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Could Child Care Help Women at Work? Spoiler: Yes!

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Huh, it’s almost as if our economic elites are beginning to wake up to the realities of life in America. I call this going through a process of de-Greenspanization.

Jerome H. Powell, the Federal Reserve chair, suggested on Wednesday that improved child care support policies from the government might help pull more women into the labor market.

The Fed chief studiously avoided commenting on specific government policy proposals during three hours of wide-ranging testimony before the House Financial Services Committee. But he did acknowledge, in response to a question, that enabling better options for affordable child-care is an “area worth looking at” for Congress.

“Our peers, our competitors, advanced economy democracies, have a more built-up function for child care, and they wind up having substantially higher labor force participation for women,” Mr. Powell said, answering a question from Representative Cindy Axne, an Iowa Democrat. “We used to lead the world in female labor force participation, a quarter-century ago, and we no longer do. It may just be that those policies have put us behind.”

Women’s labor force participation had climbed for decades in the United States before stalling out — and then actually dropping slightly — starting in the 1990s. As Mr. Powell alluded to, adult women in the United States hold jobs or look for them at lower rates than women in some other major advanced economies, such as Canada or Germany.

Research has suggested that the divergence may be linked to child care policies. In a 2018 paper that asked why the share of Canadians who work or look for jobs had climbed even as United States labor force attachment had fallen, researchers at the Federal Reserve Bank of San Francisco pointed out that most of the gap owed to different outcomes for women. And they pointed to caregiving policy differences as a likely culprit.

“Parental leave policies in Canada provide strong incentives to remain attached to the labor force following the arrival of a new child,” the paper, written by the San Francisco Fed president, Mary C. Daly, and co-authors, pointed out. “The contrast between the incentives Canada and the United States offer prime-age workers to remain attached to the labor force is clear.”

I personally love how economists have to do a couple of decades of research to come up with answers that are common sense to regular people, or in many cases, have already been shown to be true by historians many years earlier. In any case, remember that we came within a smidgen of a federal child care bill in 1972 before Nixon vetoed it after Phyliis Schlafly and Pat Buchanan said it would destroy families through socialism. There weren’t quite enough votes to override the veto and federal child care proceeded to disappear from the national political agenda for a mere half-century, all while the cost of child care skyrocketed to ridiculous levels.

Of course, it’s a long way from Powell talking about this to anything being done. But it’s a step.

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