Our straitjacket of rules and spiral of subsidies has demonstrably failed; time to give families flexibility
Debates surrounding childcare policy often become emotionally charged. This is understandable given that discussion of the research often hinges on the question: “Is daycare good for kids?” It can leave parents who keep their children at home, or those who rely on out-of-home childcare, feeling they are being told they are doing something that is not “good” for their child’s development.
One step toward a more productive discussion is removing this question from the debate entirely. It is not only emotionally loaded, it is far too broad to be useful. Every child, family and childcare center is different. Some children will thrive in formal early learning centers, while others will do better and be happier staying at home.
Instead of fighting about whether childcare is “good” for kids in some global sense, we should recognize that families have different needs and that public policy should support Wisconsin families rather than encouraging one choice over another.
Unfortunately, Wisconsin policy is currently failing this test. The childcare sector is highly regulated in ways that drive up costs without clear evidence that the related regulations improve safety or quality. Then, state subsidies to address those costs only exacerbate them. A recent study published by the Badger Institute and authored by Angela Rachidi provides a detailed overview of this problem.
One issue identified by Rachidi is the state’s YoungStar quality rating system for childcare providers. A detailed validation study found that its ratings meant little. As Rachidi writes, “The time, effort and cost required to achieve higher quality ratings resulted in no better school readiness for participating children.”
YoungStar’s ineffectiveness points to a broader problem with childcare policy in Wisconsin and much of America. Well-meaning regulators and lawmakers, seeking to ensure quality and transparency for parents, can create rules that raise the cost of care without clear evidence they produce the intended benefits. In trying to help working families, governments can make childcare more expensive.
This creates a cycle in which elevated costs generate calls for additional subsidies, even though subsidies do little to address the underlying cost pressures created by regulation, instead passing them along to taxpayers. Further, Rachidi shows that government subsidies, including in the childcare sector, have been an important contributor to inflation in recent years.
Rachidi provides a roadmap for breaking this cycle of regulation and subsidy, which imposes substantial costs on families and taxpayers.
First, she encourages lawmakers to pursue regulatory changes that increase diversity in the childcare sector and expand supply by making it easier for informal and family-based care providers to operate.
Second, she encourages the state to help families access a wider range of options through alternative forms of assistance, such as education savings accounts that can be used for early learning. She also points to models in Arizona and Florida that give parents more flexibility over government spending directed toward their childcare needs. These approaches show how public funding can be structured around parental choice rather than limited to providers participating in YoungStar, as is currently the case in Wisconsin.
Finally, she calls for a comprehensive review of childcare regulations to determine whether they clearly pass a cost-benefit test. This would include reviewing YoungStar’s quality rating system with the goal of supporting quality care while reducing unnecessary compliance costs.
There is no need to settle the exhausting and emotionally loaded question of whether childcare is “good” for kids. What matters is what works for specific families. Wisconsin should focus less on subsidizing heavily regulated center-based care as the primary mechanism for helping families meet the costs of raising their children and should instead encourage more childcare supply to emerge organically while giving parents more flexibility over how public support is used.
Families are different, and childcare policy should reflect that reality by making it easier for parents to choose the arrangements that work best for their children.
Ben Eisen is vice president of research and policy for the Badger Institute.
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