FACT SHEET: Build Back Better Investments in Care Will Boost Economic Growth and Help Businesses Thrive
On Thursday August 12th, Vice President Harris will meet with business leaders to discuss how the care provisions in the Build Back Better Agenda will help workers, businesses and the economy
Leaders of Airbnb, Chobani, Etsy, Gap, Microsoft, Patagonia, Seventh Generation to join Vice President Harris at the White House
Care Can't Wait Coalition announces support from over 275 companies for care provisions in Build Back Better
Today, employers from across the country have stood together to make it clear that a strong care infrastructure is critical to their businesses and the U.S. economy.
They know that it is bad for business and the economy when working families do not have the support they need to work and find quality care for their children and older or disabled relatives. When workers don't have adequate care for their families, they are more likely to experience care disruptions, which can translate to lower productivity, increased absenteeism, and higher turnover – all hurting the bottom line for businesses. For example, the Work Institute's 2020 Retention Report estimates that replacing an employee costs as much as 30% of a worker's annual salary.
And, with a large portion of the workforce facing care challenges, it is harder for businesses to recruit and retain a skilled, stable workforce so that they can compete globally. The United States has been falling behind its economic competitors in terms of the share of prime age men and women (ages 25 to 54) participating in the labor force, in part due to care challenges. One study estimates that lack of access to "family-friendly" policies, such as child care and paid parental leave, explains nearly a third of the decline in U.S. women's labor force participation relative to other OECD countries. Stagnant or falling labor force participation not only hurts businesses directly, but it also represents a missed opportunity to increase U.S. GDP growth.
The President's Build Back Better agenda has a robust plan to invest in care —making child care and long-term care accessible and affordable, and establishing national paid family and medical leave. These policies are a win-win for both employees and employers and will strengthen our economy as a whole. One economist finds the President's plan, and especially its investments in the care economy, would increase labor force participation by almost a full percentage point—with even greater gains for women—and boost the economy's real GDP growth by 10 to 15 basis points in the long-term.
About one-third of the U.S. workforce live with children under the age of 14. The COVID-19 pandemic has highlighted how the strain of child care hurts businesses and the economy. U.S. Chamber of Commerce Foundation research found that two-thirds of working parents faced child care instability due to COVID-19, and that businesses have seen large numbers of workers leaving due to child care issues. But, families have long faced a caregiving crisis. Child care costs have been rising for decades, and even before COVID-19, 43 percent of parents with children under age six reported struggling to find adequate child care for their children.
- Child care increases worker productivity and business revenue. One study found a $57 billion annual cost to the economy due to child-care related lost earnings, productivity, and revenue, including nearly $13 billion that employers shoulder due to workers' inability to access high-quality, affordable care.
- Access to affordable, high-quality child care would increase workforce participation, providing a more robust recruitment pipeline for businesses. Lack of childcare can make it logistically difficult for parents to work outside the home. Indeed, many parents report that they work fewer hours than they need to or would prefer in order to care for their young children, and 86 percent of primary caregivers say problems with child care hurt their efforts or time commitment at work. The lack of adequate child care especially puts a strain on working mothers. In a study of corporate America in 2020, one in four mothers considered slowing down their careers – including by reducing their hours, moving to part time, or taking a less demanding job – or leaving the workforce altogether. Studies of child care subsidies find that increased access to child care can increase the likelihood parents are employed and employed full-time.
- Child care investments would boost family incomes, which can support business and economic growth. Child care has helped women enter the workforce, and over the past 40 years, as more women entered the labor force and brought home larger paychecks, they have driven 91 percent of the income gains experienced by middle-class families. When families have higher incomes, they can better save for retirement and purchase needed goods and services, driving consumer demand, and supporting business and economic growth.
- Investments in child care would make the U.S more competitive. The United States now lags behind other developed countries in investments in child care and early education, one major reason its labor force participation is declining while those of its competitors rise. Investments in child care can help reverse that trend, helping American businesses win the 21st century.
Paid Family and Medical Leave
The United States is one of the only countries in the world that does not guarantee paid leave of any kind — 95 percent of the lowest wage workers, who tend to be who predominantly women and workers of color, lack any access to paid leave. But, comprehensive paid family and medical leave is good for business.
