Biden Administration

Now the CHIPS Act Is Going To Subsidize Child Care Too

If Congress wants to spend taxpayer money on child care services, it should pass a bill authorizing that.


A federal effort to throw about $40 billion in taxpayer cash at semiconductor manufacturers is now going to double as a backdoor effort at expanding federal subsidies for child care.

According to The New York Times, the Commerce Department is set to unveil new rules on Tuesday that will effectively force recipients of the new federal semiconductor subsidies to "guarantee affordable, high-quality child care for workers who build or operate a plant." The Times reports that the new rules will not specify how recipients use the funding, though it could include everything from "building company child-care centers near construction sites or new plants" to "directly subsidizing workers' care costs."

We'll have to wait until the rules are made public to fully judge the situation, but given those options, it would seem like most companies will choose to simply pass along some of the subsidies to offset workers' child care costs. Which is great for those workers—provided they can actually find care.

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).

There's also a procedural issue here. Namely: If Congress believes it is in the best interest of the country to increase federal subsidies for child care, it ought to pass a law that does that. Doing so would allow for a comprehensive debate about the costs involved, the government regulations that inhibit the availability of care, and the best ways to ensure that American families can afford whatever level of child care they might desire.

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. Well-intentioned or not, the Commerce Department's repurposing of the CHIPS Act isn't going to make child care any more affordable or available for the vast majority of workers.