Child care subsidies would send 1.2 million women into the workforce, new paper finds

As childcare subsidies as those proposed by the Biden administration were enacted — not the most likely scenarios at this point — a significant number of women would enter the labor market, writes Emily.

Why it matters: Despite the policy’s slim chances, this is an important paper for the longer-term analysis of the issue—probably the first quantitative look at how this type of proposal would affect maternal employment, the cost and quality of childcare, and family income.

  • It also points to a possible solution to the country’s persistent persistent labor shortage.

Details: The researchers, a team of eight economists who study child care and early education, modeled the effects of the proposal in Biden’s Build Back Better plan — which would cut the amount families spend on child care, for children 5 and under, to no more will not limit. than 7% of income for those earning up to 250% of median income.

  • Under the BBB scenario, the share of lower income mothers who are employed full-time would increase by 18 percentage points; while overall there would be an increase of 10 points, amounting to 1.2 million mothers.
  • Meanwhile, wages for child care work – one of the lowest paying sectors in the US – will rise between 19%-29%, depending on the education level of the worker.
  • Finally, the researchers find that the increase in spending will enable more families to access higher quality care. And it will reduce the amount of money most households pay out of pocket for care.

Zoom out: The US lags behind most other high-income countries in terms of maternal employment.

  • In 2019, the most recent year for which data was available, 68% of mothers with children aged 3-5 in the US were employed, placing the country 32nd on a list of 40.
  • The researchers estimate that broad childcare support under the administration’s proposal would push the rate up to 78%, putting it in 9th place.

Between the lines: The public spends just $1,500 annually on children up to the age of five, according to a paper from last year. Then, when kids enter the k-12 system, that number shoots to $12,800.

  • Yet researchers have found support in the earliest years is critical to their development and well-being.
  • The country also benefits from a more educated and productive workforce in the long run, as I wrote in the New York Times last year.

The bottom line: But right now, with inflation on everyone’s mind, this kind of fiscal spending seems a long way off.

Related Posts