It has to be taken as a sign of progress that the presidential candidates of both major political parties talked about providing child care and paid family leave in their campaigns, for the first time in U.S. history. But despite this progress, the Trump administration’s child-care proposal is not comprehensive enough to be of much use to the large numbers of low-income families in great need. Trump’s child-care proposal is—surprise, surprise—another tax giveaway to upper-income taxpayers, disguised as an increased tax credit for struggling low-income families. The increase is vanishingly small for low earners. In response to Trump’s plan, Democratic Senator Patty Murray and Representative Bobby Scott drafted the Child Care for Working Families Act. A summary of the bill, expected to be introduced in full tomorrow, shows a more comprehensive plan for high-quality early learning and affordable child care.
Subsidized child care and paid family leave are crucial for American families because they have the potential to increase disposable family income and reduce poverty and inequality in a meaningful way. They are also essential for achieving gender equality, key for children’s well-being, and a stimulus to the economy. For all these reasons, any progressive or Democratic Party platform must include wide-ranging child care and paid family leave proposals. Trump’s plan doesn’t get us there, but as in many other countries with our wealth, we can and must humanize our economic system by building in time and resources for caring for our families.
How does the United States stack up against other countries in terms of family-friendly policies? Famously, we remain the only industrial nation that does not have a national paid maternity leave policy. The United States also does far less to provide quality, affordable child care than many other wealthy countries. The Scandinavian countries spend about 1.5 percent of their GDP on early childhood care and education alone, compared to about 0.5 percent in the United States. Both benefits, if widely available, would improve health and well-being, as well as family income. In Quebec, our neighbor to the north, the maternal labor supply increased by 10 percentage points when the province made child care universally available originally for $5 per day, demonstrating that there is a huge latent demand for child care.
In the current era when our economy is producing many low-wage jobs with few, if any, benefits and inequality is growing between top and bottom earners, requiring employers to provide more job security and help with family care costs, even if done in partnership with government, would improve workers’ lives enormously. Child care costs have also increased dramatically in the United States. These costs are a particular burden for single mothers, who have two-fifths of all babies who are born today; almost a quarter of all children five and under live with single mothers. For these mothers, high-quality center-based care is unaffordable and they often rely on friends and family in order to take paid jobs.
These benefits would also improve gender equality. For a woman, knowing you will not lose pay and have a job to return to is key when taking time away from work to have a baby. Providing income and job security for maternity leave can keep mothers and their children from sliding into poverty. Knowing you will be able to return to work because you have good, affordable child care available would increase your lifetime income and prevent poverty in old age. Mothers spend more unpaid time taking care of children than fathers do and often leave the labor force to do so, resulting in reduced lifetime earnings and retirement income for the mother and reduced income for the family. Providing paid family leave for both men and women and affordable child care for all would help mothers and fathers equalize care giving and make combining work and caring for a family easier.
Pumping public dollars into high-quality child care is an investment that has both immediate and long-term potential to increase economic growth. The lack of affordable child care has been shown to keep parents, especially mothers, from working. Providing more child care also creates jobs for child-care workers. Using subsidized, center-based care, which is generally considered more reliable and higher quality than many informal child-care arrangements and family day-care homes, is also associated with increased job stability for mothers. Access to affordable and reliable child care is also important for completing job training programs and higher education, improving the productivity and earnings of those who complete them, who can go on to attain higher-quality jobs that provide fringe benefits and upward mobility.
High-quality child care has also been shown to increase the future productivity of children: they do better in school, are more likely to attend college and work and earn more, and are less likely to engage in crime. High-quality child care helps to close the income gap between the poor and the rich.
Child care has been described by the late economist Barbara Bergmann as a merit good; it does more for society than it costs. Parents, many of whom have low incomes especially when their children are young, simply don’t have the funds to invest the optimal amount in their own children. And parents are not the only ones, or even the main ones, to benefit from their investment; well-educated children benefit all of society. As a society we underinvest in children, and only the public sector can fill the gap. A 2016 Council of Economic Advisers’ report estimates that every dollar invested in child care returns roughly $8.60 in benefits to society.
Other countries have child-care models that are useful in thinking about our own ideal policy. The Scandinavian countries, France, Chile, and the Canadian province of Quebec all provide universal child care, usually in some combination of family day-care homes and child-care centers. In Europe, when caregivers, usually women, provide care in their own homes for the children of working parents, their homes are typically inspected for health and safety and the caregivers must meet basic training requirements. Payments to them are generally guaranteed by the government. Center-based care is more common among older children and in urban areas and is generally preferred by parents. In Quebec, the Centres de la Petite Enfance (CPE) have a 92 percent approval rating from users, and many of the parents who use other types of care are waiting to get a place in a CPE.
In the United States, the only recent increases we have seen in public provision of child care have come about through public schools adding pre-K programs for four-year-olds and in a few places, three-year-olds. But gains are proceeding slowly and vary tremendously across the states, from a low of 12.3 percent of all four-year-olds in a publicly funded program in New Hampshire to a high of 100 percent in the District of Columbia. The Democrats’ new Child Care for Working Families Act would aim to bring these percentages up by supporting universal access to high-quality preschool for all three- and four-year-olds. Federal dollars for younger children have not increased. Due to federal budget cuts, 400,000 fewer children have subsidized child care now than in 2001. The Trump tax boondoggle for the top third of families could instead be used to double the number of children below school age currently receiving public child-care subsidies in the United States through the Child Care and Development Block Grant, the main federal child-care subsidy.
