Company Childcare Is Not The Way Forward
Privatizing childcare detracts from universal access to quality care.
There is no way to make life easier beyond work than to make it better at work. The two are linked.
| Corey Robin, To Make Life Easier: Socialism and the Mamdani Campaign
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.
| Janet Yellen, former Secretary of the Treasury under Joe Biden (2021)
I am making this issue free to all, because I believe childcare is too serious a crisis to leave my closing points behind a paywall. But consider a paid subscription, even so. workfutures.io is my primary work in 2026.
The Childcare Crisis
Childcare in the US is critical to working parents, but it’s both expensive and in high demand. As former Treasury Secretary Janet Yellen put it, pointing out that parents cannot get loans to pay for childcare, unlike education, housing, or cars [emphasis mine]:
The most parents need child care at the exact moment when they can least afford it – at the beginning of their career when their income is lowest. There’s no financing to help them pay. If you walked into a bank, and asked for a daycare or nanny loan, no one would give it to you. Economists call this particular market failure, “a liquidity constraint.” Instead, families have to spend out-of-pocket, and they have to spend a lot. Our estimate is that to get quality child care, the average family would have to spend 13 percent of their income, more than they spend on food.
Yellen wrote that in September 2021, during the Biden administration. Things have only gotten worse since then. (Note: Biden and Yellen tried to fix the childcare mess in the Build Back Better bill, but it did not survive the cuts that led to the Inflation Reduction Act, which dropped all previous childcare provisions.) Today, you still can’t get Yellen’s hypothetical childcare loan.
We are stuck with a childcare crisis: families who cannot afford childcare, childcare providers who cannot keep their doors open, and caregivers who cannot survive on starvation wages (paraphrasing Karin Brulliard).
The Way Forward
We are beginning to see a turning of the tide, in local and regional efforts to address the market failure of childcare. Evidence for its effectiveness is mounting.
As Sydney Ember reported:
There is already a large body of evidence that universal preschool programs pay big economic dividends. A working paper published in May that analyzed the effects of universal prekindergarten programs in nine cities and states found that they resulted in a 1.2 percent rise in labor force participation, a 1.5 percent increase in employment and 1.6 percent growth in hours worked. The paper analyzed programs in Georgia, Oklahoma, West Virginia, Florida, Iowa, Wisconsin, Washington, D.C., Vermont and New York City.
Mothers experienced the greatest employment bump, according to the paper. But the benefits also extended to other women, suggesting that universal prekindergarten programs also allowed informal caregivers to seek employment as well.
Researchers at Yale and Brown showed ‘spending on child care as one of the most effective, pro-work policies ever evaluated in the United States. Using tax data and other administrative records, every dollar spent on a program providing free, full-time day care for preschoolers generated $6 in economic benefits. Most of that return came from extra pay that parents could earn because they had additional hours of care for their kids’ as Catharine Rampell reported in 2024.
That research also showed that ‘wraparound’ hours — like 7:30 am to 5:30 pm — were the most helpful for working parents, unsurprisingly. The New Haven program was ‘universal’ in that it provided care for all children, tuition-free and open to all families, without income means-testing.
New Mexico’s Governor, Michele Lujan Grisham, has created the first state-wide universal childcare program in the United States, initiated in November 2025, building on an earlier means-tested program. The state is scaling up childcare seats as quickly as possible to meet high demand.
New York City Mayor Zohran Mamdani and New York Governor Kathy Hochul have both made childcare a priority and have laid out a long-term, graduated plan for universal childcare in the city and, in the following years, the entire state.
Mamdani explained his plan in a video, saying the lack of universal childcare has led to major economic impacts, referring to a report from the New York City Economic Development Corporation that found ‘parents leaving the city or cutting back their work hours because of caregiving responsibilities cost the city $23 billion in 2022’, as cited by Sydney Ember.
Mamdani and Hochul estimate that the plan would cost $6 billion annually, but the economic and social benefits would be well worth it.
Again, Sydney Ember:
The share of women in their prime working years who are in the labor force was 77.7 percent last month [August 2025], down slightly from its all-time peak last August [2024] of 78.4 percent. Among women with children under 5, that number was about 68 percent in May. That is down from an all-time high of 71 percent in September 2023, according to an analysis in July from the Hamilton Project, an economic policy research group at the Brookings Institution. The labor force participation rate for men ages 25 to 54 was 89.8 percent last month.
