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Child care shortage shuts millions of Americans out of workforce

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Child care shortage shuts millions of Americans out of workforce

This is the third of a three-part series exploring key hurdles in the US labor market's recovery, including persistent COVID-19 fears, the end of extra federal unemployment pay and a lack of child care options for parents of young children.

COVID-19 has worsened a shortage of child care in the U.S., locking increasing numbers of parents out of the jobs market, particularly women.

The number of potential workers staying home to care for young children has climbed nearly 40% since mid-April, when the U.S. Census Bureau began tracking the data. In total, 4 million U.S. households had at least one adult cut working hours, lose a job or not look for work to care for children under five during the first two weeks of September.

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Part one: Pandemic fears squeeze labor market as millions of Americans stay home

Part two: US jobs may fail to get boost from end of extra COVID-19 unemployment support

Part three: Child care shortage shuts millions of Americans out of workforce

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The pandemic has exacerbated a dearth of U.S. day care places, as already-struggling providers are finding it even harder to retain staff amid concerns about infections and wider competition for workers. As a result, about half of Americans are living in so-called child care deserts, or areas where there is only one opening for every three children under five, according to the Treasury Department.

"This has always been a problem, but it has been exacerbated by COVID-19," said Arthur Rolnick, former senior vice president and director of research at the Federal Reserve Bank of Minneapolis and an expert on child care policy.

Even before the pandemic, about half of U.S. child care centers were losing money, according to Lauren Russell, associate professor for the Fels Institute of Government at the University of Pennsylvania. Many have failed to reopen after shutting down during the pandemic.

"They were really just doing their best to survive and then the pandemic hit," Russell said in an interview. "They really couldn't weather that storm."

The closures have contributed to attendance at child care centers only recovering to about 70% of pre-pandemic levels, according to Procare Solutions, which provides management software to about 30,000 centers. The number of child care workers also dropped 12% from its pre-pandemic level to below 920,000 in August, according to U.S. government data.

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Childcare shortages particularly affect female workers. The unemployment rate among mothers of children under the age of 18 more than doubled last year to 7.5%, ending years of decline, partly because of a lack of day care centers.

President Joe Biden has proposed universal pre-kindergarten for children ages 3-4 in a bid to ease the shortages. The plan, which would also cap the child care costs for most families at 7% of household income, is part of a $3.5 trillion, 10-year federal budget reconciliation bill that has divided Democrats in Congress.

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"The free market works well in many different sectors, but child care is not one of them," Treasury Secretary Janet Yellen said in a Sept. 15 speech. "Child care is a textbook example of a broken market."

The closure of centers during the pandemic increased unemployment rates for mothers with young children by 2.7% while shutdowns were in place, according to an Aug. 16 paper by the University of Pennsylvania's Russell and colleague Chuxuan Sun. Rates also remained elevated even after centers reopened.

Nearly 1.7 million women have left the U.S. civilian labor force since February 2020, compared with only about 1.2 million men, according to U.S Bureau of Labor Statistics data. The labor force participation rate dropped to 56.2% in August for women from 57.8% before the pandemic. The male rate fell to 67.7% from 69.2%.

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More than 1 million people were not looking for work in early September because they were caring for children, according to the Census Bureau. Nearly 70% of those people were women.

The supply of child care is expected to stay muted in the near term, meaning parents are unlikely to overcome the hurdles to returning to work, said Gina Adams, a senior fellow with the Urban Institute.

"There's a lot of evidence that this system was really not working before the pandemic," Adams said in an interview. "Then this pandemic took this fragile, patched-together, inadequate system, put tremendous pressure on it and just tore it apart."