In addition, the United States Internal Revenue Code already has a tax credit for child care (Child and Dependent Care Tax Credit), but it is limited in amount, and the benefit amounts and income eligibility standards have increased only once (in 2003) since it was passed in 1976. For most families who pay for child care for two children, the maximum annual credit increased by $240. This tax credit should be enlarged to help additional middle-class families and should be made refundable for those whose incomes are so low they do not owe taxes (as the Trump proposal does but with very modest effects). But an even more valuable benefit would be guaranteed placements (or vouchers for places) where high-quality child care is provided and where the fees are affordable because they are subsidized by the public purse and proportional to family income.
The Trump child-care proposal cannot bring about systemic change to everyday Americans’ lives. An analysis by the Tax Policy Center of the Trump proposal shows that one quarter of the benefits would go to the 12 percent of all families with annual incomes greater than $200,000, with 70 percent of the benefits going to the 36 percent with annual incomes of at least $100,000. So, families with incomes of more than $100,000 would get 82 percent of the benefits from the program. Families with incomes between $200,000 and $500,000 would gain annual tax savings forty-five times greater than those with incomes between $10,000 and $30,000, and three times larger than those with incomes between $50,000 and $75,000.
The Democrats’ bill works to make child care affordable for all families, instead of only helping those at the top, as Trump’s child care plan does. The Democratic bill would ensure that no family that has an income that is below 150 percent of the state median pays more than 7 percent of their income on child care costs and would introduce a sliding scale so that each family pays their fair share. Currently, among those paying for care, families that make less than $50,000 per year typically spend between 7 to 17 percent of their after-tax income on child care, while families earning more than $200,000 after-tax annually spend about 3 percent. The bill would also improve pay and training for child care workers, an important way to attract needed workers to the field and improve the quality of care.
Trump’s new parental leave proposal also needs to be contrasted with policy changes taking place around the country. Just in the past year, New York has added a twelve-week paid family-leave social insurance program to an existing program for medical leave, and the District of Columbia and the state of Washington have created new programs providing both family leave and medical leave. These comprehensive plans join existing plans in California, New Jersey, and Rhode Island, where many benefits have also been expanded. The Washington state program provides for up to twelve weeks of paid family leave and up to twelve weeks of medical leave (with a maximum of sixteen weeks per year) and pays 100 percent of salaries for the lowest-earning workers. In contrast, Trump’s proposal will cover only new parents for a maximum duration of six weeks and with limited wage replacement, likely similar to the level of unemployment insurance benefits, since it proposes operating the paid parental leave through the federal-state unemployment insurance program. With limited wage replacement, we know from research on California’s program that low-income families, who cannot afford to lose a third to one half of their wages, use the program less. Moreover, workers don’t have new children all that often, whereas workers frequently have serious illnesses or accidents as do their other family members. In fact, leaves for maternity or for parents to bond with a new child constitute only 16 percent of all family and medical leaves taken in the United States. Trump’s program will be too small to make the difference American workers need.
How do we make further progress on these two issues? Legislation has been introduced on both issues in Congress many times. Both issues have dedicated coalitions working for change, but arguably, at least to date, paid family leave has received more attention and energy from social and economic justice movements than affordable child care. Both are essential for families and should be endorsed by every progressive candidate in 2018 and 2020. The campaign for paid family leave has been bolstered by raised public consciousness about the hardships of low-wage workers and the demands of movements like the Fight for $15, which advocate for increased pay and improved benefits from employers. It is strengthened, too, by its broad appeal—virtually every worker needs a medical leave at some point in their lives and about 52 million workers have loved ones to care for. Despite its success in some states, this policy needs to go national to benefit everyone. Child care, too, is a near universal need that deserves a national response; not only do 80 to 90 percent of women typically have children, but even those of us who don’t are depending on today’s children growing up to be tomorrow’s workers and caregivers, the people who will take care of us in our old age.
Both these family needs, paid leave and subsidized child care, should be funded by the public and private sectors. Incorporating the price of care into the costs of doing business would ensure that corporations pay their fair share and that workers and their families enjoy higher wages and a better standard of living, conceivably even gaining leisure time to spend with loved ones. As it is now, businesses can ignore these costs—neither paying for the expenses their workers bear nor paying taxes to cover the costs publicly.
Feminists have long called for valuing women’s unpaid labor and recognize the urgency of providing and funding care, given what many see as a stalled revolution for women and the growing care needs of an ageing society, coupled with an increasing share of paid care work being done by disadvantaged immigrant workers who can barely afford to look after their own families. The National Partnership for Women and Families leads the national coalition working for paid family and medical leave, along with Family Values @ Work, which leads state-by-state efforts. The National Women’s Law Center heads the coalition working to increase public support for child care. While the memberships of both coalitions include many of the country’s largest women’s groups, they also include many civil rights and social and economic justice groups, including labor unions. Women’s groups are not strong enough to carry these issues on their own, and many must necessarily concentrate on other issues affecting women—like abortion rights or violence against women—that are often less appealing to broader coalitions. Of twenty-seven leading women’s organizations in the United States, fifteen list either paid family leave (twelve), or child care (nine), or both (six), while twelve groups do not list either among their core issues on their websites. While popular among women’s groups, family leave and child care must continue to be championed by broader coalitions.
Fortunately, large coalitions have formed around both paid leave and child care, and newer coalitions that also focus on elder care—like Social Security Works and Caring Across Generations—are becoming more involved in the fights for paid family leave and child care. It is such broad coalitions pushing comprehensive agendas for care that can drive home the urgency of these issues to all—and win real change.
Heidi Hartmann, an economist, is the President of the Institute for Women’s Policy Research, editor of the Journal of Women, Politics & Policy, and a MacArthur Fellow.
Gina Chirillo is the Coordinator of the Office of the President at the Institute for Women’s Policy Research and the managing editor of the Journal of Women, Politics & Policy.
The authors would like to thank Alex Mull-Dreyer, a student at Davidson College and summer research intern at the Institute for Women’s Policy Research, for his research assistance.