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Yellen, Harris urge childcare investments to boost overall U.S. economy

EconomySep 15, 2021 06:01PM ET
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3/3 © Reuters. FILE PHOTO: U.S. Treasury Secretary Janet Yellen answers questions during the Senate Appropriations Subcommittee hearing to examine the FY22 budget request for the Treasury Department on Capitol Hill in Washington, DC, U.S., June 23, 2021. Greg Nash/Pool 2/3

By Andrea Shalal

WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen and Vice President Kamala Harris on Wednesday called for urgent action to make affordable childcare available to more families, calling such investments critical to ensuring U.S. growth and global competitiveness.

Harris and Yellen lauded a new Treasury report that charts the failures of the current privately-financed childcare system and shows the positive impact for women, families and the overall economy from the increased public spending envisioned in President Joe Biden's $3.5 billion legislation package.

"This is a fight for our future," Harris said during her first visit to Treasury since taking office. She pointed to estimates that U.S. gross domestic product would expand by 5% if women participated in the workforce at the same rate as men.

Democrats are negotiating over Biden's package that would fund free preschool for all 3- and 4-year olds; boost pay for childcare workers, 95% of whom are women; cut the costs of such care in half for most families; and make permanent a child and dependent care tax credit.

Enacting the proposals was "the single most important thing we can do to build a stronger economy over the next several decades," Yellen said, adding that childcare's "contribution to economic growth is as essential as infrastructure or energy.”

She shared her own quest to find childcare when she returned to work after the birth of her son, Robert, 40 years ago, and said she might not be where she is today if she had been unable to find - and afford - good care.

The Treasury said the current situation was "unworkable" and said improving access to affordable, high-quality care - a market estimated at some $60 billion in 2019 - would have big follow-on impacts on wages, society at large and employment.

The Internal Revenue Service distributed a third round of child tax credit payments on Wednesday - a key lifeline for parents given the expiration of pandemic unemployment benefits and the end of a federal eviction moratorium.

Harris again called the pandemic-triggered mass exodus of women leaving the workforce "a national emergency."

"If we intend to fully recover from the pandemic, if we intend to fully compete on a global scale, we must ensure the full participation of women in the workforce," Harris said.

A senior administration official, speaking on condition of anonymity, told Reuters that Harris plans further public engagements on the legislation in coming weeks given the current "critical juncture" in congressional negotiations.

The United States ranks 35th of 37 countries tracked by the Organization for Economic Cooperation and Development (OECD) in public dollars spent on early childhood education and care, relative to GDP.

While France invests about $7,000 per child from infancy to 5 years old, the United States invests just $2,400. That in turn depresses income for childcare workers, the Treasury report said.

The report said the average American family with at least one child under the age of 5 now must devote about 13% of family income to pay for childcare, but Biden's proposals would reduce that amount to no more than 7%.

With average annual pay of $24,230, more than 15% of childcare workers live below the poverty line in 41 states, forcing them to rely on public services for their economic needs, the report said.

Yellen, Harris urge childcare investments to boost overall U.S. economy

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Comments (1)
Ominous Owl
Ominous Owl Sep 15, 2021 12:51PM ET
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Welcome to the 2021 worldwide rush towards Communism. How deceptive one has to be to use the word 'Investment' for expending without and end.
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