Childcare Has No Place in the CHIPS Act

Childcare Has No Place in the CHIPS Act

Using the CHIPS Act as a means to remedy the childcare crisis sidelines the main agenda of legislation, diverges from the root cause of the childcare crisis, and breeds a conflict of interests between the government and private actors.

 

Our children are our future, but the demands of work mean that we can’t attend to them all the time. Because of this, an estimated 15.7 million children under the age of five experience some form of childcare outside their parent’s hands. Policy institutions, like the Center for American Progress and Child Care Aware, have reported on the impact this has on families and the economy as a whole, noting the need to attend to children has significantly contributed to labor shortages in many industries.

The semiconductor industry is no exemption from this, as the childcare imperative, along with the lingering effects of the coronavirus pandemic, has exacerbated the ongoing talent shortage. In an attempt to mitigate this problem and expand the labor force, the Biden administration is mandating childcare as part of the requirement to seek incentives from the $52.7 billion CHIPS Act fund. President Joe Biden, via the Commerce Department, is leveraging the CHIPS Act and requesting chip manufacturers seeking over $150 million in incentives to provide a plan for childcare services.

 

This idea appears very attractive to some American employers, including many manufacturers who regard the lack of childcare accessibility as the drive for talent shortages. But while childcare is indisputably a vital necessity, the CHIPS Act is not the means to achieving such.

First, including childcare in the CHIPS Act diverts resources and attention from the core objective of the law.

Almost 95 percent of the $52.7 billion CHIPS fund is allocated to semiconductor manufacturing incentives and research and development (R&D). Yet if manufacturers have to spend a significant portion of that on childcare, revitalizing the onshore chips industry ends up becoming secondary. Consider that, on average, childcare costs about $10,000 per year—accounting for over 10 percent of the income of a married couple. This burden would be placed upon manufacturers who already have limited funds.

Moreover, childcare is a social policy that many companies seeking incentives are unqualified to implement, including semiconductor firms. Mandating childcare would end up increasing the costs and complexity of implementing the CHIPS Act. This is intolerable in an industry that already faces challenges from budget constraints, political opposition, and geopolitical tensions. What’s more, the funding provided for CHIPS is nowhere near the amount that China has invested in its own domestic industry. To mandate childcare would effectively be asking companies to do more with less against well-funded competitors.

Second, mandating childcare in the CHIPS Act does not address the root causes of the childcare crisis in the United States: inadequate funding, quality, accessibility, and affordability of childcare services and programs.

The idea of leveraging funding from industrially-focused legislation to cover social policy has been tried before. During World War II, the Lanham Act funded childcare centers all over America as a means of addressing labor shortages in critical industries. However, after the war, these 3,000 or so childcare centers were closed, demonstrating that tying the provision of childcare to supporting the temporary funding of a strategic imperative only lasts so long as there is a need for the latter. Additionally, the childcare centers funded by companies who pursued this agenda implemented a one-size-fits-all childcare policy that did not account for families’ diverse needs and preferences nationwide.

We cannot expect that introducing a childcare policy into the CHIPS Act would fare better; at most, it would offer temporary relief to the chips industry. It would not have any major impact on solving the issue of inadequate funding, quality, accessibility, and affordability of childcare services and programs.

Finally, using the CHIPS Act to implement childcare creates a potential conflict of interest between the federal government and the private sector. In terms of regulating and providing childcare services, this can create unintended consequences and trade-offs for workers and families.

Though both the government and private sector are facing the same issue of labor shortage, the two have different interests when it comes to childcare. If employers are required to provide childcare services by constructing on-site childcare facilities or contracting existing providers to help, it’s hard to say whether the quality of childcare provided would be sufficient without proper government oversight. An employer could reduce workers’ choices, flexibility, and autonomy in balancing work and childcare responsibilities—imagine if you were only allowed to spend thirty minutes with your child because your employer said so. This creates a disincentive for parents to work in the semiconductor industry or other high-tech sectors that require long hours and specialized skills. The government standard for quality and diverse childcare welfare may not align with private actors, whose primary motivation is to maximize production and profit. Scott Lincicome, a senior fellow at Cato Institute stated that the government would not have mandated child care “if they weren’t in conflict”.

Leveraging the CHIPS Act to implement affordable childcare may present useful outcomes on paper, but these would not be without a cost. Using the CHIPS Act as a means to remedy the childcare crisis sidelines the main agenda of the legislation, diverges from the root cause of the childcare crisis, and breeds a conflict of interests between the government and private actors. Moreover, adding this social policy to already complex legislation would increase the program’s cost and reduces its effectiveness in addressing the semiconductor shortage and broader U.S-China tech competition.

Childcare is a public good with no place in a purely economic and political agenda. By using the CHIPS Act to revitalize the domestic chip industry and address childcare, Biden is attempting to put the old adage “killing two birds with one stone” into action. But will a “stone” like the CHIPS Act be enough to kill two birds if they both happen to be eagles?

Benedicta Kwarteng is a 2023 Marcellus Policy Fellow at the John Quincy Adams Society. She is a graduate student and Public Service Fellow at John Hopkins SAIS. Her research interests include U.S. foreign policy, the informal economy, and the U.S.-China Tech War.

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