US child care is a mess but it’s not what’s holding back the recovery

She’s juggling more than just kids.
She’s juggling more than just kids.
Image: REUTERS/Carlo Allegri
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Since the start of the pandemic, economists, business leaders, and policymakers have argued that the lack of sufficient childcare is holding back the US economic recovery. But a new study has found childcare challenges played a small role in the overall decline in employment, suggesting its role in the recovery may be muted as well.

Economists Jason Furman, from the nonprofit think tank Peterson Institute for International Economics; Melissa Kearney, of the University of Maryland and the Aspen Economic Strategy Group; and Wilson Powell III, at Harvard Kennedy School, set out to answer how parenting affected the aggregate employment numbers over the course of the pandemic.

In order to quantify the childcare challenges on the labor market, the researchers compared the percent change in employment of parents with young children to that of comparable people without young children.

Between the first quarters of 2020 and 2021, the researchers found, the employment rates of parents of young children declined 4.5% compared with 5.2% among workers who aren’t parents of young children. In other words, parents of young children left the workforce slightly less frequently in the last year.

While women with children under the age of 13 experienced the greatest rate of job loss over the past year than for all other women—5.7% versus 5%—men with young children were more likely to hold onto to their jobs than men without.

Nonetheless, women with young children represent only a small portion of the US workforce—just 12%—leading the authors to conclude that any childcare issues that pushed mothers out of the workforce accounted for a similarly small share of the overall reduction in employment.

Fueling the US labor shortage debate

The US labor shortage remains a great puzzle. The economists’ latest findings may provide some clarity about its causes—as well as fuel the debate about what’s the best way to get people back to work. At least 21 Republican-led states are planning to drop the extra $300 a week unemployment payments included in the $1.9 trillion Covid-19 relief bill passed in March, saying that the generous provisions are causing a labor shortage.

The authors also found that the patterns of employment losses specific to parents are similar to those during the 2001 and 2008-09 recession, indicating the childcare challenges fueled by the pandemic were not that different than in prior recessions.

Of course, these conclusions do not take into account how school closings and ongoing childcare challenges have been a tremendous source of stress for parents during the pandemic.

The fact that women did not disproportionately retreat from the workforce in large droves while shouldering the costs of childcare and educational responsibilities for their children, could “very well be an indication of excess burden that represents a shortcoming of the safety net established to respond to the COVID-19 crisis,” the authors concluded.

Would offering more childcare support accelerate employment growth?

There’s a separate question of whether offering more childcare support would accelerate employment growth. Compared to other OECD countries, the US’s labor force participation rate for women in prime age—from 25 to 54—is lower than countries like France, Canada, UK, and Japan and has been on a decline since 2008. Investing in child care could create more jobs, particularly for low-income women.

This comes as the Biden administration has called on Congress to approve billions of dollars to help ease the juggle between work and family. The American Families Plan includes paid family and medical leave, two years of free pre-school, and expanded child care tax credits. Research has shown that in industrialized countries, subsidized child care and education had the single biggest effect on increasing women’s employment. These policies could make a difference on women’s prospects in the labor market in the long-term.