The business case for child care reform

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After facing an especially challenging past year, Americans entered 2021 with an eye toward a brighter future. The global pandemic, racial reckoning, and bifurcation over the presidential election that marked the last year of our lives left us with the question of where to focus our energies in the year ahead. One of the biggest challenges that families face during this time is the nearly impossible family balancing act of work, school, and child care.

Thankfully some relief is on the way. While it’s not perfect, The American Rescue Plan is poised to take a long-overdue step in assisting families with childcare and curbing child poverty by expanding the Child Tax Credit from $2,000 to $3,000 per child annually, with an added $600 bonus for children under 6. Although the expansion has been met with misinformed criticism, this tax credit has the potential to carry long-term impact on our economy. But much more work is needed to fix our deficient child care system. Further reforms are planned in President Biden’s infrastructure plan.

What’s become clear to me, as a businessman and a grandfather, is that we must prioritize access to affordable child care as a critical step in our economic recovery. This may seem low on the list to some, but I came away from the last year with a deeper understanding of how access to child care greatly affects parents’ opportunities for employment. 

With child care centers closed, how can a single mom of a toddler keep her career on track, or get to a job interview? When child care that is available costs more than a parent’s groceries or rent for the month, how can we expect a parent to sustain their job?

As we begin to rethink our childcare system, we must focus on two components: cost relief, to offset the financial burden on families, and infrastructure improvements to increase supply.

Americans need quality child care to support their children’s development and keep them healthy and safe, but hardworking families struggle to afford costs that exceed $20,000 annually in 22 states. Opponents to action argue child care is a personal responsibility, not a matter in which the government should interfere. I’m sympathetic to that argument. I built my career and many successful ventures on the free market. I know when a system is not working. The country’s current haphazard approach to child care is a burden on parents, society and the economy at large.

Business owners have a stake in keeping their employees happy and productive. According to the Center for American Progress, U.S. businesses lose an estimated $12.7 billion annually due to employees’ child care challenges. How can we expect working parents to be productive when they spend their days worrying about the health and safety of their children? The ongoing pandemic has only worsened matters, forcing hundreds of thousands of women out of the workforce in a short time span. We can’t claim we want to get people back to work while ignoring an element that forced them out in the first place.

I encourage other business leaders to join me in taking a long-term view of the societal and economic benefits of child care. High-quality care is not just babysitting, it’s critical development and education for the next generation. Research shows that children who have had high-quality care perform better in school, and are more likely to graduate from high school and college. The connection between quality jobs and a college degree is well-established — a worker with a bachelor’s degree has a 75 percent chance of holding a good job and the salary that accompanies it. Failure to expand child care access now ensures countless youth fall behind their wealthier peers, which risks increased taxes to support those who cannot find skilled employment, as well as difficulties hiring skilled workers.

A well-educated workforce will give America a competitive edge during an increasingly volatile global marketplace. We can’t gain that advantage when families are priced out of child care. If expenses for early childhood education were capped at even 7-10 percent of a family’s income, U.S. gross domestic product would increase to $252 billion.

Through the David & Laura Merage Foundation, I started the Care For All Children campaign to build a strong coalition of business executives, citizens and politicians to advocate for affordable child care in states across the nation. Our work was instrumental in putting Colorado on a path to statewide pre-K by putting early childhood education on the ballot and at the forefront of voters’ minds.

Though it remains to be seen how universal pre-K will fare in the Centennial State, the results have been promising elsewhere. After Washington, D.C. began offering two years of universal preschool, the city’s maternal labor-force participation rate increased by about 12 percent, with 10 percent attributable to preschool expansion.

Imagine what we could accomplish if that growth occurred nationwide and the American Rescue Plan’s investments in childcare supply and family tax relief are made permanent. The possibilities for our country and next generation of leaders are boundless with the combined strength of the business world and bipartisan political support.

By listening to experts on the ground, we can reduce the impact of inaccessible child care on our businesses. Join me in searching for and implementing solutions. Child care reform is a universal win for parents, corporations, and the economy alike. As the push for high-quality, affordable child care spreads across the country, we have a social responsibility to the next generation to add our voices to those calling for change.

David Merage is founder of Consolidated Investment Group (CIG) and co-founder of the David & Laura Merage Foundation. He is perhaps best known as the co-founder of Chef America and the co-creator of Hot Pockets.

Tags American business American competitiveness Biden infrastructure plan Child care Child tax credit Early childhood education Joe Biden Universal preschool

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