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How to screw up universal childcare

In New Mexico, a bold childcare plan is meeting hard reality. But it’s not too late to fix things.

After decades of families performing small miracles to afford childcare and sitting for years on waitlists, politicians are finally treating early childhood education like the essential economic infrastructure it is. Around the country, states and cities are pursuing universal preschool and childcare programs. It’s exactly the kind of bold, life-changing social policy that those of us in this field, like myself, have spent our careers fighting for.

New Mexico is embarking on the nation’s most ambitious plan to provide universal childcare by providing parents with vouchers for free enrollment.

But the program is struggling to make good on its promise, because the state isn’t increasing the supply of childcare services fast enough to meet the new demand from parents.

Other countries, like Canada and South Korea, ran into these problems years ago when they tried similar programs. But they also showed how to fix these mistakes, and places like New York City are incorporating their lessons into more recent childcare rollouts.

Unfortunately, the most ambitious new attempt at universal childcare in America right now is in danger of making a mistake that has derailed past efforts: throwing money at parents without providing enough care for them to spend it on.

New Mexico has touted itself as the first state to offer universal no-cost childcare, thanks to a long, 15-year fight led by parents, childcare providers, advocates, and voters. In 2022, they achieved an iconic, grassroots win, unlocking unprecedented, permanent funding for early education through a ballot initiative. This financing victory accounted for the vast majority of the 130 percent growth in the state’s early childhood budget since 2019, enabling the state to more than double the number of children served in its childcare and prekindergarten programs and to make these programs free for families using them.

But the decisions about how to implement the state’s Universal Child Care program have continued to dig New Mexico deeper into policies that have proven elsewhere to fail. In the rush to claim victory, the state has prioritized expanding demand-side subsidies, giving parents vouchers for free childcare. However, by flooding the market with demand without sufficiently increasing the number of actual places for families to bring their children, or by paying educators enough to stay in the field, the state is creating a textbook policy failure.

And if New Mexico stumbles, it could drag down similar efforts around the country.

Why universal eligibility doesn’t equal universal supply

Childcare doesn’t just have an affordability problem; it’s also hard to find, primarily because of high staff turnover and high operating costs. To create a universal system where all families who need care can find it, afford it, and benefit from it, policy must address supply and quality alongside cost.

In most markets, making a service more affordable for consumers and more profitable for producers should trigger an immediate surge in supply. Logic suggests that offering free childcare for New Mexico families would cause new slots to rapidly open as providers look for ways to capture those dollars.

But as Mildred Warner, a Cornell University professor and leading expert on childcare as economic infrastructure, argues, this sector is defined by a fundamental “market failure to generate sufficient market supply.” Warner’s comparative research across three countries — the United States, Australia, and the Netherlands — found the same pattern: The typical way of funding childcare through vouchers boosts parent demand but doesn’t increase the number of slots available. And in rural and low-income areas, it has been shown to shrink it.

“Although it’s universal, it really isn’t accessible across the board.”

The reason, says Taryn Morrissey, a professor of public policy and childcare........

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