The overturning of Roe v. Wade in 2022 intensified discussions over family policies as many parents struggle to afford the childcare they need to maintain their jobs. Despite Democrats’ insistence on subsidizing family leave and childcare by raising taxes, several Republican proposals promise to help alleviate financial strain by offering tax breaks and maintaining economic security while helping families. Before conceding to liberal policies, families need to know all their options.
Balancing career and family life is harder than ever as the shortage of childcare workers has sent daycare prices skyrocketing. There are 100,000 fewer childcare workers than there were before the pandemic. With an average hourly wage of just $13, many have left the field for higher-paying jobs. Others have been pushed out as staff shortages have forced facility closures.
As the supply of childcare workers shrinks, consumer costs surge. Even before the pandemic, childcare prices were rising at twice the rate of inflation. Today, childcare can cost as much as 20 percent of the median family income –– 13 percent more than what the Department of Health and Human Services considers affordable.
Providers are in a bind: They can only raise prices so much before families are forced to forgo the expense altogether. Unaffordable childcare has kept many parents, particularly women, out of the workforce.
Additionally, not all employers can afford family leave, with just 25 percent of the private-sector workforce having access to paid leave. Unpaid leave and high childcare costs have combined with inflation to increase the cost of living, leaving parents in a difficult position. Do mom and dad both work so they can afford to pay through the nose for childcare? Or do they try to scrape by on one income to avoid the cost of childcare?
One solution commonly proposed is to improve upon California’s universal leave policy by enlarging the program offerings. The policy doesn’t benefit those it aims to help as it replaces 55 percent of worker wages — which is not enough for low-wage earners to pay their bills. A 90 percent wage replacement has been proposed in California and at the federal level. Although increasing the replacement rate would make it easier for low-income families to use the program, everyone would pay for it come tax season.
Enlarging California’s wage replacement program would require the taxable wage ceiling — the top dollar of income subject to be taxed for the program — to be removed. In other words, tax increases for the rich would pay for the program. As taxes rise, however, employers will be disincentivized from offering their own paid-leave policies. All workers would eventually have no choice but to accept the state benefits, even if they are worse than what was formerly provided by their company.
The needs of families are already dictating the benefits employers provide for their employees, as they are desperate to keep their workers. While many workers still lack access, the number of employers offering paid leave to attract good employees increased significantly in 2020. Employers are rapidly expanding their options with mutually beneficial and flexible options for working parents, which becomes an important benefit for attracting employees.
But if we resort to government subsidies to provide leave, all this innovation will stop. That’s not something families can afford. Thankfully, conservative policymakers have proposed better options.
For example, Wisconsin Republicans introduced a package of bills aimed to remove the barriers to supply and affordability with strategic deregulation, funding and saving opportunities. One of the proposals entailed a solution to create or expand tax-advantaged savings accounts for childcare expenses, which would allow families to contribute up to $10,000. The savings accounts would not be taxed and would ease the economic burden of childcare by allowing family members to contribute.
As another example, Louisiana offers School Readiness Tax Credits for childcare providers, directors, staff and businesses that support childcare. The program offers incentives to childcare workers to achieve higher quality standards such as specialized training, while lowering their tax burden. This allows them to keep more of their pay and, it is hoped, stay in the field.
At the national level, Republicans have proposed a plan to expand the child tax credit and create the option to draw from future Social Security benefits to finance paid parental leave. Another proposal is the Working Families Flexibility Act, which would allow private employees to accrue up to 160 hours of overtime pay that can be used for paid leave.
You don’t have to increase taxes to help families get by. The tax breaks and incentives Republicans are proposing would offer more flexibility to families and employers, helping them address the problems while boosting the economy and the job market. Policymakers ought to inform the American people of their options.
