Demographics 51: Treasury Secretary calls for free college and subsidized child care

Sec. Yellin, who said a year ago that inflation would be mild and temporary, promotes free college and subsidized childcare to address labor issues.

“Programs like free community college and expanded workforce training increase the productivity of our labor force.”

“High-quality, affordable childcare and free preschool increase the likelihood that parents, particularly mothers, will participate in the workforce.”

Source: Janet Yellen Renews Call for Tax Hikes on Rich, Social-Spending Boost – Bloomberg

There is a recent meme that “if only we had more social benefits” we would have a higher fertility rate. This is what they’ve done in the Nordic countries – where they now have even lower fertility rates today, than in the U.S. These programs have failed.

Also left out is the cost of these programs. Danish taxpayers pay 40% to 70% of their annual income as taxes (those are not marginal rates, but percent of income paid).

Each proposal has a lot of moving parts that must be considered. “Free college” opens limits on who qualifies (in Europe’s free education system, you need to begin on a college track in your teens and pass entrance exams to qualify for free college) and paying families to have babies leads to taxation issues. Many Americans view Denmark’s social programs favorably – but would that continue if taxes in the U.S. became 40-70% of annual income for most taxpayers? Politicians initiate policy by sound bites, promoting the benefits and hiding the costs or harms. To make progress, we need honest discussion, but honesty is not a word known to politicians.

Also, free college would tend to keep younger persons out of the work force for 4+ years, just at time when some employers are dropping requirements for college degrees. Hmmmm….