- Comprehensive paid family and medical leave policies are associated with higher profits for businesses. The adoption of a paid leave program is associated with a 4.6 percent increase in revenue per full-time employee and 6.8 percent increase in profit per full-time employee. State programs across the country have demonstrated that paid leave can increase recruitment, retention, productivity and morale. For example, in California, most employers surveyed found that adoption of the paid leave program was associated with either positive or neutral impacts on profitability and performance, and some employers surveyed reported cost savings.
- National paid family and medical leave levels the playing field for small businesses. Less than one-third of small businesses with 100 or more employees offer paid leave, and that number drops to 14 percent for small businesses with fewer than 50 employees. Small businesses may lack the capital and the scale to provide paid leave, even when owners want to provide that benefit. While some small businesses may have the resources to offer paid leave to certain employees or on an ad hoc basis, the need for such leave is often unpredictable, and small businesses may not be able to offer leave consistently, equitably, or when it would be most beneficial to both the business and employees. Small businesses support paid leave programs which help reduce business costs and level the playing field with larger employers, while also allowing small-business owners themselves the ability to take paid leave and care for their own families too.
- Businesses say paid family and medical leave would improve their resiliency. More than 75 percent of businesses agree that a national paid leave policy would help them be better positioned to weather future public health emergencies and economic crises.
Fifty-three million adults are unpaid caregivers for an adult or child with disabilities. Over 60 percent of those caregivers work and, of those, 61 percent reported an impact on their work.
- Investments in long-term care can increase workforce stability and boost workforce participation. According to a 2019 Bank of America survey, working caregivers report missing an average of 12 hours per month of work because of their caregiving responsibilities. And, 10 percent left work entirely.
- Long-term care investments will be especially critical in the coming years. The demand for home- and community-based long-term care will increase significantly with the aging of the population – by 2060, there will be nearly 95 million adults over the age of 65, almost twice the number of adults over the age of 65 in 2016. Despite the growing demand for long-term care, there aren't enough paid caregivers to provide these critical services. An analysis conducted in 2017 estimates that there will be a national shortage of 151,000 direct care workers by 2030 and 355,000 workers by 2040.
- Improving the quality of caregiving jobs is necessary to address the existing – and looming – workforce shortage issue. Paid caregivers – who are disproportionally women of color – have been underpaid and undervalued for far too long. Wages for essential home care workers are approximately $13 per hour, putting them among the lowest paid workers in our economy. In fact, one in six workers in this sector live in poverty. Improving caregiver wages is critical to bolstering our caregiving workforce, so they can enable more Americans to re-enter the workforce, pickup more hours, or face fewer care disruptions.
The President's Plan Will Invest in Care so Businesses Can Compete
President Biden's plan:
- Cuts costs of child care by more than half for most American families – and enables them to access more convenient, higher quality care where workers receive a better wage and benefits. The President's plan fully covers the cost of high-quality child care for young children for the most hard-pressed working families, and ensures that families earning up to 1.5 times their state's median income will pay no more than seven percent of their income for high-quality child care for all children under age five.
- Supports employers to build on-site child care facilities. The President is calling for an expanded tax credit to encourage businesses to build child care facilities at places of work. Employers will receive 50 percent of the first $1 million of construction costs per facility so that employees can enjoy the peace of mind and convenience that comes with on-site child care.
- Creates a national, comprehensive paid family and medical leave program that will provide a total of 12 weeks of leave per year for parental, family care, and personal illness/safe time by year 10 of the program, as well as three days of bereavement leave per year so that workers aren't forced to choose between their jobs and their caregiving responsibilities.
- Expand access to quality, affordable home- or community-based care, while improving quality of care by boosting wages of caregivers.
- Provides low- and middle-income families a tax cut based on care expenses. Families can receive a tax credit up to half of their expenses related to caring for a child or a loved one with disabilities. This would make permanent the dramatic expansion of the Child and Dependent Care Tax Credit (CDCTC) enacted in the American Rescue Plan. With this expanded credit, families earning $125,000 can receive up to a total of $4,000 for one dependent or $8,000 for two or more. And, families earning up to $400,000 get at least as generous of a credit as they receive today.
Joseph R. Biden, FACT SHEET: Build Back Better Investments in Care Will Boost Economic Growth and Help Businesses Thrive Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/352309