Perhaps government could subsidize just the regulatory part.  For example, the business license, the property taxes, and other "government"-related expenses for running a business.   Bill it more like a non-profit, to help it keep up with the tricky nature of daycare.  (The business model of potentially unlimited sales and thus profit doesn't apply, and every hour spent at daycare competes for an hour of the parents' wages.)  People have to be careful about looking at the entire cost of daycare as a singular expense.  Part of that cost is just covering supplies for the daycare, which a parent would be buying anyway if they were at home.  What the daycare spends on food, for example, is what the parent would have spent to feed the kid themselves if they were home, and bulk pricing might actually make some of those things relatively cheaper in a daycare setting.  So really it's only the daycare staff salaries we should consider an economically tricky expense.