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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
From accountants and cooks to teachers and truck drivers, America is struggling to find enough staff to fill job vacancies. The unemployment rate, at 3.9 per cent, hovers near 50-year lows.
Shipping and logistic giant UPS is going one step further than rivals to win over workers. Last year, it started offering emergency childcare services at one site in Northern California. It now plans to expand the programme to other facilities in the US.
Other employers — and policymakers — should take note. The dearth of decent, affordable childcare has long been identified as a leading factor driving women from the workforce.
Federal data shows labour force participation among women aged 25 to 54 has recovered from the coronavirus pandemic to hit an all-time high. But that is misleading. When considering the level of increase since 2000, labour force participation among women has barely budged. This compares with big gains in other OECD countries.
In a 2022 report, Moody’s estimated that the US economy could receive a $1tn boost over the next 10 years if female participation in the market grew to levels seen in other developed economies.
Winning them back will require better access to affordable childcare. Treasury secretary Janet Yellen has called the sector a “textbook example of a broken market”.
Low pay makes it difficult for childcare employers to recruit and retain staff. The median pay for a childcare worker is just $13.71 an hour, or about $28,500 a year, according to the Department of Labor. Childcare centres say they cannot afford to pay more because parents cannot afford it. Already, half of parents spend more than 20 per cent of their household income on childcare.
During the pandemic the Biden administration provided $24bn to help the childcare industry stay afloat. That money ran out at the end of September. Congress is considering a request for $16bn in new funding.
Subsidised childcare plays badly with political conservatives. But there is a good business case for it. Some $122bn of economic output is lost every year because childcare costs are unaffordable for prospective workers.
At UPS, employee turnover at the facility where it offers emergency childcare has dropped from 31 per cent to 4 per cent. Big things can come from helping little ones.
The Lex team is interested in hearing more from readers. Please tell us what you think of the rationale for subsidised childcare in the comments section below
