A Biden-friendly economist is creating a big headache for president's spending plans

The study that found that the employment rate for parents of young children was actually lower than for parents without children – adds fuel an intense national debate about what is behind suspected labor shortages and what policy changes are needed to accelerate the return of Americans to work once the pandemic subsides.

Republicans are already largely against President Joe Biden’s childcare plans, which is why a high-profile Democrat’s statement that these proposals may not achieve Biden’s core objective – promoting employment in the short term – carries weight. The analysis was rejected by White House officials and criticized by lawmakers, including the Democratic Women’s Caucus.

Furman and his co-authors emphasized that they still believe that long-term investments in childcare are needed. However, their study contradicts many Democrats’ arguments that a lack of affordable childcare was a major driver of unexpectedly low job growth in April – 266,000 jobs were created, compared with 1 million expected. Instead, it suggests that other factors, including one that Republicans have highlighted – improved federal unemployment benefits that add $ 300 a week to state unemployment benefits – play a role in keeping people out of the workforce.

Democratic officials have used the job report to urge Congress to urgently approve the hundreds of billions of dollars in childcare assistance proposed by Biden under the American Families Plan, which also includes two free years of universal Pre-K.

“If we don’t resolve our childcare crisis, there will be no economic recovery,” said Sen. Patty Murray (D-Wash.), Chair of the Committee on Health, Education, Labor and Pensions, at a news conference Thursday.

White House press secretary Jen Psaki told reporters earlier this month that the adoption of the family plan “would be of great benefit to addressing some of the effects of childcare on educational needs … preventing women from getting back into work to get in. “

However, the new report, which analyzed data based on the federal government’s latest population survey, suggests the opposite.

Furman and the report’s other authors, Melissa Kearney of the University of Maryland and Wilson Powell III of Harvard, as well as other experts, also say that parents of young children who are unable to work from home – and therefore Schools hardest hit are daycare closings – making up such a small percentage of the labor force that even a full reopening would do little to increase overall workforce participation in the short term.

The White House and key Congressional Democrats say analysis does nothing to counter months of survey data and anecdotes highlighting the extent to which parenting employment is affected by childcare challenges. And they say that while the report shows that both parents and nonparents have been affected by the pandemic, it doesn’t specifically look at childcare or the reasons parents left the workforce.

The study “therefore does not address our concerns about the barrier to childcare in the short or long term,” said Jared Bernstein, a member of the Biden Council of Economic Advisers.

“Many factors continue to play a role: fear of the virus, obstacles to childcare, school closings, concerns about vaccination rates for people of working age,” said Bernstein in an interview. “All of these factors are in the mix, and I don’t think you can find a study that says, ‘Ah, this is the main factor or the only factor. ‘These factors all interact with each other as we continue to gradually return to pre-crisis conditions. “

The White House and other Democrats point this out other research shows that employment improved earlier this year when the schools started to open again. And they cite surveys that have shown time and time again that parents report childcare issues as the main reasons they quit their jobs or cut their working hours.

On the same day that the Furman analysis was published, the The Federal Reserve released a poll of 11,000 adults Finding that more than a fifth of all U.S. parents were unemployed or worked less in 2020 because childcare and schooling were disrupted due to the coronavirus pandemic.

“This report is contrary to common sense and real-world experience,” said Rep. Lois Frankel (D-Fla.), Co-chair of the Democratic Women’s Caucus, referring to Furman’s study. “The child care system fluctuated even before the pandemic. It was too costly and unavailable in many places, so parents who want and need to work at home have to work as caregivers. “

When asked about the Fed’s poll results, both Furman and Kearney said these results are not supported by the data. “Yes, the parents have left the workforce. A lot of them will say, “Oh, it’s because of the childcare,” said Kearney. “But there are probably other issues that affect nonparents as well.”

She and Furman both emphasized in interviews and in their analysis that their findings focus closely on whether childcare is currently holding back employment levels, rather than reducing the need for major investments to make services both high quality and affordable for children and adults working parents benefit in the long term.

“Talking to a working mother will tell you that she has passed the point of exhaustion and that the status quo is unsustainable,” said Rep. Jackie Speier, D-Calif., Co-chair of the Democratic Women’s Caucus. “The US is playing a good game of ‘family values’. It just doesn’t produce any results. It’s time to change course.”

Other economists, childcare advocates, and many democratic lawmakers also say the new study does not include comprehensive research into other effects of a lack of childcare on parents, including working hours reduction, wage sacrifices, or mental wellbeing. It also does not racially segregate workers, potentially obscuring the greater challenges facing black and Hispanic parents.

“The impact of childcare on women will be so nuanced that it will continue to have an impact for the next decade,” said Kathryn Edwards, an economist at RAND Corp. -Time, people who have cut back on their careers, people who have decided to change careers because they couldn’t make it into one anymore. There’s just going to be a lot of aftershocks. “

Proponents also highlight significant benefits for children who have quality and affordable early childhood education, an area they believe the US has long underinvested in.

“You might have a debate about the short-term problems,” said Senator Bob Casey (D-Pa.). “One of the main reasons this law was passed is that it is about the future.”

All of these elements, proponents say, remain relevant even if the economic element – that investing in childcare is necessary to bring the US back to 2020 employment levels – sounds hollow.

“There is every reason to do this,” said Abigail Wozniak, a labor economist at the Fed in Minneapolis, of investing in childcare. “But I think it’s important to be clear about what we’re going to make of this. And these really simple statistics that that’s just not a very large part of our current workforce suggest that that alone is unlikely to make a massive increase labor force participation and employment. “

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