By Jennifer Weinhart, Senior Policy Advisor, Engine Advocacy & Foundation
Historically, it’s been difficult to be a woman startup founder without the access to the capital and networks typically enjoyed by male founders, and the path to entrepreneurship is even harder for mothers who have to also balance a disproportionate share of family care responsibilities. The problem of inaccessible and unaffordable child care only increases that disparate access to the startup ecosystem for women, and it’s about to get a lot worse.
On September 30, the expiration of pandemic-era funding for child care centers will result in up to 70,000 child care programs closing, leaving up to 3.2 million children without care. Once the country hits this so-called child care cliff, facilities will be forced to raise their prices, which many parents will not be able to afford, and fewer child care spaces will be available. When coupled with the scaled back child tax credit after a pandemic-related change expired at the end of 2021, even if parents can find open care spots, they may no longer be able to afford them. It’s bad for mothers and families, but it’s also bad for the economy and the startup ecosystem. The Century Foundation estimates that the loss in tax and business revenue will amount to $10.6 billion per year and that parents will lose $9 billion per year in earnings. And without action from policymakers to improve the accessibility and affordability of child care, women founders will be stalled — or be forced to give up altogether — on their path to entrepreneurship.
Women founders are driving American innovation; startups founded by women create jobs, boost local and national economies, solve seemingly unsolvable problems, and regularly outperform their male-founded counterparts. Women-founded startups produce a higher return on investment over five years than those founded by men, and women are more likely to be job creators for other women — enabling women to increasingly become family breadwinners.
Despite the clear economic (and moral) benefits of supporting women founders, many of whom are mothers, policymakers regularly overlook how critical access to child care is for entrepreneurs. Women continue to shoulder the burden of child care responsibilities (in addition to carrying much of the financial burden), and are often forced to withdraw from the workforce or work reduced hours because of unaffordable or inaccessible child care. And while the issue is top of mind for many working mothers and women founders, the simple truth is that men in the innovation ecosystem and throughout the economy have not had to historically balance caregiving responsibilities with financially providing for their families to the same extent women have.
During the pandemic the critical role of child care became more evident. Many women left the workforce to care for their children who were learning from home. When the pandemic hit, the U.S. lost almost 10 percent of its child care programs. Policymakers responded to the child care crisis unfolding alongside the pandemic with historic investments in the industry as part of the American Rescue Plan Act, which supplied almost $40 billion for child care, including $24 billion directed to the states in support of 220,000 child care providers.
At the same time, Congress took steps to ensure families had more funds to afford necessities and care for their children by temporarily enhancing the child tax credit. The expanded credit provided advance payments, increased the maximum credit amount, and, because it was fully refundable, was more accessible to low and no income families. Parents were better able to afford rent, food, and other basic necessities, giving them a bigger cushion to pursue entrepreneurship, undertake job training, and take on more work. But despite the clear benefits — including an increase in entrepreneurship and a reduction in child poverty — Congress let the expansion expire, leaving many to once again struggle to care for their children.
Women founders already face significant barriers in the startup ecosystem without considering access to child care. From inequitable distribution of venture capital, to higher interest rates for loans, to reduced access to credit — the life of a woman founder is at best a steep uphill climb. If Congress truly cares about the U.S. retaining its position as an innovation powerhouse and supporting women founders, they must act swiftly. Earlier this month, 60 women founders and startup ecosystem leaders called on Congress to permanently expand the child tax credit in support of women’s entrepreneurship. And legislation already exists to help avert the cliff in the bicameral Childcare Stabilization Act. The livelihood of women founders depends on policymakers doing their job to equitably support the innovation ecosystem through more access, more facilities, and more funding.
Engine is a non-profit technology policy, research, and advocacy organization that bridges the gap between policymakers and startups. Engine works with government and a community of thousands of high-technology, growth-oriented startups across the nation to support the development of technology entrepreneurship through economic research, policy analysis, and advocacy on local and national issues.