- Joe Biden’s American Families Plan featured “care economy” measures that Congress is currently debating.
- 50 years ago, a similar plan actually passed the House and Senate – before Richard Nixon vetoed it.
- “The Nixon veto set our country back behind the rest of the world by a generation,” says Time’s Up Tina Tchen.
- See more stories on Insider’s business page.
The American economy has a female-participation problem, and it’s related to the cost of childcare. The first is too low and the second is too high.
Over 2.3 million women dropped out of the labor force between February 2020 and February 2021, and women continue to struggle to return to work without childcare. In fact, the US experienced a bigger drop in women’s employment than any other nation because of the pandemic – a reduction of 9.4%, according to the International Labour Organization, a United Nations agency focused on advancing social and economic justice.
Likely related is the drastic decline of the US birthrate – a record 4% drop in 2020 – with ominous implications for the size of the next generation’s workforce, and its potential for driving economic growth.
President Joe Biden is trying to make it easier for women to return to work by passing legislation that would provide affordable, quality childcare for all families as well as pay childcare workers a fair wage to encourage more people to pursue a career in early childhood education. It forms a key part of his American Families Plan, which Congress is taking up as part of a huge $3.5 trillion spending package.
While this might sound like a radical idea, it’s not the first time Congress has tried to offer parents universal childcare and provide fair wages to childcare providers. Exactly 50 years ago, Congress succeeded in passing a bill into law, but the president at the time – Richard Nixon – had the opposite attitude to Biden.
Nixon vetoed the bill, not because of its costs and not because the legislation lacked bipartisan support, but because he said it was a “radical” idea that could weaken the family structure by giving government the authority to care for children and by pushing women into the labor market.
The declining US birthrate can be traced back to 1971 – the same year Nixon vetoed the Comprehensive Child Development Act. For a generation of Americans to replace themselves, there would need to be 2,100 births per 1,000 women. American women have given birth below this number every year since 2007, and in most years since 1971. It suggests that Nixon’s veto weakened the family structure in exactly the way he was trying to prevent.
“The Nixon veto set our country back behind the rest of the world by a generation,” said Tina Tchen, CEO of Time’s Up, a nonprofit focused on creating equity and power for women in the workplace. “It was an opportunity to put our country where the rest of world is by seeing caregiving as an essential public support for workers.”
The pandemic made the childcare problem worse
The pandemic exposed just how great a problem the lack of affordable childcare is and how much it has impacted the US economy. Nearly half of childcare providers closed their facilities during the COVID-19 shutdown, and 18% of childcare centers remain closed, according to a 2020 survey by the National Association for the Education of Young Children.
Even before the pandemic, parents were postponing school and training programs, declining promotions and sometimes leaving the workforce entirely due to childcare challenges, the US Chamber of Commerce Foundation found in a study of Iowa, Idaho, Mississippi and Pennsylvania. Issues such as breakdowns in care, affordability, or limited access resulted in anywhere from $479 million to $3.47 billion in estimated annual losses for these states’ economies.
“We knew there was an issue with childcare access and affordability but everything was elevated during the pandemic,” said Cheryl A. Oldham, senior vice president of education and workforce at the US Chamber of Commerce Foundation. “We cannot get back to business if childcare centers are not in business.” The Chamber is currently studying childcare issues in six additional states – Arizona, Alaska, Arkansas, Missouri, West Virginia, and Texas – and plans to release those results in the fall.
The effects of that 1971 veto have been rippling through the U.S. economy ever since. Parents who do find childcare end up paying exorbitant fees. Despite US families paying, on average, almost a quarter of their net income on childcare, more than one in six women who are childcare workers live below the poverty line, according to Undervalued, a report by the National Women’s Law Center.
A lifetime of lower wages for women
The US childcare system has failed both Nina Perez and her mother, Amy Perez. If not for Nixon’s 1971 veto, Amy would have had the support she needed to return to work after giving birth to her first child. Instead, she was forced to quit her job as a flight attendant in 1981.
