The U.S. is returning to a tired old playbook: If at first you fail to make something a universal right, try making it an employee benefit.
For a brief moment, it looked like America could get a real child-care system—one that wasn’t defined by lengthy waitlists, sky-high fees, and crossed-fingers quality. When the House of Representatives passed the Build Back Better Act in 2021, it included $400 billion in funding, part of which would have paid programs enough to boost providers’ wages, in turn increasing the supply of available slots. The act also would have capped all but the wealthiest families’ child-care bills at 7 percent of their income. This overhaul would have put child care squarely in the same category as Social Security, Medicare, and other guaranteed supports: It would have, in other words, become a right. Since Joe Manchin and 50 Republican senators killed the bill, however, many policy makers have started following a tired old playbook: If at first you fail to make something a universal right, try making it an employee benefit.
The instinct to make for any policy port in a storm is understandable, and the American child-care system is stuck in a years-long hurricane. At its core is a financial paradox. Child-care providers have very high fixed costs due to the need for low child-to-adult ratios, so they can’t pay their staff well without significantly increasing parent fees (many child-care workers make less than parking attendants). In other words, child care simultaneously is too expensive for parents and brings in too little revenue for programs to operate sustainably. In fact, the industry is still down more than 50,000 employees from pre-pandemic levels. Centers have shut down for want of staff, long waitlists have stretched to the point of absurdity, and the rising cost of care continues to exceed inflation.
The system desperately needs a large infusion of permanent public money so that programs can compensate educators well, parent fees can be slashed, and supply can rise to meet demand. As Annie Lowrey wrote last year, “The math does not work. It will never work. No other country makes it work without a major investment from government.”
Read: The reason child care is so hard to afford
In his public remarks and his proposed budget for the 2024 fiscal year, President Joe Biden is certainly insistent about the need for a permanent answer to child-care funding. Democratic Senators Elizabeth Warren and Patty Murray, along with their House counterparts, have each submitted a major child-care bill in recent months. Yet in the face of congressional gridlock, Democrats and Republicans alike are turning to employers as a salve.
At the federal level, the Biden administration is nudging companies to offer employees child-care assistance, embedding such encouragement in the semiconductor CHIPS Act and a recent executive order on care. Red states such as Oklahoma and Missouri have proposed—along with other actions, like tax credits for donors to child-care programs—sweetening the incentive pot for employer child-care benefits. States such as Michigan and Kentucky are piloting programs in which child-care costs can be split among the employer, the employee, and the government.
The problem is that these are quarter measures at best. Millions of gig workers who don’t receive benefits will be left out by default. And employer-sponsored benefits are unreliable because people may switch or lose their job—and because employers can simply change their mind. According to a recent Care.com survey of 500 companies, nearly one-third said they might cut child-care benefits if a recession takes hold. Even putting all of that aside, none of these programs can ever hope to help even the barest fraction of the millions of families who want and need care.
Read: America’s child-care equilibrium has shattered
For instance, two years after its inception, Michigan’s well-intentioned Tri-Share initiative reaches a grand total of 277 families. On-site child-care centers can quickly fill up and may not meet the needs or preferences of blue-collar workers who require care during nontraditional hours. Moreover, none of these initiatives significantly addresses providers’ wages, and opening new programs when you can’t even find staff for existing ones is a bridge to nowhere. A child-care system that relies on the employer-employee relationship is fundamentally flawed. There is a reason we do not offer public schooling as part of a benefits package.
That is not to say that employers should be ignored. Some parents benefit greatly from having child care located where they work. However, those programs do not have to be funded and run by the employer; in a publicly funded system, on-site centers can be one option among many. Similarly, employers can and should be asked to contribute to the child care their employees rely on, but through taxation instead of fringe benefits. Vermont is set to become the first state to substantially increase child-care funding with a small payroll tax, at least 75 percent of which will be paid by employers. The resulting funds will allow the state to make many more families eligible for child-care assistance and help providers raise their wages.
We’ve been at this crossroads before, with health care. During World War II, companies began offering health insurance as a perk. This was done to get around wage caps established in 1942 to prevent the economy from going haywire as companies competed for the suddenly shrunken labor force. Coming out of the war, President Harry Truman proposed a national health-insurance system akin to what would become the U.K.’s National Health Service. The plan failed under opposition not just from business interests but from several major labor unions that had become invested in the idea of employer-sponsored insurance—a decision whose effects the country still feels today.
Child care itself serves up a cautionary tale. In the late 1960s and early ’70s, a wide-ranging coalition of advocates and elected officials pushed for a universal, affordable, choice-based child-care system. Their efforts culminated in the Comprehensive Child Development Act of 1971, which would have created a nationally funded, locally run network of child-care sites. The legislation passed Congress on a bipartisan basis before President Richard Nixon vetoed it. Soon thereafter, the coalition splintered. The historian Anna Danziger Halperin has written that, “following this narrowing of political possibilities and shift of the policy landscape to the right, by the 1980s advocates … no longer pressured policymakers for universal approaches. Instead they focused on more limited provisions, like tax incentives for employers to provide child care.”
The logic behind leaning on employer-sponsored child care is easy: Something is better than nothing. Yet this is not always the case, in life or in public policy. In the middle of a hurricane, handing out umbrellas is a waste of time and energy. As America learned with health care, if we get used to a service being tied to employment, that idea can become entrenched and very hard to change. Today’s stopgap measures become tomorrow’s status quo. Marching down such a path will make it even harder to gain the momentum needed to build and fund a child-care system that works for everyone.
Part of the difficulty in gathering that momentum is the lack of a popular child-care proposal that captures the public imagination. Murray’s plan has the most support within the Democratic Party and formed the basis for the Build Back Better child-care provisions. Although transformational, the bill uses a complicated income-based sliding fee scale and a bureaucratic “activity test” whereby parents must prove they are engaged in work or school, or have a legitimate reason not to be. One would be hard-pressed to summarize either Murray’s or Warren’s plan in a sentence, much less a viral sound bite.
The time and energy spent promoting employee child-care benefits, then, would be better spent developing a simply communicated, comprehensive reform plan. To maximize its popularity, such a plan should help with the early years as well as after-school and summer care, and follow the lead of some Nordic countries with stipends for stay-at-home parents. The simplest, strongest plan to capture the public’s attention could be to mimic the public-school system, and propose universal and free child care. Ideally, any plan would be tied into a suite of pro-family policies that includes paid family leave and a monthly allowance for helping with general child-rearing costs. There is significant political upside to getting this right: The child-care pain point is deep and broad, and fixing child care is an astoundingly popular policy area that could be put front and center in a campaign.
The miserable state of American child care is not a given. In the past 30 years, Germany, Canada, Ireland and other peer nations with market-based child-care systems have undergone tremendous reforms. Canada aims to halve child-care fees nationwide, and some families have already seen their bills reduced by thousands of dollars. Within the U.S., in addition to Vermont’s recent victory, New Mexico is proposing to make child care free for most families while boosting educator wages. The common thread? Large amounts of permanent public money.
In the end, the country must decide what child care is: a right that every family deserves and that is worth investing in, or a luxury to be purchased by those with means and bestowed upon a lucky few at their employers’ whim.