Prices are information, yea, even about childcare

We may not like the information contained in prices, we may wish to do something about it, but the one thing we really musn’t do is ignore that information:

For the first time in decades, the number of women not returning to work after having a baby is on the rise.

To find the reason why, we don’t have to look much further than the spiralling cost of a full-time nursery place for a child under two, which has risen from an average of £236 a week in 2018, to £274 in 2022. That means, for many women with two or more young children, the cost of childcare far outstrips their salary. The numbers simply don’t add up.

No, sadly that is the numbers actually adding up. As a society considering the allocation of labour we desire that everyones’ be applied to the highest value use. This is what makes the society as rich as can be, that each economic asset be best used. If childcare for two kids costs more than many earn by putting two kids in childcare then that’s information. That the highest value use of that person’s time is to do the childcare, not the work to pay someone else to do it.

As we say, we may not like this information but there it is, that’s what those prices are telling us. Subsidy doesn’t change that information either.

But a survey of 27,000 parents revealed that childcare costs have forced 43% of mothers to consider leaving their jobs and 40% to work fewer hours.

If childcare getting done is worth more than the work not being done then that’s also the right answer.

The government will balk at the idea of investing millions in the childcare sector, but it is an investment, not a cost: it is estimated that if women’s participation in work was as high in the UK as a whole as it already is in the south-west of England, it could add £48bn a year to the UK’s economy.

And that is failing to understand how GDP doesn’t count household labour. We would indeed increase GDP but only because GDP is the count of monetised transactions. It’s an accounting trick that is.

It’s entirely possible to acknowledge all of this and still come up with different solutions. But we do insist that we’ve all got to start from the information that is being presented to us. If it doesn’t make economic sense for the low paid to be sending their children into childcare so they can earn low pay well, that doesn’t make sense then, does it?