Yellen, Harris to push childcare investments as boost for overall economy By Reuters
© Reuters. FILE PHOTO. U.S. Treasury secretary Janet Yellen responds to questions at the Senate Appropriations Subcommittee hearing on the FY22 budget request of the Treasury Department in Washington DC. June 23rd, 2021. Greg Nash/Pool
By Andrea Shalal
WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen and Vice President Kamala Harris will urge Congress on Wednesday to back proposed spending on affordable childcare, armed with a new Treasury report that maps out big benefits such care offers the economy.
Congress will be considering $3.5 trillion worth of legislation that includes free preschool for children 3-4 years old; a boost in pay for childcare workers (95% of them are women); a cut of half the cost of care for most families; and permanent credit for child and dependent care taxes.
Due to the Supreme Court decision to uphold a federal moratorium on evictions and expiration of pandemic unemployment benefit, the Internal Revenue Service is set for a third round in child tax credit payments. Parents will have a critical lifeline as a result.
According to the Treasury, the actions would increase both supply and demand for childcare, resulting in long-lasting positive effects on children and their families as well.
“It’s past time that we treat childcare as what it is – an element whose contribution to economic growth is as essential as infrastructure or energy,” Yellen said in a statement.
It was the single most important thing that we can do for a better economy over the next few decades to enact President Joe Biden’s suggestions, she stated.
According to the Treasury, the present situation is “unworkable”. It stated that improving accessibility to high-quality, affordable care, which was estimated at $60 billion by 2019, would have many positive effects on wages, employment, and society.
The Treasury stated, “A well-funded sector for child care will allow parents to remain in labor force and work the hours that suit their family’s needs, as well as earn a living, while also ensuring our economic prosperity.”
Harris – who is using her first visit to the Treasury since taking office to make a joint pitch with Yellen for the childcare provisions – has called the pandemic-triggered mass exodus of women leaving the workforce https://www.reuters.com/article/us-health-coronavirus-women-jobs/pushed-out-by-pandemic-women-struggle-to-regain-footing-in-u-s-job-market-idUSKBN2AW19Y “a national emergency.”
A senior administration official spoke on condition of anonymity to Reuters and said that Harris will continue public engagements regarding the legislation during the next few weeks due to the “critical juncture” in congressional negotiations.
Last month, the vice president highlighted the importance of affordable childcare https://www.reuters.com/article/usa-biden-companies-idCNL1N2PJ0WD for improving U.S. competitiveness during a meeting with top executives of seven companies, including Microsoft Corp (NASDAQ:) and Etsy (NASDAQ:), noting that it also directly affected recruitment, retention, worker productivity and corporate profits.
It identified the numerous market failures in the current system that relies on private funding and called for changes to allow parents to make better economic decisions and live a more secure life.
According to the Treasury report, the average family that has at least one child younger than 5 years must now spend about 13% of their income on childcare. However, Biden’s proposed changes would bring that number down to just 7%.
In terms of the amount of public money spent on care and education for children in early childhood, the United States is ranked 35th out 37 countries monitored by Organization for Economic Cooperation and Development. This figure was calculated relative to Gross Domestic Product.
France has an average investment of $7,000 for each child between infancy and five years, while the United States spends only $2,400. According to the report, this results in lower incomes for childcare workers.
The report stated that 15% of childcare workers are below the poverty level in 41 states with an average salary of $24,230. This means they must rely on the public sector for their economic needs.