Destabilizing Women’s Equality: Why the Fed Wins and Women Lose as ARPA Funds Expire

Blog Post | 112 KY. L. J. ONLINE | October 9 , 2023

Destabilizing Women’s Equality: Why the Fed Wins and Women Lose as ARPA Funds Expire

By: Holly Hammons, Notes Editor, Vol. 112

Women have been asked to faithfully march to the top of the hill, children strapped to their backs, with the promise that equality awaits if they just keep climbing. But what, if anything, are we to do when we reach the top only to find that our summit’s foundation is a false floor—forcing us back to the beginning? While hyperbolic, this imagery is far from hysteric . . . it is reality now faced by millions as COVID-19 relief childcare subsidies ended October 1, 2023.[1] At the same time, the Federal Reserve (“The Fed”) has been actively fighting inflation through a series of interest rate hikes, traditionally implemented to slow demand.[2] When inflation defies this expectation, however, the Fed seeks to accomplish its goal through other means—including workforce reduction. Regardless of intention, the Fed will likely reach their inflation reduction goal via the Congressional inaction surrounding childcare subsidies because many mothers will have to make the choice leave their careers rather than pay exorbitant childcare costs.

The End of Childcare Stabilization Funding

Fortunately for the Fed (and the Fed alone), Congress has decidedly done nothing to expand or continue the Federal Childcare Stabilization Funding provided by § 2202 of the American Rescue Plan Act (“ARPA”).[3] These funds were allocated by Congress during the COVID-19 pandemic to maintain parental involvement in the workforce by eliminating or drastically reducing the cost of child care tuition per child.[4] In fact, as Congress declines to confront the issue, an estimated 3.2 million children will lose funding previously provided through ARPA.[5] This lack of funding will have impacts far beyond the families of those children. As childcare centers lose funding and/or children, they will likewise lose wages—wages that are staggeringly low in the first place.[6] Nongovernmental organizations estimate the average wage for childcare workers to be $25,460.00, notably making the child care cost for two children above child care professionals’ income.[7] Julie Kashen of The Century Foundation goes as far as estimating 70,000 childcare centers will be forced to close their doors altogether after being hurled over the edge of this “child care cliff.”[8]

Inevitably, as centers close and/or raise their tuition to fill the gaps created by this disparity in funding, women will once again be forced into accepting Congress’ apparent belief that we cannot—and should not—have it all.[9] Erik Ortiz, writing for NBC News, tells the stories of multiple women seeking alternative options or making the outright choice to leave their careers due to lack of childcare options.[10] Moreover, a February 2022 RAPID survey indicated “increasing numbers of women were forced to initiate their own departures from fulltime work—even though they could not afford to do so” largely due to “unreliable child care.”[11] Given that yet another federally funded pandemic-era childcare support will be liquidated in 2024,[12] we are still in the midst of a freefall to the rocky bottom of this cliff.

Childcare as an Economic Gatekeeper

Notably, as mothers fall back down the ladder, the Federal Reserve finds a victory in the fight against inflation.[13] The Fed’s methodology mimics Reagan-era theories of economic growth wherein the agency applies pressure to supply and demand to meet their goals.[14] When the first weapon in their toolbelt  (increasing interest rates) fails to “slow down an overstimulated economy,” efforts shift toward other means . . . means that “require some pain for workers.”[15] That “pain” is likely an unprecedented rate of unemployment, which experts project “will have to reach as high as 7.5% more than double its current level, to get inflation down to the Fed’s target of 2% [inflation].”[16] This goal is often achieved by increasing interest rates, which in turn slows down spending and lowers demand overall.[17] After eleven consecutive interest rate hikes by the Fed, inflation has decreased, but not to the “purely arbitrary”[18] rate the agency has set its sights on.[19]

Given the decrease in inflation rates and the simultaneous stagnant high of hiring rates, one would be tempted to take an optimistic view of the Federal Reserve’s intentions. Realistically, however, “[t]he Fed wants to see hiring decelerate because strong demand for workers tends to inflate wages and feed inflation.”[20] This brings us to the question at the heart of this analysis: how can the government reduce demand enough to impact the hiring rate without spiking the unemployment rate, thereby signaling economic weakness? The answer has appeared in the form of childcare as the economic gatekeeper for women in the workforce. As childcare becomes increasingly costly, many families will grapple with the perception of choice to pull their children from centers. When women have historically been kept from achieving wages on par with their male counterparts,[21] and traditional notions of gender normality deem wives’ employment “less important than their husband’s”[22] it should come as no surprise when mothers leave the workforce en masse in the coming months. As mothers “voluntarily” leave the workforce, the Fed will likely tout statistics demonstrating the achievement of their arbitrary inflation goal, ignoring the careers sacrificed along the way.

Reality, Not Conspiracy

While there is no villain hiding behind the curtain, maniacally pulling the strings to cause this confluence of interests, there is also no urgency from Congress to correct this impending childcare crisis. While some democratic Senators have introduced legislation to alleviate the problem, there has been no significant traction to demonstrate progress toward a better system.[23] The September 2023 Jobs Report indicated substantial growth in hiring (336,000 jobs).[24] When policymakers meet again to decide whether to increase “borrowing costs” for a twelfth time in early November, they must evaluate against the backdrop of the average American.[25] The end of the student loan moratorium, recent successful unionized strikes, and continued rise of wages should all be factors for their consideration.[26] It is highly unlikely, however, that a lack of childcare will enter the discussion in a meaningful way, which is more indicative of the underlying gender narrative than not.  As I write this post, I am well-aware many of my male colleagues may be irritated by a feminist view of economic theory. They must ask themselves, however, if they have considered their career one built on that cliff’s edge. Likewise, society must recognize that women will continue to suffer the consequences of Congressional inaction at the foot of the capitalist altar until our priorities shift.  

