The White House has faced challenges in its attempts to broaden national support for childcare, but it is making another effort on a smaller scale.
Companies seeking to access a new $40bn (£33bn) pool of government subsidies for the semiconductor industry will be required to submit plans detailing how they will provide childcare for their workers.
This requirement represents an unconventional use of federal government authority. Officials explained that the rule is intended to address a workforce shortage.
This initiative coincides with the US beginning to accept applications from companies for billions in subsidies for the semiconductor industry, as approved by Congress last year to bolster US competition with China.
“Here’s the truth: CHIPS won’t be successful unless we expand the labor force. We can’t do that without affordable child care,” Commerce Department Secretary Gina Raimondo wrote on Twitter.
“That’s why we’re requiring companies that receive funding to tell us how they plan to provide affordable child care for workers.”
Since the onset of the pandemic in 2020, the number of people citing childcare issues as a reason for not working has increased, exacerbating shortages in a service that was already scarce and costly.
However, the White House has struggled to gain Congressional support for increasing federal funds to improve worker pay and expand pre-kindergarten programs in the childcare sector.
The federal government often mandates that firms awarded contracts adhere to certain standards beyond those required of the private sector.
These measures are influential due to the government’s significant presence as an employer. For instance, federal contractors must pay a minimum hourly wage of $16.20, which is above the minimum wage in some states.
However, the national government has not previously addressed childcare requirements in this manner, noted Danielle Ewen, a longtime education consultant.
“It is a new avenue for the federal government to require employers in a particular industry to provide childcare,” she said.
The requirement specifies that applicants seeking more than $150m in grants or other direct funding for semiconductor manufacturing plants must submit plans to provide plant workers and construction workers with access to “affordable, accessible, reliable, and high-quality childcare.”
The agency did not clarify how it would determine if companies meet these standards.
Subsidizing childcare costs could strain existing resources if demand increases without a corresponding rise in supply. Analysts indicated that more details are necessary to understand the full impact of this policy, which has received some criticism.
“Affordable childcare is an admirable goal – but it has nothing to do with semiconductors,” investor Steven Rattner, who worked on the Obama administration’s auto industry rescue, wrote on Twitter.
“If we want the CHIPS act to work, it can’t be used as a pack mule for unrelated policy priorities.”
However, the move has also been supported by others, such as Democratic Senator Jeanne Shaheen. “Investing in our economy means investing in the workers who make it run,” she said.
The Semiconductor Industry Association, which represents chip manufacturers, did not respond to a request for comment.
Historically, the US has relied on the private sector to provide benefits like health insurance, which are seen as government responsibilities in other countries.
Currently, about 28% of firms with more than 500 employees offer some childcare benefits, according to an annual survey by the Bureau of Labor Statistics.
Angie Garling, vice president for Early Care and Education at the Low Income Investment Fund (LIIF), which has worked with San Francisco on its childcare initiative, emphasized the importance of addressing diverse childcare needs.
“The way to make this type of program successful is to ensure companies are putting the diverse childcare needs of their employees front and center,” she said. “Employers must be part of the solution.”
