The Harris-Walz economic plan addresses America's family and child-care crisis during the election.

• The Kamala Harris administration's economic policy platform, unveiled on Friday, could reignite a battle over the expanded child tax credit that Joe Biden has struggled to pass, despite bipartisan support.
• As Minnesota governor, Harris' running mate Tim Walz prioritized child care in his economic plan by advocating for state tax credits, assistance to working families, and support for the child-care industry. Similarly, J.D. Vance, Trump's running mate, has also expressed support for an expanded child tax credit.
• While many business executives view the absence of affordable and accessible child care as a hindrance to the labor market, the United States stands out among developed countries in its lack of policy support for this issue.

Kamala Harris' selection of Minnesota Governor Tim Walz, a former teacher, as her running mate was noted for his potential to bring a renewed focus on child care and early childhood policy. As governor, Walz implemented initiatives such as expanding state child tax credits and creating a paid family leave program. He also allocated funds to increase early child-care professional wages and enhance provider capacity. One expert commented that Harris is "doubling down" on child care with this choice.

The Harris administration's national economic platform, revealed on Friday, prioritizes restoring the federal child tax credits introduced during the pandemic, which are linked to the financial stress faced by families with young children.

On CBS last Sunday, J.D. Vance proposed nearly doubling the current child tax credit to $5,000, while Harris suggested expanding tax relief of up to $6,000 for families with a newborn.

Child-care support is a significant expense for families, employers, and policymakers alike. With child-care costs increasing by 32% since 2019, families across the economic spectrum are struggling to access affordable care. This has led to many parents considering leaving the workforce or missing workdays when child care centers are unavailable. Employers are also concerned about the impact of high child-care costs on their workforce and long-term sustainability.

A recent study by the Boston Consulting Group revealed that only 12% of workers and 6% of part-time and lower-income workers have access to workplace child-care benefits. The study found that for every dollar employers spend on child care, they get a return on investment of $4.25. In 2019, research conducted by the nonprofit arm of the U.S. Chamber of Commerce emphasized the importance of employer support for increasing child-care access.

Child care is not just a social issue but also an economic one, according to Jessica Chang, founder of Upwards, a startup that collaborates with companies such as Amazon and the U.S. Army to offer benefits.

Child-care supply and demand challenges

A study from Upwards highlights a paradox in the child-care sector: both shortages and underutilization. Despite 51% of Americans living in areas with three children for every available child-care spot, only 11% of providers were at full capacity at any given time in 2023. The child-care industry is vulnerable due to massive pandemic emergency investments running out and leaving low wages and a shrinking workforce.

Embedding child-care benefits in the workplace can benefit both workers and child-care providers by connecting them to essential services and increasing the providers' ability to serve more children and families.

""The cost of replacing an employee can sometimes be as high as four times their annual salary, yet we only consider the expense when we think about it," Chang said."

Employees who utilize child-care benefits have five times higher retention rates than the average employee in the same workplace, according to a study. This reinforces the argument that employers should prioritize the costs and lost benefits of not offering child care.

Over $100 billion lost annually

The U.S. economy loses an estimated $122 billion annually due to the early childhood care crisis, with costs to families, businesses, and taxpayers almost doubling from 2018 to 2023. Additionally, companies suffer losses related to recruitment and talent retention, as stated in a 2023 study by ReadyNation, a national childcare advocacy nonprofit.

Nearly 85% of primary caregiver parents reported that difficulties in obtaining child care negatively impacted their work, with over one-quarter receiving reprimands while facing these challenges. Additionally, over half of parents of young children facing child care challenges considered leaving early or late and missing work days.

Nancy Fishman, a ReadyNation senior advisor, stated that "the ability to work for those who desire to do so benefits everyone."

The "motherhood penalty" refers to the significant impact of child-care challenges on mothers, which often results in them leaving the workforce in large numbers and staying out for extended periods following the birth of a child.

The latest "State of Motherhood Report" reveals that 66% of American women are considering leaving their jobs due to the unavailability of child care, which is the highest percentage ever recorded in the annual study. With the increasing cost of child care, this percentage may continue to rise.

A study by Upwards reveals that economic gains from keeping more women in the workforce are amplified by supporting and subsidizing child care. The study considers a woman's average yearly salary, the absenteeism and production savings of employers, and the average turnover cost savings of employers, demonstrating the significant impact of child care and working mothers on the economy.

Government policy obstacles

The expansion of the child tax credit and the provision of child-care benefits by employers are both challenging goals for the Harris administration. The CHIPS Act, which supports the establishment of semiconductor facilities in the U.S., has required applicants for funding over $150 million to provide access to child-care benefits, a previously untested policy concept in the U.S. However, Commerce Secretary Gina Raimondo has criticized the politicization of these benefits in the U.S., stating that it is deeply misguided and a net negative for the economy.

Despite initial bipartisan support, the Biden administration has repeatedly failed to pass an expanded child tax credit along with business tax breaks. As both presidential administrations focus on policies for working families, ongoing debates about tax and subsidies continue to hinder progress. With research indicating that working parents with young children are facing financial challenges, inaction and gridlock may persist.