Affordable child care will help women re-enter workforce, stimulating the economy

Posted on September 13, 2021 in Child & Family Policy Context

Source: — Authors: – Opinion/Contributor
Sept. 12, 2021.   By Ali Kaazempur-Mofrad, Contributor

The COVID-19 pandemic has had serious repercussions on the economy, causing many Canadians to lose their jobs.

Women have been disproportionately affected, in part due to the fact that hard-hit sectors like the service industry, which experienced over two million of the 2.7 million jobs lost in April 2020, normally employ significantly more women than men.

Even as the economy reopens, there are various hindering factors that may impact women’s return to the workforce. Chief among these factors is accessible child care, which has proven critical during the COVID era. To address this issue, Canada seeks to subsidize child care via reducing the average cost of government-regulated daycare programs, hoping to enable women to return to work and thus stimulate the economy through boosting and diversifying workforce participation. While promising to have positive impacts on the economy, some aspects of the policy need careful consideration to prevent unintended consequences.

Given that child care is a necessity for working women with young children, reduced child-care expenses will lead to an increased demand. While in the short run the governmental daycare facility capacity is fixed, the rise in demand will result in a shortage of space and adequate facility supply. To counter the shortage, daycare facilities would need to increase their capacity. In this long-run expansion, more jobs will also be created for women in the child-care industry, where over 95 per cent of workers are women.

Funding such a policy is reliant on the government budget, the bulk of which is borne by the taxpayers. This would create some public dilemmas. Firstly, parents with young children, regardless of financial need, would all benefit from such a blanket policy. Secondly, this policy imposes a tax increase on all families, including those who may not directly benefit from it.

Therefore, rather than providing the opportunity to all families with young children, the policy could be tailored to fit the needs of families within certain income brackets. By limiting the qualifications, the government would be able to allocate a more sustainable budget and reduce the weight of the imposed tax to secure funding of the policy. By targeting specific groups, e.g., families in lower income brackets, the government could enable and encourage working women to return to the workforce without imposing unnecessary tax increases on the public.

By subsidizing child care to women who intend to return to work, the government provides adequate social support to those who need the help the most. Such a policy will eventually help the economy to grow naturally, and will embolden consumers’ confidence to increase spending. As women return to the workforce, their increased income yields greater spending power, boosting demand for normal goods and further stimulating the economy.

Overall, the implementation of the subsidized child-care policy offers greater societal benefit than its cost, which optimizes efficiency and maximizes economic growth.

Ali Kaazempur-Mofrad is an undergraduate student at the University of Toronto majoring in physics and minoring in statistics and mathematics.

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