First of all, not all daycare providers are scammers. Let's get that off the table.
No doubt many are doing an important job, if an unfortunately necessary one, because many mothers choose not to or don't have the ability to stay home with their children.
But as daycare expenses skyrocket and subsidies for daycare services leave the state and federal government groaning under the weight of the expense, not to mention the budgets of parents who get no subsidies, who are forced to spend inordinate percentages of their monthly budgets, one has to wonder what has happened to create what amounts to a crisis.
The answer: policymakers, bureaucrats, and unions have conspired to create an affordability crisis an an industry that is rife with outright welfare fraud.
In the last 12 years, the number of child care workers has increased by about 33%, while the number of children ages 5 and under fell by 8.8%. The isn't just a matter of Somali fraudsters. It’s a much bigger story about special-interest politics boosted by ideology and…
— Tim Carney (@TPCarney) January 13, 2026
In the last 12 years, the number of child care workers has increased by about 33%, while the number of children ages 5 and under fell by 8.8%. This isn't just a matter of Somali fraudsters. It’s a much bigger story about special-interest politics boosted by ideology and masquerading as family policy.
In recent years, the number of children in America has declined dramatically (unfortunately), and government spending has skyrocketed at the same time. Massive amounts of money have poured into the industry, and the employment of daycare workers has grown 33%, even as the number of children they care for has shrunk. At least the number of real children has shrunk.
During the pandemic, the number of children in daycare dropped by more than 50%, while at the same time spending exploded. Governors and the Biden administration bragged endlessly about the expansion in spending, while glossing over the dramatic decline in enrollment.
2022. Doctor Jill Biden travels to Minnesota to tout the billions of dollars being spent on child care via the American Rescue Plan. pic.twitter.com/rv3TCiFuU7
— MAZE (@mazemoore) January 6, 2026
Why did this happen? I mean, aside from the massive fraud that is being revealed.
The Washington Examiner did a deep dive into the daycare industry and outlined a trend that many have noticed, but few have thought much about. Daycares are no longer what we once thought they were. They are unionized, organized, and aggressive in exerting their political power to make massive money grabs.
You have probably seen the viral videos of apparently vacant Somali-run and state-subsidized day cares in Minneapolis. You may have seen that New York just announced $15 billion a year in universal child care in New York City.
You probably don’t know that in the last 12 years, the number of child care workers has increased by about 33%, while the number of children ages 5 and under fell by 8.8%. The explosion of the child care industry has persisted even while the number of stay-at-home mothers has risen in recent years.
The story here is not just a matter of Somali fraudsters. It’s a much bigger story about special-interest politics boosted by ideology and masquerading as family policy.
For the past two decades, Democrats have been pumping billions of dollars into the child care industry at the behest of labor unions, who then use the state funding as a lever by which to unionize all child-care workers, including the unwilling.
These same unions, in turn, funnel this taxpayer money back to the Democratic politicians.
When you hear a Democratic politician say they want “universal child care,” or campaign on expanding “affordable, high-quality child care,” you should suspect that they are playing patronage politics with the labor union allies.
This distortion of the market sometimes leads to remarkable results, such as the fact that there are many "ghost" daycares that get massive amounts of pandemic funding to this day from states like California. Despite having their clients disappear during the pandemic, the state continues to pay for the number of children who were enrolled pre-COVID. The stated reason is that COVID disrupted the industry, so in order to maintain the daycares the state stepped in to provide subsidies based on the number of children they SHOULD have had during the pandemic.
These subsidies were just extended into 2026, meaning a daycare with one child (often the providers' own) could get subsidies for 10 or 20 children, as if they existed.
I had to GROK this because I didn't believe it:
— GEMMA6271 (@GEMMA62711) January 5, 2026
- California's 2025-26 budget extends "Cost of Care Plus" monthly payments to childcare providers through June 30, 2026, reimbursing based on authorized enrollment rather than actual attendance, which can result in funding for…
To make matters worse, California has extended COVID-era childcare payments into mid 2026. That means a daycare can have 2 kids now but still get paid as if they had 19 kids like they did before the pandemic. And no, these aren’t tax credits, they’re straight-up checks. There’s talk of extending it. We are talking about 100s of Millions of dollars going to ghost daycares
- California's 2025-26 budget extends "Cost of Care Plus" monthly payments to childcare providers through June 30, 2026, reimbursing based on authorized enrollment rather than actual attendance, which can result in funding for unfilled slots similar to pre-pandemic stabilization grants. - These payments total around $210 million for one-time stabilization plus ongoing regional rates of $107–$230 per child monthly starting January 2026, potentially overpaying providers with low current enrollment amid post-pandemic drops, echoing K-12 "ghost student" funding controversies that cost the state $4 billion in 2024. - The post by , a vocal critic of state spending, amplifies taxpayer waste concerns just as federal HHS paused nationwide childcare subsidies on January 2, 2026, due to fraud allegations in Minnesota, sparking replies decrying Democratic policies.
Billions of dollars are paid to daycares for children who do not exist, sometimes due to fraud, but often because it is state policy to pay for children who only exist on the books.
The Washington Post’s EJ Dionne elaborated: “All three are key to getting things done. In Minnesota, key players included unions, environmental groups and faith-based organizers in the appropriately named Isaiah organization. In the run-up to the session, the outside groups were brought into the task of crafting an agenda.”
That is, Democrats let the outside groups, including the unions, craft their child care policies.
It was telling that Democrats did this with a razor-thin majority. Their aggressive actions in 2023 should be understood in part as a strategic effort to build political strength: funnel more money to their political allies, which will help them win in two, four, and eight years.
Building their political power is explicitly the goal of these outside groups. Isaiah, one of the groups Dionne cited, has “Build Power” in its motto. Isaiah’s biggest project is a program called “Kids Count on Us,” which is a lobby effort to boost state subsidies for child care.
This is explicitly a supply-side project more than a demand-side one. As Kids Count on Us describes itself, “Providers, teachers, and parents organizing together.”
In that 2023 session, the groups also lobbied successfully to extend special COVID-19-era direct payments to child care providers. Called the “Great Start Compensation Support Payment Program,” it is “designed to support the child care and early learning industry and workforce,” according to the legislature. It’s a $100-million-a-year subsidy directly to the industry. This money never goes to parents. It just goes to the businesses, and thus to the unions.
In that 2022 cycle, government unions, such as AFSCME and SEIU, spent more than $13 million on Minnesota politics, with almost all of the money going to Democrats.
You see where this is going, right? Unionize daycares first. Then get the unions to lobby for more money, which in turn hire more employees whose union dues pay for the lobbying and campaign contributions, and the grift goes on. Government officials raise the rates, and pay for ghost children, and it's all perfectly legal, if corrupt as h-e-double toothpicks.
SHOCKER in San Diego:
— Amy Reichert (@amyforsandiego) January 4, 2026
2 out of 2 childcares reviewed so far had ZERO children present during state inspection. ABDULAHI, SUAD FAMILY CHILD CARE had only the owner & her own baby present. Owner was cited for missing school enrollment verification for 6 out of 6 enrolled children. pic.twitter.com/Y5z0reIs2r
And, of course, the public is led to feel virtuous for helping out children and working mothers, many of whom don't actually exist.
It's perfectly sane to focus on the outright fraud that has sprung up around this grift, but it is also a distraction from the deeper corruption here that uses taxpayer dollars in a perfectly legal way to steal billions of dollars around the country. Nobody will get investigated, nobody will go to jail, but billions pour into the pockets of unions and political parties to keep expanding the fleecing of taxpayers.
All while taxes go up, and the deficit explodes. It is a massive wealth transfer.
