Kamala Harris recently chose Minnesota Governor Tim Walz as her running mate, who is known for his focus on child care and early childhood policies. Walz has expanded state child tax credits and implemented a paid family leave program. Harris aims to prioritize restoring federal child tax credits introduced during the Covid pandemic, especially for families with young children. Donald Trump’s running mate, J.D. Vance, also proposed increasing the child tax credit to $5,000. Child care has become a pressing issue for families of all economic backgrounds, as costs have increased by 32% since 2019, leading to potential workforce dropouts and financial burdens on families.
Child-care policy is not only a concern for government officials but also for employers looking to support their workforce. Research shows that for every dollar spent on child care, employers can get a return on investment of $4.25. Despite the clear economic benefits, only a small percentage of workers, particularly part-time and lower-income workers, have access to workplace child-care benefits. Jessica Chang, founder of child-care startup Upwards, emphasizes the economic impact of child care and stresses the importance of embedding child-care benefits in the workplace to support employees and child-care providers.
The child-care sector faces challenges of both shortages and underutilization, with 51% of Americans living in areas with three children for every available child-care spot. Despite this, only 11% of child-care providers were at full capacity in 2023. Embedding child-care benefits in the workplace can help address these challenges by connecting workers to services they need and increasing providers’ capacity. The lack of affordable child care not only affects families but also has a significant economic impact, with an estimated $122 billion lost annually in earnings, revenue, and productivity due to the early childhood care crisis.
The disproportionate effect of child-care challenges on mothers, often leading to their exit from the workforce, has been labeled as the “motherhood penalty.” Nearly 85% of primary caregiver parents face challenges in obtaining child care, which impacts their work efforts and leads to missed work days. The latest “State of Motherhood Report” indicates that 66% of women in the U.S. consider leaving the workplace due to lack of child care, highlighting the need for policies that support working parents. Upwards’ study shows that supporting and subsidizing child care for working mothers can have a multiplier effect on economic gains, emphasizing the importance of addressing child-care challenges.
Implementing an expanded child tax credit and encouraging all employers to provide child-care benefits present challenges for the government. The Biden administration’s CHIPS Act required corporations receiving funding to provide access to child-care benefits, a policy concept that is common overseas but untested in the U.S. Previous efforts to pass an expanded child tax credit coupled with business tax breaks have faced obstacles, highlighting the ongoing debates on tax and subsidy issues. Despite the potential economic benefits, gridlock and inaction may continue, leaving working parents with young children facing financial hardships.
