Which, if we had had memes back then, it probably would have been meme-d forever.

Amy Scott: Totally.

Kimberly Adams: But election campaign finance experts say that in the years after Citizens United, individual millionaires and billionaires, not corporations, were the dominant political giving force. Just 10 donors – just 10 – accounted for more than a billion dollars over the decade, according to the Center for Responsive Politics. And that is in part because there was a later Supreme Court decision that basically applied the Citizens United logic and expanded it even further, allowing the creation of what we now know as Super PACs and dark money groups, where these groups can take unlimited amounts of money from individuals or corporations, as long as they don’t give it directly to a candidate. And so Stephen Colbert very famously spoofed this, which is that as long as you don’t coordinate directly with the candidate. But sometimes as we’ve talked about in the show, candidates will even put guidelines on their websites available to the general public with the messaging that they want. So basically, you end up with even more money funneling into politics, and you have dark money groups where their organizations don’t have to disclose their donors, and they can spend as much money as you want. You have no idea where that money’s coming from. Now to the actual question, whether or not the Supreme Court is going to revisit Citizens United in light of their fresh perspectives on established precedent, doubtful. Given the political leanings of the court, and the conservative majority, there is little to no appetite, it seems, to revisit these things.

Amy Scott: Yeah. Should there be? Well, that’s another question, right? And a lot of people think that this decision was catastrophic for democracy and that indeed money does corrupt politics, regardless of where it’s coming from. So yeah.

Kimberly Adams: Do you remember when Obama called out the Supreme Court during his state of the union over this? And everyone was so horrified that a President of the United States would publicly challenged the Supreme Court. That was our version of a scandal back then.

Amy Scott: Oh, those were the days.

Kimberly Adams: All right, we also got this question about the baby formula shortage.

Sarah: Hi, my name is Sarah. And I’m from Atlanta. And I was hoping you could make me a little bit smarter about the formula crisis. We’ve discussed the ongoing shortages of different items. But this seems a little different. And the primary cause and ongoing effects of it. It’s all just a little confusing. Thanks.

Amy Scott: Yeah, I get it. I agree. And so, thanks to our producers for kind of simplifying this for us. The current baby formula shortage really stems from two issues, and one is the supply chain disruptions due to the pandemic that have caused all kinds of other shortages. The ingredients used to make baby formula and also labor shortages have contributed to this. But then the second issue is there was a recall of infant formula due to reports of bacterial infection in babies. And that led to the closure of a big baby formula manufacturing plant in Michigan, run by Abbott Nutrition, one of the big companies that provides baby formula. And so because there are so few makers of formula in the United States, and we’ll get into that a little bit more, when one plant shuts down, it causes significant problems. But a lot of this stems from the fact that it’s just a very concentrated industry, there are just four companies that dominate the market here in the United States, including Abbott Nutrition, the owner of that plant that was closed in Michigan. And to keep costs low, the companies only operate a handful of plants across the US. So if one goes down, it’s a big deal. I think there’s a bigger question as to why there is a monopoly. And this is kind of interesting to me. One is the regulations that make it hard to import baby formula, but also, the government. The US government is one of the biggest customers of baby formula. It buys a lot of formula to help families that are on the WIC program – Women Infant and Children. And because of that, supermarkets give preferential treatment as in shelf space to the formula that has the WIC contract, and pediatricians also tend to recommend the WIC approved formulas, so that limits the players in this industry. Now, the government has taken some steps to get more formula to the market. And it appears, according to Politico, that that shuttered Abbott plant has restarted operations, although it was kind of quiet, so maybe help us on the way. But yeah, if you are trying to feed children, feed babies, and you rely on formula, this has been a huge crisis.

Kimberly Adams: You know, this story has been such an example of why inflation is such a complicated issue to address in this economy. Because the reasons are so multifaceted. It has to do with supply chains, it has to do with labor, it has to do with, you know, health code violations and things like that. And you can address any one of them and still not necessarily solve the problem, and lead to shortages, which can lead to price increases. It’s pretty wild.

Amy Scott: Yeah, it’s like the tide going out and revealing who’s wearing shorts. Sorry, I know it’s a gross analogy, but it reveals so many problems in the system. And I think fixing that is going to be really challenging, as you said. All right. So let’s go to Mark in California, he emailed us and says, on Friday, Stephanie Hughes had a story on Marketplace about how people are leaving the childcare industry because it’s poorly paid. But as someone who once had a child in childcare, I can tell you that it’s very expensive. So where does all the money go? Insurance? Profit? Kimberly, want to take that one?

