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The False Prophets of the Childcare Revolution

Business leaders and corporate cheerleaders talk a good game about the importance of quality early care while fleecing working families.

Mark Wilson/Getty Images

Business groups and executive types love to talk about the importance of childcare. A 2019 report from the Council for a Strong America’s ReadyNation initiative, a bipartisan coalition of over 2,000 executives, was bluntly titled “Want to Grow the Economy? Fix the Child Care Crisis.” Similarly, a 2018 Wall Street Journal article, “Why Businesses Are Pushing for Better Child Care in America,” cited Louisiana business leaders who had written, “One of the fixes to our labor shortage is as obvious as the fact that the snow is frozen: Make it easier for parents to get quality, affordable child care.” There are splashy White House summits and major employers like Target offering employees childcare benefits.

You could call it a positive development—meaningful access to childcare is wildly important, after all. The problem is that these business leaders are talking out of both sides of their mouths. By pushing for deeper and deeper cuts to corporate taxation and taking advantage of every available tax loophole, corporations are further starving a system that is not working for parents, childcare practitioners, or children. The harm here is obvious: With corporate taxes bottomed out, there’s not only less public money overall, but the need arises for additional sales or income tax, costs that are largely borne by the same struggling workers who already can’t find or afford quality early care. It allows the richest people in the country to pass the check to middle- and low-income families. 

Still, it’s easy to understand why corporations are suddenly focusing on this issue. Even if the obvious human toll of the crisis has proved to be less than persuasive to the executive class, there is now sizable data on how a lack of reliable, affordable, high-quality childcare hurts employee recruitment, retention, and productivity—and keeps many potential workers out of the labor force altogether—which is a particular problem in a tight labor market. ReadyNation estimates the consequences cost American businesses nearly $13 billion a year just among parents of children aged three or younger. And while it may feel slightly dystopian to regard children as the next generation of workers, the crisis simultaneously impacts future labor markets because of how much, we now know, early experiences shape later educational outcomes

Which is why the U.S. Chamber of Commerce Foundation released, in 2017, a report called  “Workforce of Today, Workforce of Tomorrow: The Business Case for High-Quality Childcare.” The report stated plainly: “While enabling parents of young children to enter and remain in the workforce, childcare is simultaneously laying the human capital foundation—whether well or poorly—for much of our nation’s future workforce.” 

Yet nowhere in the aforementioned reports—or any other industry report—is a suggestion that business help pick up the tab, through taxation, for services it acknowledges directly impacts its profits. There are certainly laudable recommendations in these documents (for instance, offering business expertise to local childcare providers), and it’s undeniable that vocal business support has made it easier for lawmakers to pass modest early childhood funding increases. In the big picture, though, corporate executives and their lobbyists are more than happy to advocate for cuts to their already low tax rates, further squeezing tight state budgets and taking away money that could otherwise be used for birth-to-five early care and education. 

As things stand, business leaders get to have it both ways: They are hailed as early childhood champions for saying the right things without actually having to make any sacrifices (if paying for a program that basically pays for itself can be considered a sacrifice). Too often, we laud CEOs just because they provide donations to early childhood nonprofits or co-author an op-ed, without reckoning with how minor those contributions are relative to their wealth or how the company’s other actions may be harming families. For instance, last year Arkansas sliced its corporate tax rates, which one local children’s advocacy group estimates will cost the state nearly $40 million a year while overwhelmingly benefiting the wealthiest companies. A true early childhood business champion might propose that money be better used to stabilize early care in a state where one in three children live in a childcare desert

This is not dissimilar to how Ivanka Trump positions herself as a champion for working families—and even held a White House summit last December on childcare and paid family leave—despite her father’s huge social service cuts and tax policies (which she has also been happy to champion). The naked hypocrisy of the summit, hosted by an administration that has overseen a massive separation of migrant children from their families, inspired nearly 100 child and family advocacy organizations to sign a letter of protest, writing that “we reject the administration’s callous track record on family policy, which has been nothing less than devastating for children and families.” 

This kind of doublespeak is a nationwide problem: There are vanishingly few examples of any states or communities seeking corporate tax increases to fund early childhood services. The closest instance is a proposal currently on the table in New York to increase the payroll tax (and bar companies from passing the cost on to their employees) in order to fund New York City’s childcare initiative for infants and toddlers. The proposal faces an uphill battle, not least because, as the New York Post reported last September, “the city’s top business group threw cold water on the idea.”

The situation isn’t much better at the federal level. There have been recent increases for childcare subsidy funding (though the latest Trump budget does little for early care, while coming after many important programs for women and children), but the 2017 corporate tax cut represents a huge opportunity lost. As Senator Bob Casey, a Democrat from Pennsylvania, recently noted when unveiling a proposal for comprehensive childhood supports, simply raising the federal corporate tax rate from its current 21 percent to 28 percent—still a major cut from the pre-2017 level of 35 percent—would generate $700 billion over a decade that could be directed to children and families.

It’s important to note that corporate taxes on their own aren’t capable of generating the revenue needed for a universal, high-quality early care and education system. Such a system will cost several hundred billion dollars a year nationally, as it should for an endeavor requiring low adult-to-child ratios and well-compensated educators, one so important it literally shapes the wiring of children’s brains. Funding such a system will require pulling from a mixture of sources‚ and corporations can no longer be left out of the equation. Democratic presidential hopefuls such as Senators Elizabeth Warren and Bernie Sanders have shown us what this could look like on the federal level, and states should follow their lead; both have proposed raising the corporate tax rate, and Warren’s proposed wealth tax is specifically tied to her large-scale childcare plan.

You can’t be for broadly accessible childcare while being against corporate taxation. So when people like the president of the U.S. Chamber of Commerce—the nation’s largest lobbying organization—say that “the skills gap is not just a college issue or a classroom issue, it’s also a childcare issue,” shortly after declaring massive corporate tax cuts as “bold reforms for lasting growth,” it’s easy to see which side of the line they’re actually on. Parents struggling to afford childcare don’t need White House photo ops or glossy reports: They need money from corporations’ overstuffed pockets.