“You are looking for those pockets of slack — and those pockets of places where those policy interventions would make a big difference,” said Lauren Bauer, the associate director of the Hamilton Project. “This is clearly one of those places.”
In January, the New York City Office of the Comptroller released a report estimating the economic impact of free, universal child care for mothers of young children. The report found that 14,200 mothers in families earning up to 150 percent of the city’s median income would enter the city’s labor force, and would generate earnings of $670 million a year. The policy, according to the report, would also result in an addition 8.8 million hours worked annually by mothers who were already employed. Taken together, the increase in labor force participation and hours worked would lift mothers’ earnings by about $900 million.
Economists have pointed to history as evidence that more expansive child care policies could meaningfully change the broader economy. The Lanham Act, a federal infrastructure bill passed in 1940, was used to create a near universal, federally-backed child care program during World War II so that mothers with young children could contribute to the war effort.
Of course, immediately after the war, the US government shut down the program, despite its popularity and effectiveness in helping mothers work. When the GIs returned from the war, they needed their jobs back, and implicitly, women were supposed to go back to housework and raising children. Here in the next century, families need two incomes just to stay afloat.
The Way Not To Do Childcare
Companies attempting to offer free or discounted private childcare to employees are continuing the deep systemic mistake America has made with private health care offered as an employee benefit. Private healthcare has become a barrier to universal healthcare, as was clear during the battles over the Affordable Care Act and since. The fact that tens of millions of Americans, often self-employed or working for companies unwilling to offer healthcare benefits, were going uninsured was the driver of the Affordable Care Act.
But the ACA is a Frankenstein monster, grafting together an insurance pool of those without company-provided health insurance alongside the non-ACA healthcare of the well-employed. And now, in the Trump 2.0 era, the GOP-dominated Congress has turned its back on the expiring ACA supplemental funding, and those who are secure in their company-provided health insurance have no common cause with those who are now finding their health insurance impossibly expensive.
This demonstrates the glitch in inequitable systems rather than in universal ones. When a social benefit is universal, the middle class (and even the elite) are committed to the system functioning. They will exert their political influence to ensure that the system works and works well. This, in turn, benefits all participants.
Why is private childcare bad? Private childcare is a form of inequality, just as private healthcare is. The company’s employees get the benefits, but others in the same communities do not. Likewise, employees will be less likely to leave a job with childcare benefits because childcare is not only expensive but also in high demand, making it very difficult to gain entry to quality programs.1
Major corporations — such as AT&T, Etsy, Synchrony, UPS, and others2 —have been experimenting with company-provided or subsidized child care for their employees. And, yes, companies see a return on their investment in childcare in terms of retention and increased productivity, and they often state that one of their goals is trying to achieve higher equality between men and women in the workforce.
But by subsidizing childcare for employees, such companies are possibly exacerbating the shortage of childcare in the communities where they operate. This reminds me of the effect of tech companies in San Francisco providing on-site lunches for their employees, which led to major consequences for the city’s restaurants. Siphoning customers and chefs away from local restaurants led to many closings, with negative consequences for the community, which is another proof of ‘there ain’t no such thing as a free lunch’.
Make It Better At Work, But For Every Working Parent
What Corey Robin said is true: we have to make things better at work in order to make things better beyond work. But that does not mean that companies have to be the only or primary agents of change in the workplace. Earlier advances at work — like child labor laws, workplace safety, unionization, and paid family leave — were not the result of enlightened management, but of mass social movements and regulation. So, too, with universal child care.
What we are seeing in New Mexico, New York, and other cities and states is the early days of what could be a major advance for the country and its working families. And the pivot to universal child care will not just save those families from the crushing cost of childcare; it will also avoid the mistake America made with private healthcare, which led to the wildly unequal system we have today. Once childcare is universal, maybe universal healthcare will follow.
At face value, such an employer seems like a good actor, but such policies are also a form of coercion, perhaps allowing the employer to pay lower salaries, or otherwise take advantage of employees.
Here’s an article with 30 companies that offer subsidized child care.