Over 3.7 million babies were born in the United States last year, according to the CDC, and while those new little ones are wonderful and miraculous, they also cost a lot—in money, emotional labor, and other expenses. And the price tags on those child-rearing expenses are rising. The USDA estimates that, on average, we spend almost $250,000 (or a little less than $13,000 a year) to raise a single child from birth to the age of 17, whereas parents in 1995 would have spent between $7,610 and $8,710 per year, depending on the age of their kids. Older kids, as parents of teens don't need to be told, have even more expensive needs.
As noted above, there are other costs that parents incur as well, though. While these may not seem to be money-related, they do have a significant economic impact. Costs such as absences from work due to caregiving needs (say, if you need to stay home with a sick child), or loss of employment due to lack of access to parental leave will impact the trajectory of one's overall career. These challenges aren't faced only by parents of young kids and teens, either. Due to an aging population of baby boomers, many Gen X-ers and Millennials (who make up a major part of the American workforce) have caregiving responsibilities whether they're parents themselves or not.
With such a huge swath of the United States' population facing these challenges, the impact on the national economy is nearly inevitable. Which makes now a great moment to examine how we've been supporting caregivers thus far, what we can be doing better, and how helping those who care for others can strengthen the overall economy.
Paid parental leave: Yay or nay?
The first thing that comes to mind when discussing how to support parents is the controversy surrounding paid parental leave, and specifically paid maternity or paternity leave. Of course, parental leave is often necessary for parents of older kids as well, as has become abundantly clear during the COVID-19 pandemic. That said, being able to stay home with your new kid(s) tends to mean longer stretches of absence—often weeks or months—which is why this type of leave usually gets more attention.
Paid parental leave for a new child (whether following a birth or an adoption) takes many different forms around the world. In the United States, it's not as accepted or common as it is in Europe, for example, where some countries have had paid leave policies dating back to the 1970s. Despite the proliferation of parental support systems around the globe, though, there's a lot of diversity in how it plays out. Some policies grant paid leave only to birthing mothers, while some are applicable to parents of any gender. Some guarantee that a parent on leave won't lose their job during their absence, and some don't. Some provide full salaries, while others provide only a percentage of one's salary prior to the period of leave.
According to data from the OECD (Organisation for Economic Co-operation and Development), the organization's 38 member countries all have varied parental leave policies, depending on the state of their national economy and other political factors. "Most [OECD] countries provide paid leave through social security schemes that rely on a mix of contributions from employers and employees, often with additional government funds. This approach is compatible with a strong national economy," says a 2018 report from the World Policy Analysis Center. According to a Pew Research Center report from 2019, the United States is the only country among 41 countries examined by the OECD in that year to lack any provisions for parental leave at all.
This finding is especially interesting when we consider that a survey conducted on behalf of the National Partnership for Women and Families in 2018 found that a bipartisan majority of voters are in favor of some form of parental leave. According to their findings, "Eight in 10 voters support a comprehensive national paid family and medical leave policy that covers all people who work (84%)," says the resultant report, going on to detail how many Republicans (74%), Democrats (94%), and Independents (83%) are in favor of this type of legislation.
And that was pre-COVID. It's no secret that the pandemic has put an additional strain on all parents, especially working parents. A recent report, based on a private survey and analysis of data from the Bureau of Labor Statistics found that working parents these days are "losing a cumulative 720 million hours each week to stress, anxiety, and caregiving." That's a lot of hours. The same report estimated a daily impact of $15 billion to the national GDP as a result of these losses.
"COVID didn't create these problems—especially for women in the workforce, and particularly for women of color. It exacerbated existing problems," Jennifer Klein, co-chair and executive director of the Biden administration's Gender Policy Council, tells Parents. "[But] COVID is a health crisis, and on top of that, an economic crisis [and] a caregiving crisis, and while that trifecta has had devastating effects on families, there's also an impetus when you have a giant structural disruption to have giant structural change." So what might that structural change look like?
