Biden administration says child care assistance will help the economy grow
WASHINGTON — The Biden administration says its plan to expand access to affordable early childhood care will help bolster long-term economic growth by making it easier for parents, especially women, to work.
President Biden proposes to spend $ 225 billion over 10 years to subsidize child care, including capping costs for low- and moderate-income families, increasing wages and training for child care workers, and providing federal dollars to health centers. He also wants to spend $ 200 billion over a decade to establish a national preschool program for all 3- and 4-year-olds in partnership with the states.
“Investing in child care can be an important determinant of labor market participation, one of the engines of economic growth,” Treasury Secretary Janet Yellen said last month.
While bipartisan support has grown in recent years to increase federal investments in young children, disagreements remain over how best to direct new spending.
Congressional Republicans and some economists cite research showing that while such programs boost labor market participation, they don’t always produce better outcomes for children. And some GOP lawmakers say that if the federal government wants to subsidize child care, they would rather let households decide whether to provide that care inside or outside the home.
“We can’t just look at this through a technocratic lens of costs and benefits,” said Samuel Hammond, director of poverty and welfare policy at the Niskanen Center, a libertarian think tank. “We must also take into account the plurality of lifestyles and preferences of American families. “
A wave of women entering the workforce helped propel US economic growth into the latter part of the 20th century. Since 2000, however, women’s participation in the labor market has lagged behind other developed countries, which some economists attribute in part to more extensive paid leave and childcare policies in these countries. .
The president’s proposals would help reverse that trend, said Heather Boushey, a member of Biden’s Council of Economic Advisers.
They would provide an immediate benefit by increasing parental participation in the labor market, boosting the economy’s growth capacity and better matching employee skills with jobs, she said.
After the city of Washington, DC, implemented a full-time universal preschool in 2009, the program increased women’s participation in the workforce by 10 percentage points, according to a 2018 report from the Center for American Progress, a liberal think tank.
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A March report from the National Women’s Law Center and researchers at Columbia University found that access to affordable child care would increase the number of working women in their prime of life with young children. ‘about 17% and would increase the average lifetime incomes of women with two children by $ 94,000. .
Mr Biden has made child care and early childhood education a centerpiece of his plan to boost productivity and economic growth, which includes $ 1.8 trillion in new spending and tax cuts over the next decade on measures such as paid family leave.
Moody’s Analytics estimates that the US plan for Mr Biden’s families would increase US gross domestic product by $ 100 billion and increase paid employment by 840,000 over the next decade, largely by making it easier for parents to work. . The White House estimates its universal preschool plan would serve five million children and save the average family $ 13,000 over two years in child care costs, and its plan to subsidize child care costs would serve three million children and allow one million parents to enter the workforce.
Republicans, including the Senses. Mitt Romney of Utah and Josh Hawley of Missouri have instead pushed for giving more money to families with young children to help parents who choose to stay at home or have a relative or neighbor who lives. take care of their children.
“It appears the administration has a strong preference for getting the kids out of the house and bringing both parents into the workforce,” Romney said at a Senate hearing on May 18.
Mr Biden’s plan also aims to give more money to families by extending an expanded version of the child tax credit until 2025.
Ms Boushey of the Council of Economic Advisers said the Biden plan seeks to correct what she called a market failure: The high cost of child care usually falls on parents when they are least able to afford it. afford it, early in their savings and less access to credit.
“If I need a service to go to work but the costs are too high at this point in my career, that’s exactly when you want the government to step in and help smooth those costs.” , she said.
Among the 37 advanced economies in the Organization for Economic Co-operation and Development, the United States ranked 35th in spending on preschool education and child care as a percentage of gross domestic product in 2019. This is one of the reasons why women’s participation in the labor market has lagged behind others. advanced economies in recent decades, Cornell University economists Francine Blau and Lawrence Kahn wrote in a 2013 article, although they noted that American women are more likely to work full time and in managerial or professional roles than women in other countries.
White House officials also cite studies showing that early childhood education programs increase high school graduation rates and lifetime earnings and reduce incarceration rates. Some studies have also found that the programs lead to lower spending on social assistance programs, health care and incarceration, and generate higher tax revenues through increased incomes.
Mr Hammond of the Niskanen Center and other conservatives counter that such policies come with trade-offs, and they argue that the data on larger preschool and child care programs is mixed.
A 2015 study found that while universal childcare services in Quebec Boosted women’s participation in the workforce, this also led to worse outcomes for children later in life in terms of health, life satisfaction and crime rates.
After England extended free nursery school to 3-year-olds for up to 15 hours per week, some 12,000 more mothers with young children joined the workforce, an increase of less than 10%, according to a 2014 study by researchers from the Institute for Fiscal Studies, a London think tank, and the University of Sussex in England.
The study suggested that the program – which costs the equivalent of around $ 990 million a year to administer – prompted many already working parents to move their children from other early education settings to free programs. said Ryan Bourne, economist at the Cato Institute, a libertarian think tank in Washington
“The direction is pretty clear – it brought more mothers to work, but it came at a huge cost,” he said.
Write to Kate Davidson at [email protected]
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