Childcare subsidies would send 1.2 million women into the workforce, says new paper

If child care subsidies like those proposed by the Biden administration were passed — not the most likely scenario at this point — a significant number of women would enter the workforce, according to a new working paper published by the National Bureau of Economic Research.

Why is this important: Despite the slim chances of politics, it is an important document for the longer-term analysis of the issue — probably the first quantitative examination of how this type of proposal would affect maternal employment, the cost and quality of childcare, as well as family income.

  • 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 the effects of the proposal in Biden’s Build Back Better plan – which would cap the amount families spend on child care. children, for children 0-5 years old, to no more than 7% of income for those earning up to 250% of median income.

  • Under the BBB scenario, the share of low-income mothers employed full-time would increase by 18 percentage points; while overall there would be a 10 point increase or 1.2 million mothers.
  • Meanwhile, wages for child care work — one of the lowest-paying industries in the United States — would rise between 19% and 29%, depending on the worker’s education level.
  • Finally, the researchers find that increased spending would allow more families to access better quality care. And it would reduce the amount of money most households pay out of pocket for care.

Zoom out: The United States lags behind 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 aged 3 to 5 worked in the United States, ranking the country 32nd on a list of 40.
  • The researchers estimate that broad support for child care along the lines of the administration’s proposal would drive the rate up to 78%, putting it in 9th place.

Between the lines: The public spends just $1,500 a year on children up to age five, according to an article from last year. Then when the kids enter the k-12 system, that number jumps to $12,800.

  • However, the researchers found support in the early years is essential to their development and well-being.
  • The country also benefits from a better-educated and more productive workforce over the long term, as I wrote in The New York Times last year.

The bottom line: At the moment, however, with inflation on everyone’s mind, this kind of budget spending seems a long way off.

Michael A. Bynum