Kimberly Adams: I imagine like every parent in America has asked this exact question. And the same thing happens actually with elder care or people who need someone to care with someone with disability at home that needs additional assistance. The care is very expensive and yet the workers are very poorly paid. And this has to do with, you know, with childcare at least many states have regulations, and there are federal regulations about it, but having a certain number of caregivers per child, which means that you have to have a lot of staff on hand. And that can add up really quick making labor, one of the most significant costs for providers. There’s also location, you know, you want childcare that’s maybe close to where you work, or close to where you live. And if you’re in a city in particular, that can be really expensive. And so you need to have certain amount of square footage, again, regulations and things like that, and rents are not cheap. Even some of the in-home providers spend money upgrading their space, to make sure that it meets regulation and safe for kids. And of course, you have to carry insurance, it’s a huge liability to take care of other people’s kids. And those liability insurance policies are pricey, and oftentimes they don’t cover like damage to the facility, and so providers have to buy additional insurance on top of that. Then there’s maintaining the facilities, there’s marketing, there’s job training, and other expenses. And, you know, it adds up, and it makes it challenging. Many childcare providers aren’t necessarily in the business for the money. A US Treasury report found that most for profit child care facilities operate on a razor thin profit margin, we’re talking about usually less than 1%. So probably not just in it for the money. But yeah, it’s a huge issue. And you know, in some of those various COVID Relief packages, they really were pushing to boost funding for these sorts of things. And, honestly, this has been one of the things that has kept a lot of women in particular from returning to the workforce.

Amy Scott: Yeah. And it’s one of those – I mean, it’s just such a conundrum, because it’s too expensive for most families, and not expensive enough for the people who are providing the care. And I say this as someone whose mom worked in early childhood education, you know, so I grew up watching my mom not earn very much to do such important work. And I think it says a lot about how much we value or don’t children in our society, that individuals bear that cost.

Kimberly Adams: And also how much we value work that is typically associated with women. And many of these caregiving roles tend to have extraordinarily low wages. And that’s a whole other show. Anyway.

Amy Scott: Yes. A whole other pod.

Kimberly Adams: It’s a whole other show. Okay, um, we are kind of running low on time. So why don’t we go to the last one. Amy, why don’t you take that one?

Amy Scott: Okay, this is an email from Paul in DC, who had a question related to last Friday’s show, he said, Kimberly had a Scotch, but didn’t say which one it was. As someone who’s just getting into scotch, what were you drinking? And do you have any you recommend?

Kimberly Adams: Oh, you know, of course I do. Of course I do. Paul, Paul, Paul, Paul, Paul. Yes, I was drinking… this was when I had this cocktail called a rusty nail, that was Scotch and Drambuie and it was very strong. It actually made my eyes water a little bit. I have not had another one since then. It was something. So now I have this big bottle of scotch that I just got for that, but it was Laphroaig. But I’m actually more of a whiskey person than a Scotch person. And I really love a good Irish whiskey. And my favorite one is called Green Spot. And most places in the US don’t necessarily carry it. I first tried it on a trip to Ireland. And so like, every so often, I’ll see it at a bar and I’ll be like, I want that! It’s called Green Spot. And the same company has like Yellow Spot, Red Spot, and like all these different… Blue Spot. But the Green Spot is the one that I like. Yeah, what about you?

Amy Scott: Well, I’m more of a bourbon person myself. Although I’ve have been known to enjoy a glass of Dewar’s. My tastes are pretty… I mean, really, I’ll take anything. I like Maker’s Mark. Bullet. Basil Hayden… I really like those little bottles. Yes, I’ve tried for roses. It’s delightful. Yeah, pretty easy. It’s got the word whiskey in it.

Kimberly Adams: It’s like, yes.

Amy Scott: Let us know, Paul, what you come up with as you explore scotch, I’d like to know more.

Kimberly Adams: Yes, and whiskey. And everybody else too, let us know what your Scotch whisky recommendations are. But for us, that is it for today. Thank you so much for listening. Amy and I will be back tomorrow with more news and hopefully a little something to make you smile.

Amy Scott: In the meantime, keep sending us your questions. You can email us at makemesmart@marketplace.org. Or leave us a voicemail at 508-U-B-SMART.

Kimberly Adams: Make Me Smart is produced by Marissa Cabrera. Olivia Zhao is our intern. Ellen Rolfes writes our newsletter.

Amy Scott: Today’s show was engineered by Juan Carlos Torrado. Ben Tolliday and Daniel Ramirez composed our theme music. And our senior producer is Bridget Bodnar.

Kimberly Adams: Ben and Daniel, I miss them.

Amy Scott: Yeah, me too.