“My parents didn’t want to lose money so they made the decision that my mother would take care of my sister herself,” said Nina, who is now national director of early learning at MomsRising, an online organization focused on increasing family economic security and ending discrimination against women and mothers. But they didn’t consider the long-term consequences of that decision. Like many other women who give up a job to care for a child, Amy was never able to get fully back into the workforce and that has impacted her Social Security earnings and retirement savings.
Amy Perez isn’t the only woman to earn a lifetime of lower wages because of the lack of affordable childcare. A 2021 study by the National Women’s Law Center and The Columbia University Center on Poverty and Social Policy finds that, by retirement age, affordable childcare would mean that women with two children would have about $160 per month in additional cash flow from increased private savings and Social Security benefits. It’s one reason women experience higher rates of poverty than men. In 2018, 12.9% of women lived in poverty compared to 10.6% of men, according to the Center for American Progress.
Finding affordable childcare hasn’t gotten any easier 40 years later. When Nina Perez couldn’t find affordable childcare for her daughter two years ago, she turned to family to help take care of her daughter. “We would have had to go into our long-term savings to pay for childcare if my mother couldn’t help with our daughter’s care,” she said.
Working parents weren’t the only ones negatively impacted by Nixon’s veto. That decision also signaled that the United States wasn’t going to invest in the caregiving workforce, said Myra Jones-Taylor, chief policy officer at Zero to Three, a nonprofit focused on improving the lives of infants and toddlers. “It racialized and gendered the disinvestment of this workforce” – a workforce that is mainly Black, Latino and immigrant women, she said.
Congress considers its first investment in childcare in 30-plus years
Congress has the opportunity to fix this problem with the American Families Plan, a sweeping $1.8 trillion package outlined by the Biden Administration. The plan includes a $225 billion investment in childcare to:
- Subsidize the costs of childcare. Parents would pay for childcare on a sliding scale with child care costs fully covered for families earning the least while families earning 1.5 times their state median income will pay no more than 7 percent of their income for all children under age five.
- Pay the childcare workforce higher wages. Early childhood staff would be paid a $15 minimum wage and staff with qualifications similar to kindergarten teachers would receive comparable compensation and benefits.
- Invest in high-quality childcare. Childcare providers would receive funding to cover the true cost of quality early childhood care and education, creating a professional pipeline for early childhood educators in all states and all settings.
The AFP would be the first new legislation aimed at childcare in more than 30 years, when the Child Care and Development Block Grant was passed in 1990. That was pegged to welfare reform and was focused on getting women to work, Jones-Taylor said, but it didn’t address the quality of childcare or the paltry wages of the childcare workforce. The only other childcare program is an earned income tax credit and child tax credit, signed by President Ford in 1975, which provided financial assistance to low-income, working families with children. Congress recently expanded this under the American Rescue Plan to $3,000 for each child between 6 and 17 years old and to $3,600 for each child under age 6 for 2021.
“The AFP is expensive because we haven’t spent money on this for a long time,” said Rasheed Malik, senior policy analyst for early childhood policy at the Center for American Progress. “We placed the burden on individual parents and families and that’s not how it is done in most of the world.”
In comparison, public expenditures on early childhood education and care is less than 0.5% of GDP in the United States, while it is higher than 1.0% of GDP in France and the Nordic countries, with total spending reaching as high as 1.6% in Sweden and 1.8% in Iceland, according to The Organisation for Economic Co-operation and Development.
It’s unclear if Congress will be able to fund everything outlined in the AFP. The budget reconciliation bill that Congress is expected to vote on before members leave for the August recess will determine how much money is available to pay for the AFP as well as the infrastructure bill that has been moving through Congress. Debate on the AFP will begin in the fall.
“This is a bipartisan issue,” Oldham said. “The more we talk about childcare as a workforce issue, the more bipartisanship there is. It’s when you get into the details of what to include that it can get partisan.” For instance, Oldham said, the Chamber doesn’t believe childcare programs should be entirely public funded or that the focus should be on universal pre-school programs.
“The lesson to learn from the Nixon veto is that when you lose a proposal like that, at this stage, it is not just gone for a year,” Tchen said. “The potential to lose it for another 50 years is great and we could lose that momentum for another generation.”