The US conditions chipmaker subsidies on childcare

a young child holding a bright cup

In its attempts to increase national childcare support, the White House has encountered opposition. It is currently trying once more, albeit on a smaller scale.

Plans for how they will provide childcare for employees must be submitted by businesses wishing to access a new $40 billion (£33 billion) pool of government subsidies for the semiconductor industry.

The situation represents an unusual exercise of the federal government's authority.

The rule, according to officials, was created to address a labor shortage.

The action is being taken as the US begins to accept business applications for the first of the massive subsidies for the chip industry that Congress approved last year in an effort to help the US compete with China.

"Let me tell you the truth: CHIPS won't be a success unless we increase the labor force. Without accessible childcare, we won't be able to accomplish that, said Gina Raimondo, secretary of commerce. That's why we ask businesses that receive funding to outline their plans for offering workers access to affordable childcare. ".

Since the pandemic struck in 2020, the number of people citing childcare issues as a reason for not working has increased, making an already scarce and expensive service even more in short supply.

To increase federal funding for the industry in order to increase worker pay and expand pre-kindergarten programs, the White House has been unable to win support from Congress.

Ordinarily, the government goes above and beyond the regulations that apply to the private sector to demand that businesses that receive contracts abide by certain standards. Given the size of the government's employer base, such actions are regarded as influential.

For instance, federal contractors are required to pay a minimum hourly wage of $16.20, which is higher than the federally mandated minimum in some states.

However, a longtime education consultant named Danielle Ewen claimed that the federal government hasn't previously taken the issue of childcare seriously.

"It's a new way for the federal government to mandate that businesses in a specific sector provide childcare," she said.

Applicants must submit plans to provide access to "affordable, accessible, reliable and high-quality childcare" for plant employees and construction workers if they are seeking more than $150 million in grants or other direct funding for chip manufacturing factories.

The agency did not make clear how it would decide whether or not businesses meet that standard.

If more parents apply for spaces for their kids while the supply remains the same, subsidizing the cost of care runs the risk of taxing already-stretched resources.

The move, which sparked criticism in some quarters, would need more information, analysts said, in order to be understood.

Investor Steven Rattner, who assisted the Obama administration in saving the auto industry, stated on Twitter that affordable childcare is an admirable goal but has nothing to do with semiconductors.

It cannot be used as a pack mule for unrelated policy priorities if we want the CHIPS act to function. ".

Others, like Democratic Senator Jeanne Shaheen, applauded the action nonetheless.

She explained that investing in our economy also entails investing in the people who run it.

A request for comment was not answered by the Semiconductor Association, which speaks for chip manufacturers.

In the US, the private sector has long been relied upon to provide benefits like health insurance that are typically provided by governments in other nations.

According to the Bureau of Labor Statistics' yearly survey, about 28% of businesses with more than 500 employees now provide some form of childcare benefits.

The New York Times, which broke the news of the requirement, says that money given through the semiconductor initiative can be used to cover the expense.


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