[1]Julie Kashen, Laura V. Gutierrez, Lea Woods, & Jessica Milli, Child Care Cliff: 3.2 Million Children Likely to Lose Spots with End of Federal Funds, The Century Found. (June 21, 2023), https://tcf.org/content/report/child-care-cliff/.

[2] Nik Popli, Why the Fed is Trying to Slow Job Growth, Time Magazine (Feb. 8, 2023), https://time.com/6253699/federal-reserve-inflation-interest-rates-workers/.

[3] American Rescue Plan Act of 2021, Pub. L. No. 117-2, § 2202, 135 Stat. 4, 31-35 (2021).

[4] Id.

[5] Kashen, Gutierrez, Woods, & Milli, supra note 1.

[6] U.S. Bureau of Lab. Stat., Occupational Employment and Wage Statistics: Occupational Employment and Wages, May 2022 39-9011 Childcare Workers (last modified Apr. 25, 2023), https://www.bls.gov/oes/current/oes399011.htm (the mean wage for childcare workers estimated at $27,920.00).

[7] Jane Fillion, New Data Finds Child Care Prices Continue to Rise Ahead of Midterm Elections, Outpacing Inflation & Following Decades-Long Trend of Annual Increases, The First Five Years Fund (Oct. 13, 2022), https://www.ffyf.org/new-data-finds-child-care-prices-continue-to-rise-ahead-of-midterm-elections-outpacing-inflation-following-decades-long-trend-of-annual-increases/.

[8] Amy Pichi, “Child Care Cliff” is Days Away as Fed Funding Expires. Millions Could Lose Child Care, Experts Say, MoneyWatch, CBS News, (Sept. 28, 2023, 10:33 AM), https://www.cbsnews.com/news/child-care-cliff-federal-funding-arpa-expiration-impact/.

[9] Erik Ortiz, Why the End of Federal Childcare Funding Matters—Whether or Not you Have Young Kids, NBC News (Sept. 28, 2023, 8:04 AM), https://www.nbcnews.com/news/us-news/child-care-cliff-federal-funding-subsidies-end-rcna117405.

[10] Id.

[11] Forced Out of Work: The Pandemic’s Persistent Effects on Women and Work, Stan. Uni.: The RAPID Survey Project, (June 2022), https://static1.squarespace.com/static/5e7cf2f62c45da32f3c6065e/t/62bde72fc48ebe6be04ea2da/1656612655531/rapid-women-and-work-factsheet-june2022.pdf.

[12] COVID-19 Child Care Relief Funding: Timeline & Deadlines, The First Five Years Fund (last visited Oct. 5, 2023), https://www.ffyf.org/wp-content/uploads/2021/05/COVID-Relief-Calendar_4-29-21.pdf.

[13] Nik Popli, Why the Fed is Trying to Slow Job Growth, Time Magazine (Feb. 8, 2023), https://time.com/6253699/federal-reserve-inflation-interest-rates-workers/.

[14] Id.  

[15] Id.

[16] Id.

[17] How Does Raising Interest Rates Help Inflation?, Chase Bank (last visited Oct. 5, 2023), https://www.chase.com/personal/banking/education/basics/how-does-raising-interest-rates-help-inflation#:~:text=When%20the%20central%20bank%20increases,demand%20and%20hopefully%20reducing%20inflation.

[18] Id. (quoting Robert Reich, former U.S. Secretary of Labor, stating “[the 2% goal is] purely arbitrary, and achieving that inflation target may cause unnecessary harm to millions of Americans.”).

[19] Paul Wiseman, Economy Adds 187,000 Jobs in August Despite Federal Reserve’s High Interest Rates, PBS News Hour (Sept. 1, 2023 9:50 AM), https://www.pbs.org/newshour/economy/economy-adds-187000-jobs-in-august-despite-federal-reserves-high-interest-rates (“The Fed’s streak of 11 interest hikes have helped slow inflation from a peak of 9.1% last year to 3.2% now.”).

[20] Wiseman, supra note 17.

[21] Rakesh Kochhar, The Enduring Grip of the Gender Pay Gap, Pew Rsch Ctr. (Mar. 1, 2023), https://www.pewresearch.org/social-trends/2023/03/01/the-enduring-grip-of-the-gender-pay-gap/#:~:text=The%20gender%20pay%20gap%20%E2%80%93%20the,every%20dollar%20earned%20by%20men.

[22] George Guilder, Women in the Work Force, The Atlantic (Sept. 1986), https://www.theatlantic.com/magazine/archive/1986/09/women-in-the-work-force/304924/.

[23] Press Release, U.S. Senator Pat Murray, Murray, Sanders, Clark, Colleagues Introduce Bill to Extend Vital Child Care Funding and Save Millions of Families’ Child Care Spots as Funding Cliff Looms (Sept. 13, 2023), https://www.murray.senate.gov/murray-sanders-clark-colleagues-introduce-bill-to-extend-vital-child-care-funding-and-save-millions-of-families-child-care-spots-as-funding-cliff-looms/.

[24] Jeanna Smialek, Jobs Gains Heat Up Even as the Federal Reserve Looks for Cooling, The New York Times (Oct. 6, 2023 4:41 PM), https://www.nytimes.com/2023/10/06/business/jobs-september-federal-reserve.html.

[25] Id.

[26] Reuters, U.S. Job Growth Beats Expectations in September; Unemployment Rate Unchanged at 3.8%, Econ. Times, (Oct. 6, 2023 7:04 PM), https://economictimes.indiatimes.com/news/international/world-news/us-job-growth-beats-expectations-in-september-unemployment-rate-unchanged-at-3-8/articleshow/104218167.cms?from=mdr.