Yellen, Harris to push childcare investments as boost for overall economy

By Andrea Shalal

WASHINGTON, Sept 15 (Reuters) - U.S. Treasury Secretary Janet Yellen and Vice President Kamala Harris will urge Congress on Wednesday to back proposed spending on affordable childcare, armed with a new Treasury report that maps out big benefits such care offers the economy.

Congress is considering a $3.5 trillion package of measures that would include free preschool for all 3- and 4-year olds; boost pay for childcare workers, 95% of whom are women; cut the costs of such care in half for most families; and make permanent a child and dependent care tax credit.

The Internal Revenue Service will distribute a third round of child tax credit payments on Wednesday, handing parents a key lifeline given the expiration of pandemic unemployment benefits and the Supreme Court's decision to strike down a federal eviction moratorium.

The Treasury said the measures would expand both childcare supply and demand, providing lifelong positive effects for children, their parents, and the economy as a whole.

“It’s past time that we treat childcare as what it is – an element whose contribution to economic growth is as essential as infrastructure or energy,” Yellen said in a statement.

Enacting President Joe Biden's proposals was "the single most important thing we can do to build a stronger economy over the next several decades," she said.

The Treasury said the current situation was "unworkable" and said improving access to affordable, high-quality care - a market estimated at some $60 billion in 2019 - would have multiple positive spillover effects for wages, society at large and employment.

"A well-funded child care sector will help parents remain in the labor force, work the number of hours and schedule that are best for their career and family, earn a living and join in our shared economic prosperity," it said.

Harris - who is using her first visit to the Treasury since taking office to make a joint pitch with Yellen for the childcare provisions - has called the pandemic-triggered mass exodus of women leaving the workforce Link "a national emergency."

"The growth of our economy is directly tied to these women," a senior administration official, speaking on condition of anonymity, told Reuters, adding that Harris plans further public engagements on the legislation in coming weeks given the "critical juncture" of the congressional negotiations.

Last month, the vice president highlighted the importance of affordable childcare Link for improving U.S. competitiveness during a meeting with top executives of seven companies, including Microsoft Corp and Etsy, noting that it also directly affected recruitment, retention, worker productivity and corporate profits.

The Treasury report laid out what it called the multiple market failures of the current system, which relies on private financing, and urged changes that would allow parents to contribute more fully to the economy and make a solid living.

It noted that the average family with at least one child under the age of 5 now must devote about 13% of family income to pay for childcare, but Biden's proposals would reduce that amount to no more than 7%, it said.

The United States ranks 35th of 37 countries tracked by the Organization for Economic Cooperation and Development (OECD) in public dollars spent on early childhood education and care, relative to gross domestic product.

While France invests about $7,000 per child from infancy to 5 years old, the United States invests just $2,400. That in turn depresses income for childcare workers, the report noted.

With average annual pay of $24,230, more than 15% of childcare workers live below the poverty line in 41 states, forcing them to rely on public services for their economic needs, the report said.

U.S. childcare in short supply as burned-out workers quit, new
hires hard to find Link

Reporting by Andrea Shalal
Editing by Robert Birsel and Jonathan Oatis

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.