CHIPS Act’s Childcare Requirements Could Help Ease the Gender Pay Gap

March 13, 2023

For “Equal Pay Day,” we look at how different provisions in subsidy programs can help women in the workforce, and how states should emulate the childcare requirements the CHIPS Act now guarantees.

Last summer, Congress approved $280 billion to strengthen the domestic semiconductor industry. The CHIPS and Science Act provides money for research, development, and manufacturing of semiconductor chips, which are used in everything from appliances and video games to computers and advanced weaponry.  

"childcare" and "ABCs" are written on colorful blocks; each block is different color and a pair of child's shoes peeks out from the corner
Source: Getty Images Signature

Companies seeking a CHIPS subsidy of $150 million or more must guarantee affordable childcare for workers who construct or take permanent jobs in a plant.  If state and local governments had similar requirement for recipients of large subsidy deals, it would go a long way toward increasing the number of women in the workplace – and their pay. 

March 14th is “Equal Pay Day,” marking when women finally catch up to what men earned the previous year at 83 cents for every $1 a man makes. Mothers fare far worse: just 58 cents for every $1 a father earns, meaning they’ll have to work until September 8th this year to match fathers’s 2022 earnings, according to the American Association for University Women. 

The reasons for the gender inequity are varied, from traditionally female-dominated fields offering lower pay, or women being less likely to be promoted than their male counterparts,  according to the Center for American Progress. The problems compound when women become mothers, especially because of the lack of affordable childcare, which can push women out of the workforce, limit their job options or create employment instability. 

In some metro areas that already have semiconductor manufacturing, childcare costs an estimated for 18% of workers’ salaries. It’s undoubtedly one reason why only three in 10 manufacturing workers in the U.S. are women, according to the Bureau of Labor Statistics (BLS) 

The childcare workforce is also under stress. Since the pandemic, the BLS estimates that employment in the childcare industry is down 5.5% from February 2020, equivalent to more than 50,000 people leaving the industry, creating even more scarcity for affordable childcare.  

The new CHIPS Act requirement for childcare can be achieved in different ways, including building on-site childcare centers, paying nearby childcare facilities to add capacity, or directly subsidizing workers for the childcare costs they incur. 

There have been some efforts to support childcare through the tax code. According to the Committee for Economic Development, there are currently 18 states that have employer childcare tax credits, which incentivize companies to provide childcare to their employees or subsidize the cost. But those have been found marginal — only 11% of workers have access to childcare through their employer. There are 25 states that have a dependent child tax credit that helps parents with the cost of childcare. Four other states allow parents to make tax deductions for some of their expenses associated with childcare.   

That’s why the CHIPS Act requirements could be so significant, if they prompt other sectors to add childcare requirements. An easy place to start would be with companies that receive economic development subsidies. If Tesla wants $1.3 billion for a new factory, it should be contingent on providing childcare to its workers. Same if Amazon wants $1 billion for a new headquarters. 

And while such requirements are rare yet, they are not without precedent. In Indianapolis for example, all companies that receive abatements must dedicate 5% of themto childcare, transit, or training for its employees. 

Better yet, governments should directly provide subsidized childcare, a popular proposition among all political groups. Ensuring that women have equal access to the workplace, through affordable childcare and other policies, helps to ensure a more equal future — not to mention addressing today’s labor shortages. With recent stipulations such as the one included in the CHIPS Act, let’s make next year’s Equal Pay Day arrive sooner, and then make it a thing of the past!