America’s ‘unworkable’ childcare system is crippling our economy, Treasury says

One reason COVID-19 has been hard on American children and parents—devastatingly so sometimes—is because America invests so comparatively little in childcare, a shortcoming that the pandemic cracked wide open. A new report published today by the Treasury Department offers new specifics on the Biden administration’s plan for repairing a dysfunctional system the document straight up calls “unworkable.

The report argues America’s situation is plagued by years of market failures that make decent childcare unobtainable for many families. The costs in the U.S., among the world’s highest, plus the country’s puny public spending, also near the bottom globally, mean young parents often struggle to afford care regardless what jobs they work or industries they’re in; it’s sort of comes with the territory of being young, saddled with bills, and not yet at their peak earning potential.

“This is not just happenstance—sound economic principles explain why relying on private money to provide child care is bound to come up short,” the report reads. It points out:

Currently, the average family with at least one child under age 5 would need to devote about 13 percent of family income to pay for child care, a number that is unaffordable for most families. Less than 20 percent of children eligible for one of the largest federal assistance programs for low-income families, the Child Care and Development Fund, actually receives funding.

Meanwhile, childcare providers struggle, too. “Many struggle to make ends meet,” the report notes. And the providers are “overwhelmingly … women, many of whom are nonwhite, who earn low wages leading to high turnover” and “rely on public services for their own economic needs.”

The pandemic has “made a bad situation worse.” The department notes that in the first eight months of the pandemic, 166,000 childcare workers lost their jobs. The childcare industry was also 83% smaller in October 2020 than in February 2020. The solution Treasury lays out is federal support for paid family leave, universal preschool, and significant tax credits for parents and dependent care, and the department has strategically timed this to coincide with debate in Congress over how to write a social-spending bill that could reach $3.5 trillion. Treasury Secretary Janet Yellen and Vice President Kamala Harris plan to try to sell these initiatives in a joint speech this afternoon at the department.