The start of 2023 presented some good news for America’s economic outlook. In the first week of January, the December jobs report was released, showing unemployment edging down to 3.5 percent with over 200,000 more people employed full-time. But even with this good news, an enduring conundrum remains: our country’s stagnant workforce participation rate.
The workforce participation rate represents the number of people working or actively looking for work. This job report showed that the U.S. labor participation rate is 62.3 percent, which has not changed since the beginning of 2022 and is only 1 percentage point higher than it was at the start of the pandemic.
This means roughly 38 percent of Americans who could be working are detached from the labor market because they believe there are no jobs available for them, or they are facing personal challenges that make it hard to retain employment. As a result, these individuals have stopped looking for work altogether, leaving employers desperate for talent and policymakers wondering where everyone went.
Few Child Care Options
There are many factors contributing to this social phenomenon. But one place to look for workers is in their homes with their kids.
Today, many families with young children must choose among bad options: spending a significant portion of their income on child care, finding a cheaper, but potentially lower-quality care option or leaving the workforce altogether.
While finding decent and affordable child care has always been a challenge, it’s been exacerbated in recent years due to increased demand from families for child care services, the rising cost of these services and the shortage of skilled workers and quality facilities.
Now it is one of the top reasons why workers, especially women, are not just leaving, but staying out of, the labor market. This is harmful for a myriad of reasons, not least that our country needs this talent to fill open jobs and keep our economy competitive.
Programs Not Enough
Hopes were high that President Biden’s Build Back Better plan would address this issue federally. But in the end, the child care provisions were not included. Last month’s appropriations package did include substantial funding increases for the Child Care Development Block Grant (CCDBG), which received $8 billion, a 30 percent increase in funding, and for Head Start, which received $12 billion, an 8.6 percent increase.
As welcome as the new funding is, these programs serve a small portion of American families.
The CCDBG and Head Start resources are targeted at low-income families and, even then, the CCDBG serves only 15 percent of eligible families, and Head Start serves roughly one-third of eligible three-to-five-year-olds and 7 percent of eligible children under three. They don’t touch most working parents or solve the problem at scale.
As a result, states are developing solutions on their own.
This is a portion of a blog that was originally posted in full at The Hill on January 27, 2023. Republished with permission.
About the Author: Taylor Maag is director of workforce policy at the Progressive Policy Institute.