Giving Compass' Take:
- Sam Abbott explains that employers benefit from child care and can play a role in addressing the current child care crisis.
- What role can you play in supporting shifts to expand access to high-quality and affordable child care?
- Read the challenges of funding high-quality childcare.
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The U.S. Department of Commerce last month announced new requirements for semiconductor manufacturers seeking funding under the CHIPS and Science Act of 2022—a key component of the Biden Administration’s industrial strategy approach to economic policy. One of these requirements is that larger chip manufacturers must have a plan for supporting their workforces’ child care needs to access this new funding.
Employers—through the taxes they pay and benefits they provide—have an important but delicate role to play in the U.S. child care crisis. Employer-supported child care helps defray essential costs paid by employees, ensuring firms that otherwise freely benefit from the child care system have some necessary skin in the game. A policy agenda that promotes employer-sponsored child care without other public investments, however, could have unintended consequences for the broader U.S. labor and the overall child care market.
This column discusses how employers benefit from the child care system, opportunities and risks posed by employer-sponsored child care, and options within the CHIPS Act, including employers’ direct engagement with existing child care providers that can strengthen local child care markets across the United States.
Employers reap the benefits of their employees’ unsustainable child care costs
The U.S. child care system is primarily funded by tuition fees paid by families, with the median price ranging from $5,357 to $17,171 a year, depending on location, children’s ages, and the type of child care provider. Parents pay these high costs because they get something in return, such as peace of mind that their child is safe, and the time to pursue other activities, including education, job training, and work. In facilitating these activities, child care creates economic benefits far beyond just the families that use and pay for it.
Employer-sponsored care may help some workers access child care, but the practice at a larger scale poses broader risks
While some large firms proactively provide child care benefits to attract and retain talent, data shows that most employers regard care needs as a private matter of personal responsibility. In 2021, for example, only 11 percent of the civilian workforce had employer-provided child care benefits, including just 8 percent of those in “goods producing industries” such as semiconductor manufacturing.
By requiring employers to plan for potential child care issues, the CHIPS Act is forcing some firms to contend with a challenge they may have otherwise ignored. This should yield tangible benefits for employees in this sector, but policymakers must be thoughtful as more employers find themselves in the child care business.
Employer-sponsored child care remains a rare benefit in the United States, but research indicates that it can be highly valuable for certain demographics. One study by Taryn Morrissey of American University and Mildred E. Warner of Cornell University finds that child care vouchers provided by a university employer were effective in reaching workers with the highest needs, including part-time workers and those with more complex child care requirements. A related study finds that workers who used these vouchers were more committed to their employers and reported less work/family stress.
Read the full article about the U.S. child care crisis by Sam Abbott at Washington Center for Equitable Growth.