Treasury Secretary Janet Yellen and Vice President Kamala Harris urged Congress on Wednesday to back affordable child care proposals included in President Joe Biden’s budget plan, calling it “the single most important thing we can do to build a stronger economy over the next several decades."

What You Need To Know

  • U.S. Treasury Secretary Janet Yellen and Vice President Kamala Harris urged Congress Wednesday to back affordable childcare proposals included in President Biden’s budget plan, seeking to highlight the long-term benefits to the U.S. economy

  • Their remarks come on the heels of a new Treasury Department report that found the average U.S. family spends roughly 13% of its income on childcare

  • The high cost of care has driven millions of Americans from the workforce in order to take care of their children, and has had a disproportionate impact on mothers

  • Biden’s proposal could save the average family nearly $15,000 a year in childcare costs, and about $1,200 each month, Harris said Wednesday

"The free market works well in many different sectors, but child care is not one of them. It does not work for the caregivers. It does not work for the parents. It does not work for the kids. And because it does not work for them, it does not work for the country," Yellen said. "It's past time that we treat childcare as what it is – an element whose contribution to economic growth is as essential as infrastructure or energy."

Their remarks came hours after the release of a new Treasury Department report, “The Economics of Childcare,” which found that the average U.S. family would have to spend roughly 13% of their income to secure quality childcare – more than they spend on food, Yellen said Wednesday.

“This report confirms we need to bring cost down with a significant public investment in our childcare industry,” Yellen added. “And this report confirms that, tragically, the United States is falling behind on a global scale on this issue of investment in childcare.”

The report also comes as millions of Americans have had to leave the workforce in recent years due to the rising cost of childcare – an exodus that increased greatly during the pandemic.

"This report confirms what millions of American families know and experience every day: Childcare remains too expensive and out of reach for far too many working families in our country," Harris said. "This report confirms we need to bring costs down with a significant public investment in our childcare industry. And this report confirms that, tragically, the United States is falling behind, on a global scale, on this issue of investment in childcare."

That impact has had a disproportionate impact on working mothers, and childcare issues were cited as the reason many working mothers had to quit their job during the pandemic, Harris said Wednesday.

“The pandemic has hit women workers extremely hard, and disproportionately,” the vice president said. “More layoffs in industries in which women are likely to work. More closures of small businesses, which women owned. And without childcare, working parents were totally stranded.”

Both Harris and Yellen drew on their personal experiences to make a case for affordable childcare. Harris, whose mother worked at a lab researching breast cancer, spent weekdays at the house of Regina Shelton, who ran a childcare center from her home. 

“She became a second mother to my sister and me,” Harris said. “My mother often said that, but for Mrs. Shelton, she would not have been able to do the work that she did. She would not have been able to make the contributions that she made in the fight to end breast cancer. She would not have been able to fulfill her ambitions for herself and her two daughters."

Yellen recounted placing a classified ad in the local paper when she was returning to the workforce. Ultimately, she ended up paying a higher price for quality childcare – an option she acknowledged is out of the question for most American families. “Child care is a textbook case of a broken market,” Yellen said. 

Biden’s “Build Back Better” agenda includes provisions aimed at lowering the cost of childcare in the U.S. Its provisions include capping child care expenses at 7% of a family’s income, and providing universal preschool for 3- and 4-year-olds. It would also expand child tax credits and fund child care centers to ensure workers can receive a living wage.

Biden’s proposal could save the average family nearly $15,000 a year in childcare costs, and about $1,200 each month, Harris noted. “Once it passes, our agenda will extend the child tax credit,” Harris said. “It will expand paid family leave, and it will lower childcare costs for every working family.”

“When women are able to fully participate in our workforce, our families, our communities and our country is stronger,” Harris said.  “Some estimates suggest our GDP would be five points higher if women participated in the workforce at the same rate as men.”

But some lawmakers are hesitant to provide the comparatively robust benefits being proposed by the administration.

The president’s plan would remove work requirements for families receiving the child tax credit, something that West Virginia Sen. Joe Manchin, a key Democratic vote for passage, opposes.

“Tax credits are based around people that have tax liabilities,” Manchin told Insider. “I’m even willing to go as long as they have a W-2 and showing they’re working.”

The Associated Press contributed to this report.