A new report released in June by the U.S. Congress Joint Economic Committee Minority said America’s child care crisis is hurting families, businesses and the broader economy, with the lack of affordable and reliable care potentially costing the U.S. economy as much as $329 billion over the next decade. The report found parents can wait as long as two years for a child care slot, while care costs an average of $13,184 annually per child, often forcing parents to leave the workforce, cut work hours or miss work. These disruptions increase employee turnover, reduce productivity and raise hiring and training costs for businesses.

Tax Benefits Remain Underused

The report said Congress has created multiple tax incentives to encourage employer-supported child care, but usage remains low because many businesses either do not know about them or find the rules too complex. Only 13% of private-sector workers currently receive child care benefits through employers. The report highlighted three major tax programs: the 45F employer-provided child care tax credit, the Dependent Care Assistance Program, and the Child and Dependent Care Tax Credit.

Under 45F, businesses can offset 40% of eligible child care expenses, or 50% for small businesses, with tax savings capped at $500,000 annually, or $600,000 for small businesses. Despite this, tax filing data from 2016 showed less than 1% of corporate tax returns used the credit. A newly introduced bipartisan bill, the Child Care Tax Benefit Outreach and Assistance Act, led by Sen. Maggie Hassan (D-N.H.) and Sen. Dan Sullivan (R-Alaska), aims to improve awareness by creating a dedicated liaison at the Internal Revenue Service to help businesses navigate child care tax benefits.

Business Case For Child Care

The committee said employer-sponsored child care can generate significant returns. Studies cited in the report found every $1 invested in employer-provided child care returns an average of $2.90 in business benefits through improved retention, higher productivity and fewer absences. In one example, a business with 700 employees that builds an on-site child care center could spend $2.8 million over five years but save $820,000 in taxes and potentially generate $8.1 million in productivity-related benefits.

In another scenario, a business with 2,500 employees covering $4,000 of annual child care costs for eligible workers could save nearly $440,000 annually in taxes while generating about $3.2 million in operational benefits. Real-world examples cited in the report included Patagonia, which reported 100% of new mothers return to work, and Etsy Inc (NYSE: ETSY), where 82% of employees said child care benefits influenced their choice of employer.

Affordability Pressure Keeps Rising

The findings come as financial pressure on American families continues to build. A recent LendingTree report found Americans now spend nearly 22% of their income raising a child, with total child-rearing costs climbing to $303,418 over 18 years. Child well-being has also weakened since the pandemic. The 2026 KIDS COUNT Data Book from the Annie E. Casey Foundation found children in 29 states are worse off than before COVID-19, while 22.4 million children live in cost-burdened households.

Former Federal Reserve economist Claudia Sahm warned Monday that new Fed Chair Kevin Warsh's efforts to reduce public communication could leave investors relying on alternative signals to interpret the central bank's policy direction. The criticism follows Warsh's first policy meeting as Fed chair, where the central bank kept interest rates unchanged and adopted a more limited approach to public communication. During his press conference, Warsh avoided discussing the future path of interest rates, arguing that a less communicative Fed would allow policymakers to receive clearer signals from financial markets. Warsh also declined to participate in the Fed's Summary of Economic Projections, the closely watched "dot plot" that shows officials' rate expectations.

Warsh Scales Back Fed Guidance

Sahm said investors will inevitably search for alternative signals, whether through the Fed's dot plot, speeches from policymakers or comments from other central bank officials. She added that the chair's silence creates the biggest information gap for markets, as only the Fed chair is authorized to speak for the entire committee and explain its policy direction. "So who's the shadow Fed Chair? No one. Nothing," Sahm said.

Private Signals Could Gain Importance

Sahm added that the worst-case scenario would be a greater reliance on private conversations and closed-door interactions with Fed officials. "But if the Fed says less in public, a private word, or even a facial expression, from an official is worth more," the economist said. According to Sahm, the issue is not only how much the Fed communicates, but also whether investors and the public have equal access to the central bank's thinking. "Less public sunlight means more business done in the dark," Sahm added.