Low Unemployment Means Less as Childcare Costs Skyrocket

Conservatives are roundly pleased with the state of the American economy. President Trump particularly loves to trot out the job numbers to support his economic agenda. And he has a right to. After all, the unemployment rate is in the basement at low of 3 percent, right? Well, there’s a problem with that number. Namely, it doesn’t count parents opting out of work to raise kids and avoid childcare costs, which can account for nearly 30 percent of a couple’s income.

Very simply, the unemployment rate is the number of people who are unemployed as a percentage of the total number of people in the labor force. The labor force is the total of people who are employed or unemployed and willing and able to work. Importantly, there are people who aren’t counted in the unemployment rate — many for good reason. Retired individuals aren’t counted, for instance. That makes sense as they are living of retirement earning and have no need to work. Students aren’t counted either, as they’ve opted out of work to learn in hopes of better opportunities. People who can’t work due to illness also aren’t counted.

Parents who have opted out of employment due to family obligations also aren’t counted. That would make sense in a society where that could be reasonably assumed to be a choice. Unfortunately, that doesn’t make sense in a society in which economics force people who want to work home in the wake of a child’s birth. As long as childcare costs force American parents to stay home, the notion that a high employment rate represents a booming economy will remain suspect.

The fact is that many parents staying home with kids have been forced to make a difficult decision. They are far more like another group who remains outside the unemployment figure: discouraged workers. Discouraged workers are individuals who want to work, have tried to find work, and who have given up. If as many as two thirds of stay-at-home parents are individuals who want to work, have tried to find employment that more than covers childcare costs, and who have given up, there’s a worrying parallel there.

It’s worth noting that those who’ve stayed out of the labor force due to family obligations are far more likely to be women. According to the Bureau of Labor Statistics, only 1.2 percent of men are out of the labor force because of family obligations, as compared to 14.2 percent of women. And the BLS projects that labor participation rates for women, falling since 2008, will continue to fall despite the economic recovery.

What this ultimately means is the the unemployment rate is not reflecting the hard truths of many women who have found it more economically feasible to do unpaid child labor at home rather than participate in the labor force. Add these women to the unemployment rate and it’s likely to tick higher.

This child care squeeze on American parents should be considered a part of most important economic indicator. After all, businesses across the United States are facing worker shortages that could possibly filled by women and men, who simply can’t afford to take those jobs because of child care costs. Unfortunately, that doesn’t square with the sort of economic narrative — corporate health equals economic health — Americans are given and have largely accepted. The fact that middle class people are getting booted out of the workforce is hard to reconcile with “booming economy.”

What’s the point of a parent working, after all, if it means their wages only cover the childcare they require because they are working. It’s a brutal catch-22. It often makes more sense to stay home with the kid. At least then a parent can see and nurture their child. But this is only possible if the remaining earner in the household can make enough money to support a family — an increasingly difficult ask as wages remains stagnant despite low unemployment.

Sure, it’s nice to see the current employment numbers and booming economy as a good sign. For many it is. But as long as childcare costs conspire to keep parents home, the unemployment rate will continue to be an inaccurate indicator of the economic reality of American families.