The US Commerce Department announced on Monday that it will require companies desiring at least $150 million in financing from a $52 billion semiconductor law to offer up a plan for providing affordable childcare for their employees.
The Biden administration futilely sought $200 billion as financing for universal pre-kindergarten as well as other childcare programs in a proposal to improve economic growth by better compensating child and home healthcare workers and freeing up unpaid caregivers to work.
Commerce cited data that a lack of accessible and inexpensive childcare “is one of the largest restraints keeping Americans—and especially women—out of the labor force” arguing that companies receiving chip funding should demonstrate how they will provide affordable childcare.
The childcare component demonstrates the Biden administration’s eagerness to direct federal funds—in this situation, CHIPS and Science Act funds—to companies that agree to advance its policy objectives.
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Nobel laureate Joseph Stiglitz tweeted that lack of childcare is an important barrier to labor force participation. “Worker scarcity is a significant challenge in our economy, especially in high-tech industries. The provision that companies receiving CHIPS money provide childcare for workers is an important component.”
The Commerce Department will announce the first funding opportunity on Tuesday. Congress appropriated $39 billion for manufacturing incentives that would encourage companies to construct and grow facilities, and the law also establishes a 25% manufacturing tax credit.
The department will highlight other factors it will consider in making awards on Tuesday. The law forbids applicants from using government funds to pay dividends or stock buybacks.
According to the New York Times, businesses will be obligated to share a fraction of any “unexpected earnings” with the federal government.
Last week, Gina Raimondo, Secretary of Commerce, stated that the funding would result in the creation of hundreds of thousands of good jobs.
“But here’s the truth: if we don’t invest in America’s manufacturing workforce, it doesn’t matter how much we spend. We will not succeed,” Raimondo voiced. “We need to be both honest with ourselves and creative with solutions if we’re going to address this workforce challenge.”
The Department of Commerce stated last year that chip company grants will be “no larger than is necessary to make sure the project happens here in the United States” and that “race-to-the-bottom subsidy competitions between states and localities” will be discouraged.
