Subject: Re: Fox News Freaking Out
One way, I would think, would be for corporations to analyze their personnel turnover and see what portion of it might be attributable to “has small children.” Just as Henry Ford reduced his turnover by 75% with his $5-a-day gambit leading to less downtime, less training time, and better output, this might be a cost which could be absorbed and still lead to better productivity and a happier workforce.

Oh, no doubt. Lots of companies offer on-site daycare as a perk. That's not what I was referring to in "solving for that." I was referring to solving for the ever-increasing cost of daycare, relative to the economy.

This is the Baumol effect, or Baumol's cost disease. The production of many (most?) goods and services in an economy can be made more efficient over time through the application of technology (which includes both equipment and developing better practices). IOW, productivity for most workers in an economy increases over time - you can get the same output with fewer worker-hours. Hence, the Green Revolution and the shift of most workers out of agriculture and into other areas of the economy.

However, for some specific things it is literally impossible for efficiency to improve. They will always require exactly the same amount of labor input no matter what happens. The classic example is a string quartet: it takes the same number of musicians to perform a string quartet today as in the 1600's. Link at bottom of post. Early childhood daycare isn't as pure an example as a string quartet, but it's pretty close. The youngest of children simply require a certain number of humans to care for them, and there's no way to really reduce that number through efficiency or technology.

What Baumol pointed out is that these sectors of the economy inevitably get much more expensive over time, because their input costs (mostly labor) keep going up as wages in the overall economy rise, but their productivity never does. Wages rise because other sectors of the economy (like manufacturing) get more efficient, and because of cross-elasticity of demand for labor, the wages of the low-efficiency sector have to rise as well - even though the sector isn't any more efficient.

This is why "stuff" gets cheap and "services" get more expensive as economies get richer and grow. Daycare is a service, and one that can't be made more efficient, so it's just going to get more and more expensive going forward.


https://en.wikipedia.org/wiki/...