child care in cook county - Illinois Action for Children

The 2010 Report of Child Care in Cook County• Public, non-profit, or donorsubsidies of child care, includingwage supplements if any exist.For example, if a religious congregationor a community agencydecides to supply space rent-freeor at a discounted rent, this willgenerally increase the supply ofchild care services in CookCounty.• Regulatory conditions includingbusiness, zoning, child careaccreditation, and licensingrestrictions. These conditionschange little from year to year,thereby not changing child caresupply much from year to year.They can, however, affect theoverall level of child care operations.And in some localities,zoning changes have seriouslyaffected providers.How much child care providerswant to supply in Cook County willdepend on all of these factors. Evennon-profit providers must cover theirbasic costs and respect these restric -tions on offering services. Theamount of care that they actuallyprovide at any given time dependson the income that providers derivefrom this care.USING SUPPLY ANDDEMAND ANALYSISIn economic theory, the price ofchild care services and the amountactually bought is determined bylevels of demand and supply. If thedemand for child care is greaterthan the amount supplied, the pricewill rise as parents seek scarceslots for their children. On the otherhand, if supply exceeds demand,providers may drop their prices toattract more children. That is the socalledlaw of supply and demand.To determine whether or not a childcare market actually works this wayin Cook County would require aspecial study. The key point wewant to underscore here is thatbecause so many factors affectdemand and supply, understandingthe total effect will be extremelycomplex.Supply and demand analysis mustincorporate this complexity in orderto be useful. It must primarily bebased on excellent knowledge ofall the factors identified above asinfluencing child care demand andsupply. Leaving out any factorcould spoil an analysis. Supply anddemand analysis must, moreover,weigh the effects of all the factorsinfluencing the child care marketsimultaneously. So complex is supplyand demand analysis, in fact, thatmost economists rely on sophisticatedstatistical and mathematical tools toperform it.Short of that sophisticated, comprehensiveanalysis, supply and demandanalysis will be very partial or onesided,and when we use it weshould acknowledge it as such. Forexample, suppose we know thatnew child care center licensingregulations will require child careteachers to have more educationcredits in college. We might predictthat salaries of these teachers mustrise to reimburse them for obtainingthe additional credentials, and thatwill increase the cost of providingchild care. Higher costs of providingchild care, in turn, will lower theamount of child care supplied, assome providers will leave the businessbecause they cannot afford topay the newly credentialed teacherswhat they demand. We can concludethat if nothing else is changingin the child care market, lower supplywill drive up the amount parentsneed to pay to find scarcer slots.Too frequently, however, analystsdo not acknowledge what we juststated in the italics above. Theyleave the impression that they havetold the entire story. We shouldalways acknowledge that otherevents in the child care marketmight outweigh the factor we arediscussing at any given moment.Perhaps teacher salaries will notrise that much, or the new credentialswill attract enough new childrento centers to cover the higher costs.Or perhaps in the next month, forexample, the State of Illinois willgreatly increase its subsidies tochild care providers. That will lowercosts and could even reverse theimpact of higher salaries on supply—ifnothing else is changing.38