Last week, the Biden administration took the unusual step of connecting industrial policy with childcare policy. In order to qualify for large sums available through the CHIPS Act, semiconductor manufacturers must explain how they are going to guarantee affordable childcare for their employees. This is a dangerous wrong turn, not because companies shouldn’t be expected to meet the needs of their workforce but because childcare should never be a job-linked benefit.
Causing childcare to run through the employer-employee relationship risks replicating one of the very worst features of the American healthcare system: lose your job, lose your healthcare. The equation of lose your job, lose your childcare may be even more cruel because there is a third party involved: the child. Young children thrive on reliability, and multiple caregiver changes can be disruptive for child development; a good childcare system is a stable system.
While the administration clearly still wants comprehensive childcare reform, the Commerce Department’s policy isn’t a harmless incremental measure as the larger fight continues. The more that Americans come to believe childcare is to be individually acquired through one’s employer, the less reason to create a system everyone can access. There is also less incentive for businesses to support such a system. Yet the job-linked idea is now in the water: New York Times editorial board member Binyamin Appelbaum wrote in praise of the new policy that childcare should be one of “a basic set of benefits that ought to be standard for workers in the United States.”
This is precisely what happened in the 1940s with healthcare. With wages capped during World War II to ensure industrial efficiency, companies began offering health insurance as a perk to attract employees. When President Truman proposed a universal healthcare system after the war, one reason it died was surprising opposition from labor unions like the United Auto Workers. Their rationale? It would be easier to go the employer-linked route than battle political headwinds. A Kaiser Family Foundation paper notes, “As workers gained better benefits from their employers, unions believed they could negotiate even more in the future.” Of course, what actually happened was that employer-linked health insurance became the norm and the U.S. was set on the path toward our current ineffective, unpopular, expensive system.
To be fair, there are models of employer-sponsored childcare that are less individualistic. For instance, Corning pays $2.5 million a year to support five childcare centers in its headquartered town of the same name. Both employees and unaffiliated community members have access to the programs. Nudging companies in that direction would be the best use of the Biden administration’s policy. Even then, however, such support can be transient when economic conditions or leadership changes. Communities from Hackensack, New Jersey, to Park City, Utah, have suffered from major employers abruptly deciding to no longer support childcare projects.
This is not an argument against on-site childcare. Research is clear that having convenient, affordable childcare is good for both employees and businesses. Instead, the question is whether those programs are operated through the largesse of companies for those families lucky enough to be employed by or live near them, or whether they are one facet of a publicly funded system with equal access for all.
There are also quality concerns. Will companies put in enough funding to ensure that childcare educators are paid well in a sector that is still down nearly 60,000 jobs from pre-pandemic levels due to inadequate compensation? Similarly, just subsidizing an employee’s childcare expenses does nothing to put new money into an underfunded and buckling system. Increasing demand without adding to overall funding levels will likely increase the number of parents on waiting lists.
Notably, no other country in the world runs childcare mainly through employers. The best-regarded systems treat childcare akin to other essential services like schools, fire departments, and roads. Imagine if chipmakers were being asked instead to ensure their employees had access to elementary schools. No, tax dollars are rolled up and spread around so that everyone, including the workforce, can benefit.
American businesses are indeed freeloaders when it comes to childcare, however. They should be expected to put skin in the game. Companies pay no dedicated taxes into the care system they and their employees rely on, unlike how their corporate property taxes support schools. Levying an employer-side payroll or care tax would therefore be a far more logical and effective response.
With major childcare legislation off the table thanks to the intransigence of congressional Republicans, the temptation to reach for other tools is understandable. Going down the path of cementing childcare as a job-linked benefit, however, is not taking a small step instead of a big step, it is taking a step in the wrong direction. Businesses should pay their fair share for childcare—but they should do so as part of a stable system that gives every American parent and child the care they need to flourish.
Elliot Haspel is the Director of Climate & Young Children at the think tank Capita, and author of the book Crawling Behind: America’s Childcare Crisis and How to Fix It.
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