What is the federal government doing to support parents and caregivers?
None of these problems are new, but the approach being taken by the Biden administration has a novel air about it. The White House is adding family and caregiver support to what's known as the Build Back Better Agenda, which the administration aims to achieve by way of a massive budget reconciliation bill that has been, thus far, paired with a more modest (but still crucial) bipartisan infrastructure bill. Of course, the word "infrastructure" conjures visions of major bridges, impressive electric grids, and a vast highway system. But supporting caregivers? Does that really count?
According to the Biden administration, you'd better believe it counts. "Families need to be at the center of our economic growth strategy," says Klein. She goes on to detail a few items in the proposed bills, which are being hotly debated in Congress in this moment. "The first is lowering incredibly high costs of prescription drugs, which is a policy that over 80% of Americans endorse, historic investments in roads and bridges [...], a historic tax cut for middle class families," Klein continues. "It includes things like putting a stop to children drinking poison water and giving every American access to high-speed internet." Klein explains that infrastructure has to include projects of this sort—projects that "actually affect people's lives."
The reconciliation bill that's on the table, should it pass, would also enact 12 weeks of paid family and medical leave, nationwide. Seeing as only nine states and D.C. have any paid parental or medical leave policies on their books (up from four states in 2016), that's quite the radical increase in family support.
What might these policies mean for the economy?
This is a thorny question, and the answer varies, depending on what you consider an economic outcome. There's plenty of evidence, for example, that parental leave policies of a certain design and length have positive outcomes in terms of infant health, and even maternal health. This is very difficult to measure in the United States, of course, seeing as most states don't have a policy with enough longevity to produce sufficient data.
"Of course, around the world, policies are much different than what is commonly being discussed here in the United States [...] mainly because they're much longer," Maya Rossin-Slater, associate professor of Health Policy at the Stanford University School of Medicine, tells Parents. "What we know from analyzing these is that policies that are up to about one year in length...have minimal impact on women's labor market trajectories, whereas the longer policies tend to have detrimental impact." This makes sense—the longer one is absent from one's job, the less likely that person will be to ascend the ladder to greater career heights.
"I think the biggest benefit of paid family leave is [...] health and wellness for families," Rossin-Slater says. "[For example] breastfeeding rates increase as a result of access to paid leave, and we know that breastfeeding is linked to improved health outcomes. Maternal health is improved, both in terms of mental wellbeing and physical recovery, and we also know that [without access to paid leave] some women would just quit their jobs, which is potentially detrimental to their careers. For women who can't afford to do that, maybe they very quickly return to work and end up sending their very young infants into potentially lower-quality childcare settings. We have evidence that [...] babies in group settings tend to get sick very often and infants that are younger than six months of age are particularly vulnerable."
If we take a long view, then, healthier and happier parents and children should be more productive and, therefore, have a positive impact on the overall economy. If we take a short view, it means higher taxes, which nobody likes. The Biden administration's proposed bill would have these apply to wealthy individuals and corporations, while the law that was enacted in California in 2004, for instance, takes those taxes out of employee paychecks. Either way, paid leave comes out of a communal pot the public pays into so that a company doesn't have to pay two employees to fill the same role. In this way, businesses (especially small businesses) don't suffer the financial burden of paid caregiver leave.
With so many moving parts, it can be hard to grasp the essence of how supporting families will boost our economy. This is especially true when we think in the short term—fixating on people leaving the labor market for several months, or on the tax burden. It's actually simple, though. In the long term, giving parents the breathing room we desperately need to stay home with our sick kids—or to welcome a newborn to the world—leads to a healthier, happier community. It leads to less hours lost to distress, more productive and creative children and adults, and more opportunities for growth.
The proposed policies, even if they don't get passed in Congress and end up being enacted on a state-by-state basis, could revolutionize how we understand growth—as being both individual and communal. We are all someone's family, after all, and there is always someone to care for. Lifting up parents and caregivers really means helping every one of us ascend to new heights, together.