April 05, 2022

At Hearing, Warren Calls for Critical Investments in Child Care to Boost Economic Recovery, Increase Labor Force Participation, and Fight Inflation

Investments in child care will help lower costs for working families and will help boost our economic recovery by ensuring that parents can go to work, helping prevent a labor shortage and further inflation.

Video of Hearing (Youtube)

Washington, D.C. – At a hearing of the Senate Finance Committee, U.S. Senator Elizabeth Warren (D-Mass.) reaffirmed the need for the United States to invest in child care to keep the country's economic recovery on track, increase labor force participation, and help fight inflation. During her exchange with Health and Human Services (HHS) Secretary Xavier Becerra, the Secretary agreed with Senator Warren that without affordable child care, our economy “grinds to a halt,” highlighting the need for federal investments in child care to reduce costs for families economy-wide. 

Senator Warren’s calls for child care investments come as economists are warning that inflation could spread from goods to services, especially as Americans get out and about, but businesses are having trouble hiring enough people to meet resurgent services demand.

Transcript: The President’s Fiscal Year 2023 Health and Human Services Budget
U.S. Senate Committee on Finance
Tuesday, April 5, 2022

Senator Elizabeth Warren: President Biden has created a record 7.9 million jobs – more jobs created in the first 14th months of any presidency, ever.  But even as we’re trying to get our economy – and our lives – back to normal, families are getting hit by rising prices on essential goods, from gas to groceries. 

And as Americans are looking to get out and about again, to go back to restaurants and bars, gyms, and movie theaters – those businesses are struggling to find enough workers to meet the surging demand. So, now economists are warning that inflation could spread from goods to services, especially if we don’t get more workers into the labor force. But one of the big things that’s holding back labor force participation is a shortage of affordable child care. Secretary Becerra, when parents can’t find affordable child care, how does that affect parents’ ability to work – and, in turn, businesses’ ability to hire? 

Xavier Becerra, Secretary of the Department of Health and Human Services: It brings things to a halt, it grinds to a halt.  And you’re stopping productive Americans from getting out there and helping businesses be profitable and prosper. It makes it very difficult for our economy to continue to be the leader when you can’t get people who are qualified to get out there and work.

Senator Warren: Yeah, well, you know what, you make a good point here. The American economy relies on working parents, and they rely, those parents rely on childcare to be able to go to work. But even with record job creation across the economy last year, the childcare industry is still down 136,000 workers compared to early 2020. So Secretary Becerra, there is clearly strong demand for child care – why isn’t supply rising to meet it? Why hasn't the market solved this problem?

Secretary Becerra: Well, whats, if it's left in the private sectors' hands, it becomes unaffordable for most families, including middle class families, to afford. You're paying essentially college tuition to care for your two year old child. At the same time, states with the support of the federal government have been providing subsidies to help prop child care providers get out there and offer those services. Here's the difficulty, as you mentioned, some of the workforce is getting paid some of the lowest wages, we need to increase that because those folks are now seeing, "I don't have to do this job. I can go make more money flipping burgers." We have to increase the wages that we pay to people who are essentially caring for the next generation of leaders. And at the same time, we have to be able to expand the size of the care facilities, so that they can take in more kids from these families. And so, the proposal, Build Back Better, actually made some of that possible. I hope that we are able to succeed in getting some of that across.

Senator Warren: So, let's just unpack that, though, a little bit in what you're talking about here. 

Childcare providers are operating on razor thin margins, they just simply don't have the money to pay their workers more than those workers could make right now by just moving over to McDonald's or to the gas station down the street. That means the childcare center can't hire staff and that means that our economy doesn't have childcare slots that it needs for parents to be able to get back to work in our economy to get back to to normal. So let me just ask, I think you've already referred to this, but let me put the question to you directly. Do you agree that to fix this problem, federal investments in child care are essential, not just for tackling higher costs for families with young children, but also for reducing the drivers that are raising costs economy wide?

Secretary Becerra: Without a doubt, just for the same reason we have publication -- public education in this country, we realize if we left it in the private hands, very few parents would be able to afford to send their kids to K through 12. Same thing applies to child care. We need to be supportive because there are caregivers who are trying to do the best job they can, but they're overwhelmed.

Senator Warren: In other words, whether we have children individually or not, we all have an interest in making this economy work. And childcare is part of making this economy work. Is that fair?

Secretary Becerra: It takes, it takes a village.

Senator Warren: Well, thank you very much. You know, this is a critical moment in our economic recovery. And we need to make these investments in childcare in order to keep our economy on track and fight back against inflation. Investments in childcare will help lower costs for working families and will help boost our economic recovery by ensuring that parents can go to work, preventing a labor shortage and preventing further inflation. These investments just can't wait. American families can't wait. Our economy can't wait. So, I hope we can get this done and get it done soon. Thank you very much for your work on this, Mr. Secretary.