Low-income families least likely to benefit from Ottawa’s multibillion-dollar child-care program

According to Director’s law, named after University of Chicago economist Aaron Director, government spending doesn’t actually help the poor. As described by economist George Stigler, who was the 1982 economic Nobelist, Director’s law is that “public expenditures are made for the primary benefit of the middle classes, and financed with taxes which are borne in considerable part by the poor and the rich.”

The massive ramp-up in government child-care spending since 2021, when the Trudeau government launched the Canada-Wide Early Learning and Child Care (CWELCC) plan, is a prime example of Director’s law in action. While the government claimed the child-care system before CWELCC was “leaving too many children and families behind, particularly low-income and racialized families,” the CWELCC leaves behind the same families.

Since launching the CWELCC, the federal government has spent tens of billions of dollars to subsidize certain licensed child-care arrangements. Which families benefited most? Not low-income and “racialized” (visible minority) families. According to new numbers from Statistics Canada, as of 2023 “regular use of child care was substantially lower among low-income families (47%) than among higher-income families (71%).”

If you count only centre-based child care and licensed home-based child care—and exclude arrangements such as nannies or relatives watching children, which would not qualify for CWELCC money—the proportions drop to 33 per cent for low-income families and 49 per cent for everyone else. In other words, low-income families were far less likely to use the types of child-care arrangements that would qualify for big government subsidies. The same StatCan data show Indigenous (38 per cent) and visible minority children (41 per cent) were less likely than the rest of the population (47 per cent) to regularly use centre-based or licensed home-based child care.

So despite that federal government’s claim that CWELCC would help “racialized” families catch up and help Indigenous families, the program directed tens of billions of dollars to child-care arrangements these families were less likely to use—and which many of them do not want to use at all. (The number one reason for not using child care was that families prefer to have a parent care for the child at home.)

Other data similarly suggest the poorest families have not benefitted from increased government spending. A 2024 poll of British Columbians asked, “Have you or anyone you personally know benefitted from access to a $10aDay child care program?” Only 16 per cent of those with annual household income under $50,000 answered “yes” compared to 18 per cent of households with income between $50,000 and $100,000 and 29 per cent of households with income above $100,000. The same poll found those with household income under $50,000 also suffered longer wait times for child-care spaces.

A separate survey covering two low-income Vancouver neighbourhoods asked about primary child-care arrangements. More than three-quarters of survey respondents had household income under $50,000. What was the most common child-care arrangement? By a wide margin, “parental care only”—which, again, is not CWELCC-subsidized—prevailed over “daycare in a community facility or centre.”

Evidence from Ontario tells a similar tale. In 2025, the province’s auditor general concluded, “Compared to 2019, child-care enrolment has decreased by 31% for typically lower-income families that are receiving the child-care fee subsidy.”

All this evidence raises the key question: Why does increased government spending—whether on child care or other programs—typically not benefit the poor?

The logic behind Director’s law is simple. Government programs typically take money from the rich because they pay the highest taxes, and from the poor because they have the least political power, and transfer it to the middle and upper-middle class where most of the political influence and votes reside.

Contrary to the federal government’s claims, its tens of billions of dollars in increased child-care spending has not benefitted low-income families in a notable way—just as Director’s law would predict.