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President Biden has a Plan C to help more Americans afford child care

Are the strings the Commerce Department has attached to semiconductor funding as transformative as Plan A? No. But they're a start.

The Biden administration made affordable child care one of the centerpieces of its early policy rollouts, but it was one of the many proposals left by the wayside in the face of centrist handwringing. Enter “Plan C”: the strings attached to billions in new federal funding that will require certain manufacturers getting government subsidies to provide access to child care for their workers.

The “C” in this case stands equally for the CHIPS Act, the bipartisan law aimed at boosting America’s semiconductor manufacturing industry, and the Commerce Department, which is overseeing that law’s implementation. The $52 billion price tag of the CHIPS Act includes $39 billion in direct subsidies to new semiconductor factories to boost the production of the chips that run basically every electronic device Americans use these days.

Companies that want a piece of the first batch of those sweet, sweet subsidies will have to meet certain conditions, according to guidelines released Tuesday by the Commerce Department’s CHIPS Program Office. While companies that have applied for federal funding will recognize most of the document as relatively boilerplate, there are a few provisions that are making progressives hopeful and making libertarian free market-types scoff at what they consider big-government overreach.

That’s all hugely important both from a labor and workers’ rights perspective and, more broadly, for American industry.

As a bid to counter potential waste and a safeguard against enriching corporate executives, the Commerce Department will prioritize applications from companies that pledge to refrain from stock buybacks over the next five years. Likewise, applicants will be “required to submit detailed financial projections, with the federal government entitled to share in any ‘upside’ profits,” The New York Times reported, as a method of getting companies to make their projections “as accurate as possible, and not exaggerate any losses to try to secure more funding.”

But the requirements getting the most attention mandate that applicants seeking over $150 million in funding provide access to affordable child care for workers building or operating new facilities. Companies will have flexibility in how they do that as long as they meet a few key requirements: “Child care should be within reach for low- and medium-income households, be located at a convenient location with hours that meet workers’ needs, grant workers confidence that they will not need to miss work for unexpected child care issues, and provide a safe and healthy environment that families can trust.”

That’s all hugely important both from a labor and workers’ rights perspective and, more broadly, for American industry. Child care is prohibitively expensive for many workers, especially for lower-income workers who sometimes have to choose between missing shifts or making sure their children are safe. Even before the pandemic, parents who could afford child care were often finding that there weren’t enough child care options available.

Now there are fewer child care workers than there were before the pandemic, and, because of the pandemic, many parents have lost a family member who was once able to watch their kids while they worked. It’s one factor likely driving lower than expected workforce participation. Economists disagree on an exact number, but even as unemployment figures hit record lows, there are still millions of missing workers that their projections can’t account for.

The lack of affordable child care is a drag on business owners as well. “Half of all workers and nearly 60% of parents cite lack of childcare as their reason for leaving the workforce,” a U.S. Chamber of Commerce report found last year. In this tight labor market, you’d assume that companies want all the help they can get to recruit and retain workers.

The Commerce Department’s scheme is better than nothing for parents who would otherwise be unable to work.

Commerce Secretary Gina Raimondo hopes that the child care requirement will help lure women to the workforce and to manufacturing specifically. “Here’s the truth: CHIPS won’t be successful unless we expand the labor force,” she tweeted on Tuesday. “We can’t do that without affordable child care.” A Commerce Department factsheet explaining the child care requirements claims that “a recent review of research on child care costs and women’s labor supply found that a 10% decrease in the cost of child care leads to a 0.5 to 2.5% increase in maternal employment.”

It’s not a policy without its detractors, including those who would say that the administration is using child care as a potential cure-all for the nation’s economic woes. The best counterpoint that I’ve seen comes from Reason’s Eric Boehm, who argues that the subsidies will boost the already high demand for child care while doing little to deal with the supply issue, namely the shortage of trained, accredited child care professionals. It’s a missing piece of the puzzle for sure, one that President Joe Biden sought to address in the Build Back Better Act that Republicans and Sens. Joe Manchin and Krysten Sinema helped kill. That failed legislation required that child care providers earn a living wage.

For all the billions of dollars in play here, it’s not clear how many kids will benefit directly from this experiment. But as Bloomberg columnist Sarah Green Carmichael noted, the Commerce Department’s scheme is better than nothing for parents who would otherwise be unable to work at the government-subsizided factories and make sure their kids are safe. And it makes all the sense in the world that if corporations get money from taxpayers to build their facilities, the federal government should require them to use some of that funding to make their workers’ lives a little better.