If the Senate doesn't bail out the childcare industry, economists see women leaving the workforce en masse

Better Capitalism
Better Capitalism
mother and child
  • The House passed two bills that would provide a combined $100 billion in direct child care funding over the next five years, but it's unclear if either will pass the Republican-led Senate.

  • Without a bailout, experts say up to 40% of childcare centers will close for good.

  • Couples who can't afford to hire a full-time babysitter will have to answer a difficult question: Who sidelines their career to care for the kids?

  • Multiple economists say that in heterosexual couples, it will be women who leave the workforce, for two reasons: They make less money than men on average, and secondly, they are already more likely to be the one who cares more for the kids.

  • Those who choose to stay in the workforce will likely prioritize flexibility over career growth, further widening the gender wage gap.

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Affordable and accessible childcare — the underpinning of a functioning US economy that allows parents to work — is hanging by a thread. And on Women's Equality Day, it's important to call attention to this issue, as women shoulder most childcare responsibilities.

The House passed two bills, the Child Care is Essential Act and the Child Care for Economic Recovery Act. They would provide a combined $100 billion in direct child care funding over the next five years, including $50 billion in immediate pandemic relief.

But it remains to be seen if the Republican-led Senate will pass the legislation. Except for the $2 trillion stimulus package passed in March, the Senate and House have not agreed on spending priorities during the pandemic.

Because of the pandemic, a whopping 40% of childcare providers expect to close permanently unless they get additional public assistance soon, according to a survey by the National Association for the Education of Young Children of more than 5,000 childcare providers. Without a bailout, the industry won't recover, multiple providers and industry experts told Business Insider.

This comes as schools, the other main source of childcare, struggle with reopening plans. Some schools are proposing a hybrid in-person and virtual approach, leaving parents with many questions. How to balance childcare and work? What to do if offices reopen?

Only 17% of parents feel prepared for virtual learning or homeschooling, a new Care.com survey of 2,000 parents shows. And 65% of parents anticipate needing more childcare than they currently have this fall.

According to a separate Bankrate survey of 1,500 parents, 30% say they're going to have to cut back their work hours to take care of their kids, and 15% say they are going to exit the workforce completely.

"Failure to bail out the child care industry will be a step back to the progress that has been reached by women in the US in terms of the participation in the labor market," Maria Floro, an economics professor at American University, told Business Insider.

Without a bailout, the childcare crisis will fall on the backs of women and their careers 

A very real potential outcome of this crisis, should government aid not pass the Senate, is an exodus of women from the workforce, Matthias Doepke, a highly cited Northwestern economist who published an analysis of the gendered effects of the coronavirus pandemic, told Business Insider.

Economic research from the University of Chicago reveals that about 17% of all US workers have a child under the age of 6 at home, and most of these workers do not have an alternative caregiver in the household (such as a stay-at-home spouse).

"Without access to childcare, many of these workers will be unable to go back to work. Women would make up the majority of the affected parents, in part because there are many more single moms than single dads, but even within couples the women often carry the majority of childcare obligations," Doepke said.

Think about the difficult choice couples face from a financial point of view. Men, by and large, make more money than women do. So when faced with the decision of which partner in a heterosexual couple should sideline their career to care for the kids, there's an obvious answer.

"If you want to make the economic, rational decision, it makes sense that the person with the larger earnings goes back to work, so that would, most often, be the husband," Doepke previously told Business Insider.

There's also the fact that women currently provide more childcare and generally take on more household work than men, making them more likely to continue to do so in the future. Research has indicated that mothers perform about 60% of childcare: 7.2 hours per week for fathers versus 13.7 hours for mothers. Separate research shows working women are more likely to take on childcare duties than men.

Women leaving the labor force will impact the economy for decades, Betsey Stevenson, a labor economist at the University of Michigan and former member of President Barack Obama's Council of Economic Advisers, told Politico's Zack Stanton.

Families will have to reckon with not only lost wages from the years women are out of the workforce, but also the lost income in earning potential over their lifetimes.

"We're going to see what happens as women choose to take time out, as they scale back their hours, as they get sidelined in their jobs. All of those things will mean they're in a worse position in four and five years' time than they would have been without the pandemic," Stevenson told Stanton.

This could mean the wage gap could actually increase in the coming years as men get further along in their careers, and women step back altogether or stay stagnant in exchange for flexibility, Floro said.

"It will be a step back to the progress that has been reached by women in the US in terms of the participation in the labor market. You might see a widening of the gender wage gap," Floro said.

The economy will also struggle to restart.

"The bottom line of this analysis is that without schools open and childcare available, we cannot get anywhere near a full recovery, because a good share of the workforce will be unable to work due to childcare needs," Doepke said.

Read the original article on Business Insider