To Tap Federal Funds, Chip Makers Will Need to Provide Child Care

WASHINGTON — The Biden administration plans to leverage the federal government’s expansive investment in the semiconductor industry to make progress on another goal: affordable child care.

On Tuesday, the Commerce Department will announce that any semiconductor manufacturer seeking a slice of nearly $40 billion in new federal subsidies will need to essentially guarantee affordable, high-quality child care for workers who build or operate a plant.

Last year, a bipartisan group of lawmakers passed the CHIPS Act, which devoted $39 billion to directly boost U.S. semiconductor factories as part of $52 billion in subsidies for the industry, in hopes of making the nation less reliant on foreign suppliers for critical chips that power computers, video games, cars and more.

Companies that receive the subsidies to build new plants will be able to use some of the government money to meet the new child care requirement. They could do that in a number of ways, in consultation with Commerce officials, who will set basic guidelines but not dictate how companies ensure workers have access to care they can afford.

That could include building company child-care centers near construction sites or new plants, paying local child-care providers to add capacity at an affordable cost for workers, directly subsidizing workers’ care costs or other, similar steps that would ensure workers have access to care for their children.

American employers, including manufacturers, are increasingly raising concerns that a lack of access to affordable child care is blocking millions of Americans from looking for work, particularly women. President Biden pushed Congress to address those concerns over the last two years, proposing hundreds of billions of dollars for new child care programs, but he was unable to corral support from even a majority of Senate Democrats.

But Mr. Biden did convince lawmakers to approve a range of new spending programs seeking to boost American manufacturing. Now, Commerce is trying to utilize a centerpiece of those efforts, which aims to expand American semiconductor manufacturing, to make at least a small dent in his large goals for the so-called care economy.

It joins a growing list of administration efforts to expand the reach of Mr. Biden’s economic policies beyond their primary intent. For instance, administration officials have attached stringent labor standards and “Buy America” provisions to money from a bipartisan infrastructure law. The child care requirement will be flexible for chip makers, but it will almost certainly divert some subsidy dollars that are meant to expand factory capacity and create jobs.

The Commerce Department is expected to release its application on Tuesday, allowing companies to begin making a case for federal subsidies that the industry lobbied hard to secure from Congress.

The prospect of accessing those funds has already enticed domestic and foreign-owned chip makers to announce billions of dollars in plans for new investments in Arizona, central New York and elsewhere.

But even as they ramp up investments, companies are complaining of difficulties in finding workers to build and operate manufacturing facilities.

America’s child care industry has not fully rebounded from the pandemic recession. It is still about 58,000 workers, or 5 percentage points, short of its prepandemic peak, according to an analysis of Labor Department data by the Center for the Study of Childcare Employment at the University of California-Berkeley.

Shortly before the pandemic, the Bipartisan Policy Center in Washington surveyed 35 states and found more than 11 million children had a potential need for child care — yet fewer than 8 million slots were available.

That shortage is particularly acute in some of the areas where manufacturers are set to begin building new chip plants spurred by the new legislation. Commerce Department officials calculate that in the Syracuse area, where Micron announced a $100 billion chip making investment last year after Mr. Biden signed the new law, the need for slots in child care facilities in nearly three times the size of the actual care capacity in the region.

In Phoenix, where semiconductor manufacturing is booming, child care costs consume about 18 percent of a typical construction or manufacturing worker’s salary. That share is higher than the national average.

Gina Raimondo, the Commerce secretary, said in an interview that the child-care requirements should help companies cope with a tight labor market by making it easier for them to attract and retain caregivers who have been kept from working by difficulties finding care for their children.

In a speech last week, Ms. Raimondo called efforts to attract more women to the work force “a simple question of math” for industries complaining of labor shortages. “We need chip manufacturers, construction companies and unions to work with us toward the national goal of hiring and training another million women in construction over the next decade to meet the demand not just in chips, but other industries and infrastructure projects as well,” she said.

Only about 3 in 10 U.S. manufacturing workers are women. Ms. Raimondo said the CHIPS Act would fail if the administration did not help companies change those numbers, by bringing in women who have children.

“You will not be successful unless you find a way to attract, train, put to work and retain women, and you won’t do that without child care,” Ms. Raimondo said in an interview.

The Commerce requirement would represent a relatively small step toward Mr. Biden’s much larger, and as-yet unfulfilled, child care ambitions.

Mr. Biden unveiled a $4 trillion economic agenda in the months after he took office. It was split into two parts. One focused on physical investments: repairing bridges and water pipes, laying broadband cable, spurring a shift to low-emission sources of energy and catalyzing new manufacturing capacity to compete on a global stage. It was a source of repeated legislative success for the president, who signed a bipartisan infrastructure bill, the CHIPS bill and a climate, health and tax bill that passed with only Democratic votes.

But Mr. Biden failed to persuade centrist holdouts in his party, like Senators Kyrsten Sinema of Arizona and Joe Manchin III of West Virginia, to back most of the provisions in the second half of his agenda. Those were largely the president’s plans to invest in people: federally guaranteed paid leave; subsidized care for children, the disabled and older Americans; universal prekindergarten; free community college for all, and more.

The lopsided nature of Mr. Biden’s success threatens to exacerbate existing gender disparities in the economy. Some economists warn they could hinder future economic growth. Many of Mr. Biden’s people-focused programs were deliberately aimed at boosting female participation in the work force.

It could be years before Democrats have another opportunity to pass those programs. Republicans won control of the House of Representatives last fall and roundly oppose Mr. Biden on new spending proposals and the tax increases on corporations and high earners that he has called for to cover that spending. Progressive groups and liberal lawmakers largely concede there is little chance of a child care bill making its way to Mr. Biden’s desk before the 2024 election.

When it became clear last year that sweeping plans to expand and subsidize child care would not make it into the climate, health and tax bill that marked the culmination of Mr. Biden’s economic efforts in Congress, Ms. Raimondo gathered aides around a conference table. She told them, she said, that “if Congress wasn’t going to do what they should have done, we’re going to do it in implementation” of the bills that did pass.

Some American manufacturers have already turned to on-site care facilities to help meet workers needs. The automaker Toyota has provided 24-hour care at a factory in Kentucky since 1993 and one in Indiana since 2004.

Chad Moutray, director of the Center for Manufacturing Research at the Manufacturing Institute, which is affiliated with the National Association of Manufacturers, wrote in a report late last year that child care availability is part of the reason women do not seek more jobs in manufacturing.

“Women represent a sizable talent pool that manufacturers cannot ignore,” he wrote.