Lack of affordable child care is hurting parents and the economy

The latest figures show that women’s labor force participation rate has risen within one percentage point of its pre-pandemic rate. But women have been responsible for all the net labor force declines since February 2020, according to the National Women’s Law Center.

One major obstacle for many women seeking re-entry into the workforce is an unreliable childcare system, says Marketplace senior economic contributor Chris Farrell. But a lack of access to affordable quality childcare was already a problem before COVID and was only exacerbated by the pandemic.

David Brancaccio of Marketplace spoke to Farrell about how our childcare system is affecting parents and the wider economy. The following is an edited transcript of their conversation.

David Brancaccio: Given the reporting we’ve done on this, let me venture a wild guess. Any chance that an important part of this gender inequality is the problem of finding childcare that one can afford?

Chris Farrell: That’s it. I mean, you just hit it off. I mean, take the figures from the 2022 cost of care survey, that’s by Care.com. And the numbers are sobering, David: 51% of parents say they spend more than 20% of household income on childcare. And 43% say it has become more difficult to find childcare in the past year. And the problem is really acute for working mothers without university degrees, who earn low and unstable incomes.

Brancaccio: So if you can not work or can not work the hours you want, of course less money comes in. But it does not stop there.

Farrell: No, it is also difficult for people to get back into the labor market. And often careers get a big hit. Accumulated social security benefit rates are lower. Savings rates, lower. And nationally, the cost of lost earnings, productivity and revenue, due to a lack of good childcare options, is an estimated $ 57 billion a year.

Brancaccio: Childcare was very difficult before pandemic. This is what economists call a failed market, because normally, if you do not get enough workers in the field, you increase their salary. But if childminders do this, it will increase the price they have to pay the parents who then could not afford the care. And then you add pandemic.

Farrell: That’s right. So I looked at this report from the Brookings Institution and calculated that the cost per hour of childcare paid by families has increased by almost one third over the last 15 years, just to get to your point. And if we look from the period 2016 to 2018, more than two million parents of children aged five and younger, they quit their jobs, stay out of the workforce, change jobs, to deal with childcare challenges. And the pandemic, it not only made prices go up, babysitters – they left this low-paying career that usually does not have mass benefits during the pandemic.

Brancaccio: Yes, President Biden’s infrastructure plan did have provisions in it. More access to childcare and universal Pre-K for all 3- and 4-year-olds. Congress did not pass Build Back Better.

Farrell: Yes, so that initiative went nowhere. But the thing is here, David, I think it’s important to look at the 38 members of the Organization for Economic Co-operation and Development, better known as the OECD. The US is near the bottom, measured in terms of childcare provision and maternity leave policies. The call for reform in the US became even more urgent after the pandemic. This is a big problem. But until it is addressed, our human capital economy cannot reach its potential. And that’s too much for families and society to pay.