Jun 17, 2022 - Economy & Business

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

Illustration of alphabet blocks with dollar signs instead of letters.
Illustration: Shoshana Gordon/Axios

If child care subsidies like those proposed by the Biden administration were enacted — not the likeliest of scenarios at this point — a significant number of women would enter the job market, Emily writes.

Why it matters: Despite the policy's slim chances, this is an important paper for the longer term analysis of the issue — likely the first quantitative look at how this type of proposal would affect maternal employment, the cost and quality of child care, and family incomes.

  • It also suggests a possible solution to the country's stubbornly persistent labor shortage.

Details: The researchers, a team of eight economists who study child care and early education, modeled out the effects of the proposal in Biden's Build Back Better plan — which would cap the amount families spend on child care, for children 5 and under, at no more than 7% of income for those earning up to 250% of median income.

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

Zoom out: The U.S. lags 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 ages 3-5 were employed in the U.S., ranking the country 32nd on a list of 40.
  • The researchers estimate that broad child care support along the lines of the administration's proposal would push the rate up to 78%, putting it in 9th place.

Between the lines: The public spends only $1,500 annually on children up until age five, according to a paper from last year. Then, when kids the enter 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 term, as I wrote in the New York Times last year.

The bottom line: At the moment, though, with inflation on everyone's mind, this kind of fiscal spending seems far off.

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