This story begins: 19th.
As efforts to expand the child tax credit and provide paid family leave have stalled at the federal level, states are increasingly encouraging private employers to fill one of the biggest problems for working parents: child care shortages.
According to the National Conference of State Legislatures: 17 States offer a child care tax credit to “employers who operate or contract child care services for their employees.” These states are: Arkansas, Colorado, Connecticut, Georgia, Illinois, Iowa, Kansas, Maryland, Mississippi, Montana, New Mexico, New York, Oregon, Rhode Island, South Carolina, Virginia, and West Virginia.
Eric Syverson, a senior policy expert with the National Conference of State Legislatures’ Fiscal Issues Program, said the debate over the child tax credit at the federal level is fostering a bipartisan agreement to find ways in the tax code to help parents and families who need child care services.
“I think state governments are now aware that the federal government is temporarily and now again looking at increasing these tax credits, the child tax credit, the child and dependents tax credit, the earned income tax credit. [Earned Income Tax Credit]”…We’re seeing that being considered by a number of states right now: ‘If we pass our own bill, we could benefit from that increase,'” Syverson said.
He added that the biggest beneficiaries of state tax credits are large businesses that can afford child care costs. Despite the credit’s growing popularity, relatively few businesses take advantage of it. Syverson attributes that to the high cost of setting up a child care facility and a general lack of awareness of the tax credit among large companies. According to the Bureau of Labor Statistics, 12 percent In 2023, one-third of workers will have access to child care benefits through their employer.
Jessica Chan is co-founder and CEO of Upwards, a child care marketplace that connects families with child care providers, assists child care providers with their business needs, and helps companies and government agencies create child care benefit programs for their employees. Chan said her company works between the key stakeholders in child care: employers, governments, families and child care providers.
Initially, Upwards may work with employers to match employees with nearby child care facilities, a more feasible and cost-effective option than building on-site facilities. The company could also use data from employees to customize child care benefits. For example, if it finds that an employee is taking time off work to care for a child, it might recommend offering a backup child care credit to help families find child care during unusual hours.
“By partnering with Upwards, we [employees] “We need to find reliable providers who can accommodate the varied work schedules we see at our properties,” Susan Loveday, vice president of human resources for Dollywood Parks and Resorts, said on Tuesday. “In addition, we provide a monthly stipend to assist with child care costs. [employees] “My child is being cared for by an Upwards provider”
For Chan, child care as an employee benefit could become similar to health insurance, or maybe even more important.
“That’s why we need both employers and governments to be on board to really normalize this and say, ‘This is not a social issue. This is an economic issue. This is not a mother’s issue. This is a family issue,'” Chan says. “For example, what we’re hearing from employers isn’t, ‘We’re going to try this and if it doesn’t work, we’ll stop.’ They’re actually saying, ‘How do we make this successful so that it doesn’t matter? How do we keep it up for two or three years so that it’s done right?’ This is a big shift from just ticking a box.”
Federal action on child care and other family policies has been slow. The Senate voted against expanding the child tax credit.Additionally, federal law does not guarantee workers paid leave for parental, medical or family care responsibilities.
But there are efforts at the federal level to encourage companies to provide child care for their employees, a move supported by both Democrats and Republicans.
in 2022Congress passed the CHIPS Science Act, a bill that would expand semiconductor manufacturing and research and allocate $50 billion to companies that provide child care services to their employees.
When President Joe Biden was considered the Democratic presidential nominee, he debated former President Donald Trump. said“We should significantly increase the child care tax credit. We should significantly increase the possibilities for women, men and single parents to return to work. And we should incentivize businesses to have child care facilities,” she said as a way to address the child care crisis.
The Heritage Foundation Project 2025Former President Donald Trump’s blueprint for his second term called on Congress to encourage employee child care in the workplace, saying it would “put the least strain on parent-child bonds.”
But some experts argue that employer-sponsored child care is only a temporary solution to the child care crisis and raises equity issues.
For Elliot Haspel, a senior fellow at family policy think tank Capita and author of “Crawling Behind: America’s Child Care Crisis and How to Fix It,” employer-provided health insurance and its “Uneven results” Whether that’s reflected in child care is something people should scrutinize. Haspel said, “The only real solution to America’s child care needs is a system of choice funded by a permanent public funding stream,” and an employer-based tax is a first step in raising those funds.
“There’s a lot of precedent at the state and local level for fair ways to fund more affordable, accessible, quality child care,” Haspel said. “In Vermont, we’re funding a major child care reform bill with a small payroll tax of 0.44 percent, 75 percent of which goes to employers and business owners. Employer after business owner is going to Congress and saying, ‘Tax us. This is important. This is worth it.’ That’s the kind of employer activism we need.”
Similarly, Massachusetts, Washington, D.C. and Portland also impose taxes on high-income families to subsidize child care costs, he said.
“If we care about something — public schools, roads, parks — and we think it has enough social value, we’ll raise the money,” Haspel said.
Casey Peaks, senior director of early childhood policy at the left-leaning Center for American Progress (CAP), cites a Council for a Strong America report that says the child care crisis is costing the U.S. dearly and believes employers should be more active advocates for child care funding. $122 billion Every year there is lost income, productivity and revenue. She sees childcare as both an economic and a social issue.
“I’m not a parent, so I call it a public good, but I still benefit from child care. I take the subway to work every day, and I benefit from subway drivers and bus drivers who are able to put my kids in a safe, quality child care program so I can get to work,” Peaks said. “I believe businesses have a role to play, and it’s in their best interest to make sure we don’t have a child care crisis. … I believe what employers provide should be better than what public investments can provide, if possible.”
Another aspect of the child care crisis is supply. Despite rising child care costs, child care workers are earning, on average, just $1.2 billion a year, according to a June 2024 report from the Federal Reserve Bank of Chicago. $14.60 per hourThe Chicago Fed blames the decline in supply on the jobs’ low wages and heavy responsibilities. Employment of child care workers in the fourth quarter of 2023 was 9% below pre-pandemic levels.
Anna Lovejoy, CAP’s director of early childhood policy, acknowledges the efforts states are making to address the child care crisis, but doesn’t believe incentivizing businesses to provide child care will help solve the supply problem and could raise equity issues.
“When you tie child care to employment, if someone loses their job or quits their job, they don’t have child care while they’re looking for work,” Lovejoy says, “so it puts families at a disadvantage. And I think it creates some equity issues between people who have jobs and people who don’t, and people who have child care and people who don’t.”
