Why your children's daycare may determine how wealthy they become

Children who are born into poverty often struggle to escape it. Photo / 123rf.com

Children who are born into poverty often struggle to escape it. Researchers have studied this generational snare for years, concluding that underfunded schools and overworked or absent guardians exacerbate the cycle.

But a recent study from the University of Chicago finds that quality daycare can make a big difference: Low-income mothers with access to good programmes raise children who grow up to earn more money.

In other words, quality childcare, which includes educational activities and healthy meals, appears to better prepare children for school and the labour force. "Supplying the support for low-income families will lead to a larger social return," said co-author and economist Jorge Luis Garcia.

The cost of childcare in the United States can rival the mortgage payment, ranging from about US$5000 on average annually in Alabama to a whopping US$22,000 in the District of Columbia.

It can also be hard to find. An analysis of eight states last year from the Centre for American Progress, a left-leaning think-tank, found more than half of young children in rural zip codes inhabit a "child-care desert," or communities where small children outnumber day-care spots by at least 3 to 1.

This can lead to inconsistent care, especially among poor families.

The University of Chicago study, led by James Heckman, a Nobel laureate economist, tracked children from birth until age 35. Heckman and his team focused on two full-time programmes in North Carolina, which provided free care to low-income children, ages 8 weeks to 5 years.

The researchers followed a group of children who were born in the mid-'70s and received the care, which featured daily educational exercises, and a "control" group that either stayed at home or landed in cheaper or part-time programmes.

They found that mothers who received the free, full-time care made more money while their children were in preschool, and out-earned their peers 20 years later.

When they turned 30, meanwhile, they were out-earning their counterparts in the control group: The girls grew up to make roughly US$2500 ($3563) more per year and the boys made a staggering US$19,800 more.

The programme disproportionately benefited boys, the researchers wrote, because boys who grow up economically disadvantaged are more likely to get suspended at school and land in the criminal justice system.

The findings reinforce the importance of good care in early childhood but lawmakers continue to debate about if and how to pay for it. The North Carolina programmes in Heckman's study, for example, cost about US$18,000 yearly per child. That price tag is out of reach for most working families.

During the US election campaign, President Donald Trump proposed allowing parents to deduct the average cost of childcare in their area from their taxes. Details of how that would work, however, have yet to be released.

Ivanka Trump, now special assistant in the West Wing, has been leading White House efforts to work out a blueprint that the GOP-dominated Congress might embrace. Republicans have generally opposed expanding government benefits.

Lynette Fraga, executive director of Child Care Aware of America, a national organisation focused on the quality of childcare, said politicians should consider childcare an economic issue.

"When you have nurturing, responsive care in early childhood, your brain development is on a terrific trajectory," Fraga said. "It's the building blocks for healthy, long-term outcomes. It's a win for parents, children and the future workforce."