The Biden Administration's Backdoor Effort to Subsidize Child Care

The passage of the $40 billion CHIPS Act (Creating Helpful Incentives to Produce Semiconductors and Science) is a dubious effort to throw taxpayer money at the problem of Chinese subsidies for their semiconductor industry.

Whether it will work in the United States has yet to be proven. But one little-noticed codicil in the legislation is the ability of the Commerce Department to set certain conditions on recipients of the subsidies that would require them to “guarantee affordable, high-quality child care for workers who build or operate a plant.”

The subsidy could also be used to assist in “building company child-care centers near construction sites or new plants” or “directly subsidizing workers’ care costs.”

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If Congress wanted to subsidize child care, they would pass a bill. But Congress hasn’t mandated this kind of “guarantee” before. And by subsidizing some workers’ childcare, the problem will only be exacerbated for everyone else.

Reason.com:

The reason that child care is unaffordable for many families is ultimately a supply-side problem that’s unlikely to be solved—and could actually be made worse—by subsidizing the demand side like this. And it’s a supply-side problem that’s largely the fault of governmental regulations like occupational licensing schemes (often with mandatory education requirements that have nothing to do with knowing how to take care of kids) and requirements regarding the number of staff per child.

Without repealing those supply-side constraints on the availability of child care, increased subsidies that flow to only a handful of workers will likely allow those families to afford care at the expense of others. The overall availability of child care won’t increase and the subsidies will likely only inflate costs (as they always do).

When the CHIPS Act was being debated, no one in Congress said a word about subsidizing child care for workers in the semiconductor industry. This was an add-on by the Commerce Department, which wants to socially engineer entire industries.

It should go without saying that the CHIPS and Science Act of 2022 is not that bill. This new rule seems to be an entirely post hoc construction by the Commerce Department, which is responsible for implementing the law and seems vaguely aware that affordable child care is a problem keeping some workers out of the labor force.

That’s a real issue, but Rube Goldberg-ing new mandates into an expensive and misguided industrial policy is no way to make social policy.

This kind of backdoor mandating of social policy is unconstitutional. And if anyone chooses to challenge it, the Supreme Court would likely find it wanting in its constitutionality.