Companies that get federal subsidies should be required to provide child care

It is no secret that the cost of child care has increased so much that it is forcing some parents to quit their jobs in order to be able to care for their children. I wrote about this in a recent op-ed in the Sun-Times that urged politicians on both sides of the aisle to come together and find a way to help families.

While legislative efforts are pending, the Biden administration reportedly plans to leverage the federal government’s investment in the semiconductor industry to ensure that employers provide affordable child care. The Commerce Department announced that any semiconductor manufacturer seeking part of $40 billion in new federal subsidies will need to guarantee affordable, high-quality child care for workers who build or operate a plant.

This is a good idea that can and should be duplicated for other industries that receive federal subsidies. The list is long. Among the industries getting the most federal subsidies are utilities and power companies and the auto, oil and gas, electric and electronic equipment industries, according to The Subsidy Tracker.

Other industries that receive federal subsidies include chemicals, financial services, metals, real estate, airlines, health care services, pharmaceuticals, freight and logistics, hotels and information services, just to name a few. While some industries rely more on federal subsidies than others, there is no doubt that taking away the subsidies would affect each one.

The Commerce Department’s recent announcement basically says that companies that receive federal subsidies can use some of the government money to meet the new child care requirement. Companies can do that by consulting with Commerce officials, who will set basic guidelines, according to a report in the New York Times.

Among the ways these companies can meet the requirement is by building child care centers near construction sites or new plants, or by contracting with local child care providers to add capacity at an affordable cost for workers. Child care cost will be defined by the government. Right now, child care costs consume about 18% of an average construction or manufacturing worker’s salary in Phoenix, where semiconductor manufacturing is booming, according to the New York Times.

Lack of child care costs everyone

Nationwide, the average cost to individual parents of child care is $5,520 a year, according to a recent study from ReadyNation. Insufficient child care costs businesses $1,640 per parent in lost revenue and increased hiring costs, adding up to $23 billion annually nationwide. Presumably, these costs would go down if companies provided child care.

While some may consider the Commerce Department’s stance as a cost burden to companies, the requirement will actually enable more people to return to work, and companies that provide affordable child care will be more attractive to prospective workers. This is vital among all industries, as many companies are having staffing difficulties.

The government loses out, too, in lost income and sales tax revenue of $1,450 per parent, or $21 billion nationwide. And among primary caregivers who do work, 85% reported that child care challenges are cutting into their work hours or productivity, causing them to be late for work, to miss days or to be distracted when they are at work.

To be sure, the Commerce Department requirement will not totally fulfill Biden’s election pledge regarding child care. Part of his agenda included a plan to pass federally guaranteed paid leave, subsidized care for children and universal prekindergarten. Those goals have yet to come to fruition, but this recent development is a positive step.

The federal government should require all industries that receive federal subsidies to guarantee affordable child care. That move would help a large chunk of the nation’s work force and also compel industries and companies that do not receive subsidies to follow suit in order to stay competitive in the labor market.

Jeffery M. Leving is founder and president of the Law Offices of Jeffery M. Leving Ltd., and is an advocate for the rights of fathers.

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