There’s a puzzling labor shortage in the U.S. economy. It’s puzzling because employers report 11 million job openings, the most on record, yet unemployment remains elevated and workers aren’t chasing those jobs. There are 5.6 million fewer people working than before the Covid-19 pandemic began last year—split evenly among men and women—and the portion of Americans who want to work has fallen abruptly. Obstinate barriers stand between workers and jobs.
One of them is childcare. A patchwork, expensive childcare system shackled working parents before the pandemic, and kept some from working altogether. The pandemic made that worse, with some parents quitting their jobs to care for kids suddenly attending school remotely. Many childcare facilities closed or lost workers, and with employers now trying to get back to normal, a shortage of affordable childcare resources has only gotten worse. Treasury Secretary Janet Yellen recently described the nation’s childcare system as “broken.”
President Biden wants Congress to authorize $45 billion in new spending per year to finance universal preschool, subsidize childcare for lower-income families, pay caregivers more and refurbish old facilities. But businesses don’t need to wait for government help. “Companies need to offer more in-house childcare,” says Sarah Quinlan, founder of SAQ Economic Advisory and a former senior vice president at Mastercard. “This is a fundamental thing that needs to happen. If you want people to go back to work, you’ve got to have a place for their kids to go. School districts should also provide after-school care until 6:30. You’ve got to understand what the real hours of work are.”
A new Yahoo Finance-Harris poll reveals the stress childcare burdens cause parents who work or want to work. Sixty-eight percent of parents with kids under 18 said they struggle to find trustworthy care, and 66% said managing care for their kids is “overwhelming.” Forty-four percent said care is unaffordable. That dovetails with Treasury Department data showing the average family with kids under 5 spends 13% of its income on childcare, nearly twice what Treasury considers affordable. Some lower-income families spend far more.
Employers could lure more parents with family-friendlier benefits. In the Yahoo Finance-Harris survey, 73% of parents said childcare demands influence their job decisions, including whether to work in the first place. Half said they’d be more likely to take a job if the employer offered on-site care, even for a fee, while 66% said they’d be more likely to consider a job at a company that offered flexible scheduling. (Here are the full survey results.)
On-site care isn't a priority
Some companies obviously offer such benefits already, and with Covid forcing a lot more remote work, many employers are considering a permanent shift to more flexible arrangements. But accommodating working parents doesn’t seem to be a particularly high priority. A recent McKinsey study found that 49% of large companies offer emergency backup childcare, while only 12% offer on-site childcare. The numbers are doubtless much lower among small companies that lack the scale to provide such resources.
While many companies are desperate for workers, they’re more preoccupied with getting through the pandemic than designing new benefit programs, says Ruhal Dooley of the Society for Human Resources Management. “Employers seem less concerned about on-site daycare, as the emergency of the pandemic has not subsided enough,” Dooley says. “More people are working modified schedules and teleworking. They may still need day care, but not at an employer’s office.” Still, Dooley says, it's a good time for employers to redesign benefits that might help lure workers.
On-site childcare can be expensive for employers to provide, and it only works at centralized locations where there are enough workers with young kids to make it worthwhile. Any employer setting up such a facility would have to compete for workers who are scarce in the childcare field just as they are in many others.
A corporate gender gap may be part of the problem, as well. “Boards are still 70% male,” says Quinlan. “The rich men who run companies have nannies and don’t even think about it.” She also points out that more remote work means some companies have excess real estate they could convert to childcare space.
Biden’s childcare plan would address chronic problems, along with Covid-related disruptions. "The pandemic helped reveal what a big problem there’s been all along,” says Laura Dallas McSorley of the Center for American Progress. “We have an opportunity to think not just about this pandemic, but about the last 50 years when childcare has been holding back parents, careers and the economy. Families can’t pay more and childcare workers can’t make less.”
Biden’s plan, among other things, would finance universal preschool for all American kids. It would cap out-of-pocket childcare expenses at 7% of family income, with federal subsidies covering the rest. It would also raise pay for relatively low-paid childcare workers, which could bring more people into the field and make more childcare available. The plan would lower the typical family’s childcare costs by at least $5,000 per year, according to a Center for American Progress analysis.
The plan, however, looks like a tough sell in Congress, at the moment. Republicans oppose much of the new spending Biden wants, along with the tax hikes on businesses and the wealthy that would pay for it. Biden is calling for $3.5 trillion in new spending on all his priorities, but probably won’t get that much. So if Congress does pass childcare reforms, they could amount to less than Biden wants. Some employers may be waiting to see if Washington makes working life easier for parents, but nothing stops them from making their own reforms—if they really, really need all the workers they say they do.
Rick Newman is the author of four books, including "Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. You can also send confidential tips, and click here to get Rick’s stories by email.
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