US attaches child care conditions to chipmaker subsidies

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Nursery care for toddlers can cost more than a third of median family income in parts of the United States, according to the Department of Labor

The White House has been frustrated in its efforts to expand national support for child care. Now he’s trying again – albeit on a smaller scale.

Firms looking to tap into a new pool of $40bn (£33bn) government grants for the semiconductor industry will have to submit plans for how they will provide workers with childcare .

The condition marks an unusual use of federal government powers.

Officials said the rule was intended to address a shortage of workers.

The move comes as the United States begins inviting applications from companies for the first of billions in chip industry grants that Congress approved last year to help the United States compete with China.

“Here’s the truth: CHIPS will only succeed if we grow the workforce. We can’t do that without affordable child care,” Commerce Department Secretary Gina Raimondo said. wrote on Twitter. “That’s why we’re asking companies that receive funding to tell us how they plan to provide affordable childcare to workers.”

The number of people citing childcare issues as a reason for not working has risen since the pandemic hit in 2020, deepening shortages of a service that was already scarce and expensive.

But the White House has been unable to muster congressional support to increase federal funds for the sector to raise workers’ wages and expand pre-kindergarten programs.

The government generally requires companies that win contracts to meet certain standards beyond the rules faced by the private sector. Such movements are considered influential, given the extent of the government’s presence as an employer.

For example, federal contractors must pay a minimum hourly wage of $16.20, although this is above the minimum in some states.

But the national government has not taken the issue of childcare seriously in the past, said Danielle Ewen, a longtime education consultant.

“This is a new avenue for the federal government to compel employers in a particular industry to provide child care services,” she said.

The requirement states that applicants seeking more than $150 million in grants or other direct funding for chip factories submit plans to provide factory workers and construction workers with a access to “affordable, accessible, reliable and high-quality child care”.

The agency did not say how it would determine whether companies meet that bar.

Subsidizing the cost of care risks straining existing resources, if more parents seek places for their children but the supply remains the same.

Analysts said more details would be needed to understand the impact of the move, which has raised objections in some quarters.

“Affordable child care is an admirable goal — but it has nothing to do with semiconductors,” said investor Steven Rattner, who worked on the Obama administration’s bailout of the auto industry. wrote on Twitter.

“If we want the CHIPS Act to work, it cannot be used as a mule for unrelated political priorities.”

Yet the move was applauded by others, like Democratic Senator Jeanne Shaheen.

“Investing in our economy is investing in the workers who make it work”, she says.

The Semiconductor Association, which represents chipmakers, did not respond to a request for comment.

The United States has long looked to the private sector to provide services — such as health insurance — considered the responsibility of governments in some other countries.

According to an annual survey conducted by the Bureau of Labor Statistics, about 28% of companies with more than 500 employees now offer child care benefits.

Money awarded through the semiconductor initiative can be earmarked for cost, according to The New York Times, which first reported the requirement.

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