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Child care woes leave small biz 'struggling to get people in' as job growth fizzles

·4-min read

The child-care crunch sparked by the pandemic has become a crisis for many workers and small businesses, as would-be employees stay at home rather than working.

The dynamic is hindering the economic recovery, and disproportionately impacting women in ways that may last for years, some observers say.

Only a month ago, the consensus among top economists and business leaders was that fall would bring a surge in hiring, with the end of extended unemployment benefits, schools reopening and continued vaccinations boosting labor participation.

However US employers added far fewer jobs than expected in September — the lowest number of the pandemic-era recovery. A defining feature of the recovery has been vast numbers of open jobs that employers can’t fill, which is making new job creation increasingly lackluster.

Brian Jacobsen, senior investment strategist at Wells Fargo Asset Management, told Yahoo Finance Live this week that rather than “a big bang, a flow of workers coming into the market and getting employed,” it now seems more likely that it’ll be a slow trickle of employees returning to the workforce over the course of months.

'Struggling to get new people in'

Tustin, CA - August 11: A student talks with his mom before his first day of kindergarten at Tustin Ranch Elementary School in Tustin, CA on Wednesday, August 11, 2021. (Photo by Paul Bersebach/MediaNews Group/Orange County Register via Getty Images)
Tustin, CA - August 11: A student talks with his mom before his first day of kindergarten at Tustin Ranch Elementary School in Tustin, CA on Wednesday, August 11, 2021. (Photo by Paul Bersebach/MediaNews Group/Orange County Register via Getty Images)

While economists were hoping to see recovery in sectors hardest hit by the pandemic, female labor force participation was also expected to go up as reopened schools eased child care issues for some. Yet the number actually fell from 56.2% to 55.9%.

“We've been struggling trying to get new people in,” Tiara Flynn, owner and CEO of Sumnu Marketing, a marketing consulting firm for small businesses, told Yahoo Finance in an interview.

As more employers push to get employees back in-house, some new applicants themselves are taking a harder stand.

“A lot of them either want pay raises or they don't want to have to come into the office, even if it is on a hybrid schedule,” Flynn added.

And childcare has emerged as another flashpoint between workers and potential employers.

Flynn added that many applicants and employees are complaining about caretaking costs. Recent Harris Poll data reflected how working parents feel “overwhelmed” by decisions related to managing their children.

“There's not a lot of programs that are available or fitting for the working mother,” Flynn said.

A recent report from the Small Business for America’s Future found that over 50% of small business owners believe that the lack of affordable high-quality child care for employees has had a negative impact on their business.

Of those polled, 66% believe the federal government has a role in supporting universal access to affordable, high-quality child care. Only 70% of small business owners support federal funding dedicated to providing child care services to underserved communities.

There is still a real need. Data shows that 72% of small business owners say they have employees with at least one child under 13, or that have a need for daily child care services and just 28% offer benefits related to child care.

“We have a broken market. Small businesses just don't have the same resources that large companies do so we think that there is a federal solution that needs to happen,”

said Rhett Buttle, senior advisor for Small Business for America’s Future, a national coalition of small business owners and leaders.

Working women have always shouldered more of the household responsibilities, the pandemic — which some observers have called a “she-cession” —has made the childcare issue undeniably worse.

Still the pandemic-era may offer another opportunity to create a change for working parents, especially women.

President Joe Biden has earmarked his plans for a $1.8 trillion American Families Plan, which includes provisions spanning from universal preschool to paid family leave and an extension of the child-tax credit expansion. It also calls to ensure low- and middle-income families spend no more than 7% of their income on child care.

As the lack of child care options persists, some small business employers have adapted and allowed their employees to bring their children in during workday hours.

“We kind of set up shop,” said Flynn. “This half of the room everybody's working and this other half, you have kids, they need to be on their computer.”

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv

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