Elizabeth Warren's plan to expand the federal role in child care could help more women get off the mommy track, boosting their lifetime earnings and labor participation. It could help companies, too. But are the economics supported by the costs?
Can better child care help women make more money years after their kids are big, or even convince workers to have more children in the first place?
An analysis by Moody's Analytics says it may be deficit-neutral — raising as much money as it costs to run — since Warren proposes to pay for it with the annual tax on fortunes bigger than $50 million. Warren has described the levy on the ultra-rich as a"small tax" and has cited research from economists at the University of California who proposed a 2 percent tax on net worth above $50 million and an additional 1 percent tax on net worth above $1 billion.
Leaving the workforce for five years to raise children costs women, conservatively 20 percent of their earnings potential even though their leave only represents one-eighth of their working lifetime, researchers led by Amanda Hindlian found.
Early-childhood programs currently cost from 9 percent to as much as 36 percent of a working-class parent's wages, Warren said, citing a study from the Economic Policy Institute. According to the U.S. Department of Health and Human Services , child care is affordable if it costs no more than 10 percent of a family's income. By this standard, less than half of Alabama families can afford infant care, the EPI study found.
These two programs — and the federal government's block grant program for low-income family child-care support, which Congress increased in 2018 by $5.8 billion over two years — reach about 2.5 million children under the age of 5 at a cost of approximately $10 billion per year. Women get more return, to their own income and prospects, from child care than almost any other investment designed to make juggling parenting and work, studies say. Its impact on female employment is three times large as that of paid maternity leave.
Julia Barfield, senior manager of policy and programs at the Chamber's Center for Education and Workforce, said this is an issue where conversations are becoming higher priority and it is being recognized as a workforce issue. One of the Chamber's messages on the issue is that companies need to directly provide child-care solutions to workers rather than depend on already cash-strapped government agencies. While she could not comment on Warren's plan specifically, Barfield said the federal government has a role to play.
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