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Yes/No: Should Semiconductor Support Be Conditional on Child Care?

The Commerce Department recently announced that, to be eligible for subsidies and incentives created by the bipartisan CHIPS and Science Act, semiconductor companies must have plans in place to help workers find and access child care. That requirement comes on top of others, such as wage levels and use of American-made construction materials. Over the past two years, BPC has worked with members of both parties on policies that would enhance U.S. national competitiveness. BPC has also worked with lawmakers in both parties for many years on child care, seeking policies that will ensure not only a robust supply of high-quality providers but also increase affordability for families.

Semiconductor support was the central piece of the CHIPS and Science Act.
The Commerce Department’s announcement was a surprise to many and received a good deal of media attention. Here, we look at arguments on both sides of the issue.

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Yes: A Private Sector Solution to Two National Challenges

Semiconductor companies are in line to benefit from tens of billions of dollars in taxpayer support for construction of new manufacturing facilities. Reinvigorating domestic semiconductor capacity is, for both Republicans and Democrats, an urgent national priority. Because semiconductors are central to our daily lives—and because domestic production has steadily declined over three decades—policymakers view public support for the industry as essential for national security and economic competitiveness.

Ensuring broad access to high-quality, affordable child care is also a national priority that both parties agree is urgent. We know that lack of such access has been a significant barrier to millions of Americans returning to the workforce or participating fully in the economy. On the supply side, operating a child care business means living on the barest margin of profitability. The balance between affordability and quality (which is shaped by the need for well-trained staff and compliance with staffing ratios and government regulations) is often elusive.

Doling out billions of taxpayer dollars to support a specific industry and individual companies should not be taken lightly by policymakers. It is reasonable to expect beneficiaries to help policymakers address other pressing concerns. The semiconductor industry, moreover, has not been bashful in calling for more taxpayer support. Almost as soon as the ink was dry on the president’s signature on CHIPS and Science, the industry said more subsidies and incentives would be needed. Construction on some facilities has been slowed by shortages of qualified workers.

Women, on whom the child care burden falls hardest, have long been underrepresented in the technology manufacturing and construction workforces. At a time when labor markets are historically tight, this is an effort to help companies find workers and expand opportunities for women. Requiring semiconductor companies to ensure child care access will thus help fill one of their own needs: they can’t find the workers to build the new facilities. The child care requirement is not piling on or attaching unrelated conditions—it will spur the industry to address one of its self-professed bottlenecks.

The path to achieving high-quality, affordable child care for everyone who needs it must rely heavily on the private sector. Businesses know that child care challenges mean lost employee work hours and lower productivity. Making receipt of taxpayer support conditional on enlisting business to include child care is sensible.

No: Don’t Load Public Goals onto Private Companies and Undermine Political Support

The CHIPS and Science Act enjoyed strong bipartisan support, with 18 Republican Senators voting for something that had been championed by both Senate Majority Leader Chuck Schumer (D-NY) and Sen. Todd Young (R-IN). The Commerce Department’s bait and switch on child care—not to mention other requirements—threatens to spoil this bipartisan consensus.

More legislation to boost U.S. competitiveness—particularly vis-à-vis China—is almost certainly on the way. The new House Select Committee examining the U.S.-China relationship will maintain public attention on this issue. Its establishment attracted enormous bipartisan support. Both Democrats and Republicans are slowly coalescing around a more hawkish approach to China and determination to strengthen U.S. competitiveness, even if agreement on the precise details still must be worked out. Members of both parties have also come together on proposals to expand child care access.

The Commerce Department’s child care requirement will erode bipartisanship. Lawmakers of both parties, even those who supported the CHIPS and Science Act, may be reluctant to sign on to future competitiveness legislation because of concerns that the Administration will pile on such unforeseen requirements. Bipartisanship, once achieved, is not something to be taken for granted or treated casually. Making a leap from one policy priority, semiconductor manufacturing, to another—even one that has bipartisan support—is a good way to undermine trust.

Aside from political dynamics, the child care condition is ill-advised. Congress came together in support of semiconductor subsidies because our withering domestic production capacity has left us exposed to supply bottlenecks and geopolitics. Building a new state-of-the-art semiconductor manufacturing facility takes a long time; Congress knew this and appropriated billions of dollars in subsidies and incentives so companies could get started on new projects as soon as possible. (Tens of billions of dollars of other investments in CHIPS and Science were authorizations rather than appropriations.) Telling semiconductor companies that they now need to shoulder responsibility for addressing our nation’s child care crisis—one that has bedeviled generations of policymakers—ensures that we will continue to remain vulnerable to semiconductor shortages for a very, very long time.

Industrial policy works best when it is targeted and specific. Loading on other social goals, even those that are laudable and enjoy bipartisan support, will ensure that neither succeeds.

What’s Your Take?

At BPC we thrive on the hard work of finding compromise and building consensus. How would you advise policymakers to respond?

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