Why the U.S. Should Not Follow Canada's Lead on Child Care

“Democrats will … guarantee affordable, quality child care to millions of working families for less than $10-a-day per child,” reads the Democratic Party Platform. Your friendly neighbor to the north, Canada, has been building such a child care system since 2021. The goal of the system, in the words of the Canadian government, is to “create a Canada-wide system of high-quality, affordable, flexible, and inclusive early learning and child care that all families can access no matter where they live.” What has actually been achieved is a complete destabilization of the sector and increased difficulty accessing child care programs. As the U.S. zeroes in on reducing child care costs this electoral cycle, politicians should definitely not look to Canada as an example. 

First, the basics. In 2021, the Canadian federal budget allocated roughly $30 billion dollars to be spent over five years. Each Canadian province (minus Quebec, which has its own system already) and three territories signed agreements with the federal government. To get the money, provinces must encourage mainly public or not-for-profit child care and bring parental fees down in the licensed child care sector. 

The one bright spot in the system is that child care fees have been lowered, but with a major caveat: this is only for the minority of parents able to access a spot, which sits at just over 30 percent. Other than that, a laundry list of problems have emerged, including but not limited to—molasses-slow child care space creation, other pre-existing subsidies to child care being cut, wealthy people gaining access to the limited spaces, and general chaos in the child care sector. Most provinces are failing to meet the terms of their own agreements with the federal government. 

Examples of problems abound from coast-to-coast. For example, Nova Scotia hired consultants to ascertain the real cost of child care—a valuable datapoint in creating a quality system—only to report one year later that they didn’t yet know. In Alberta, child care providers are mounting rolling strikes and forging a national protest movement to get the federal government out of child care. Across Canada, one could argue there’s a different kind of “strike” happening; many providers are simply leaving child care provision altogether. Overall child care attendance in 2023 was lower than it was in 2019. 

Having established the system’s significant shortcomings, the question is why. There are (at least) three reasons in my view. One is that the Canadian government has gotten the very definition of child care wrong. Another is jurisdictional overreach. And finally, basic economics are proving difficult to thwart. 

The first—getting the definition of child care wrong—sounds irrelevant, perhaps too theoretical. But this has everything to do with the system’s design. Consider that Canadian parents use diverse forms of child care. In 2019, this included but was not limited to parents (40%), relatives (15%), neighborhood daycare homes (12%), preschools and centers (31%) as well as other arrangements in smaller percentages. Canada’s child care system funds only one of these forms—licensed day cares. 

If child care is the care of a child, no matter who does it, then there always has been a robust ecosystem of care in Canada. However, if child care is only licensed care in centers, there will always be a shortage. The government went with the latter definition, choosing to fund only the parents who have a spot in a licensed day care center and pushing families toward that choice. 

Canadian parents use diverse forms of child care. But Canada’s child care system funds only one—licensed day cares. 

A second problem is jurisdictional overreach. Federal leaders want to standardize child care across Canada, but the fact is education and child care remain provincial jurisdiction. While Canada has a population smaller than the U.S., it is geographically large and diverse. Ethnic minorities, of which we have many, often have different notions of what good child care means. As a result, many of the private entrepreneurs providing child care in Canada today entered the sector to provide care for their own communities. These small “Ma and Pa” child care shops are the very ones that do not have the lobbying presence and extra staff now required to navigate the growing government bureaucracy. Neither are they welcome. Private-for-profit child care expansion is deliberately limited by the system’s terms of agreement in every province. This has, in turn, limited the ability of private providers to sign on to the system, or to expand.

Jurisdictional overreach has also created political conflicts. The federal government is but a funder and holds the purse strings. The provinces take the money but are responsible for the outcomes. It didn’t take long for political finger pointing to begin here about who was failing more, with the federal minister responsible for the system laying the blame squarely at the provinces’ feet. 

At bottom, however, the biggest problem is one of basic economics. Subsidizing one form of care inflates demand for it. In a bad economy, the offer of $10/day is too good to pass up. The inflated demand has increased wait lists. Statistics Canada reports vastly more parents are reporting having difficulty finding care in 2023 as contrasted with 2019. 

When the government of Ontario finally released a funding formula in August 2024 to “clarify” how day cares that joined the system would receive their money back, it provided anything but. The document includes specific detail on what costs are reasonable and worthy of reimbursement from the government. One can easily see how quality declines as operators lose control over working quickly and independently. How they order a range of items, from craft supplies to replacing major appliances, is now subject to government oversite.  

Now that the costs belong to government, governments across Canada are already moving to control child care provision costs. It is true that as a truly Canada-wide system, what Canadians got is hugely underfunded. At the same time, no one should be confused into believing the child care system itself is failing because it is underfunded. It’s the way child care is defined and how the funding flows—through layers of bureaucracy—that is the bigger issue here. 

Only a minority of parents will ever defend this system, and it’s the roughly 30% who are already in it. Canadian family policy offers significant advantages; it just so happens this child care system is not one of them. It’s other Canadian policies (direct payments to families and parental leave) that Americans interested in family policy should examine. 

Andrea Mrozek has examined child care in Canada for 18 years, and is Senior Fellow at Cardus Family, an Ottawa-based think tank.