Mom & CEO Shares Her Theory About Why Federal Childcare Funding Was Cut — And It Will Have You Seeing Red
It may be part of a plan to address inflation by making parents' lives harder — an approach some economists says is sure to fail.
ADragan, nd3000, IOFOTO, oksanashufrych / Canva There's no doubt about it — childcare in the United States is in full-on crisis and has been for years, with costs that are breaking parents nationwide. And with a new recent legislative decision, it's all but certain to get worse.
A mom and businesswoman on TikTok thinks she knows why the government has made this choice, and it says everything that is wrong with our country's approach to this important issue.
The mom and CEO thinks federal childcare funding was cut in order to fight inflation.
On September 30, 2023, federal funding for childcare, enacted as part of the government's efforts to address the COVID-19 pandemic, was allowed to expire. With $24 billion in subsidies suddenly gone, many of America's already beleaguered childcare centers have been forced to grapple with two bad solutions: pass those costs onto parents already paying exorbitant prices for childcare, or close down entirely.
Sarah Biggers-Stewart is a mom and CEO of her own cosmetics and skincare company, Clover by Clove. As a business owner she has a keen interest in economics, and when the government allowed $24 billion in childcare funding to simply lapse it seemed very obvious to her what was going on.
Biggers-Stewart thinks federal funding for childcare was cut to purposefully eliminate jobs.
That may sound like a bold claim, but it's far from tinfoil hat territory. Biggers-Stewart began her video with a quote from economist Dr. Kathryn Anne Edwards, who recently testified before Congress to explain how the lapse of pandemic-era childcare subisidies, and our childcare system in general, interact with our market-based economy.
"When the funding ends, that could mean three million mothers leave the labor force," Edwards is heard saying, referencing economists' estimates that three million children will lose their childcare due to the expiring subsidies. And as Biggers-Stewart points out in her video, that's all but certainly no accident.
"I'm not a conspiracy theorist," she said, "[but] I know that historically, most coincidences are not actually that coincidental." She then explained how the Federal Reserve tends to address inflation, which of course the United States has been struggling mightily with in recent years.
"The Fed has limited levers at its disposal when it comes to fighting inflation," she said. This includes raising interest rates, which the Fed has done 12 times since March of 2022 — that's why everything from your mortgage to your credit card bills have become increasingly more expensive recently. But, of course, you can only raise rates so far before it starts to have deleterious effects.
"The final frontier," Biggers-Stewart explained, "is labor. The two main levers in labor are you can either change wages so that people are getting paid less for more labor, or you can reduce the number of people being employed and make it more competitive — so increasing unemployment."
The U.S. currently has an employment rate higher than it's been since the 1960s, and while ordinarily that's a good thing, in a time of increasing wages, it hinders the Fed's ability to address inflation because consumers have more buying power. So, unemployment becomes the answer.
And can you think of a better way to have less employment than millions of parents in the lurch, unable to access childcare?
Fed Chairman Jerome Powell has explicitly said he may turn to unemployment to continue addressing inflation.
This isn't just some crackpot idea Biggers-Stewart cooked up. Fed Chairman Jerome Powell has said he intends to fight inflation by pushing people out of their jobs, though not in so many words.
Asked directly by Republican Senator John Kennedy in a March 2023 congressional hearing whether he was trying to "raise the unemployment rate," Powell replied, "No, we’re not, we’re trying to realign supply and demand, which could happen through a bunch of channels, like for example, just job openings." Which is, of course, the same thing.
Powell was far more direct about it later in the hearing when challenged by Democratic Senator Elizabeth Warren, during a terse exchange in which Powell defended the decision by sniping, "Will working people be better off if [the Fed] just walk away from our jobs and inflation remains 5, 6 percent?"
Some economists say this approach to fixing inflation is more than counterintuitive — it flat out won't work.
Economics are economics, and they don't always play according to the rules we'd like. But there are a few vitally important points missing from any defense of this approach.
One, as Dr. Edwards explained in her testimony, our childcare crisis is a problem of supply not meeting demand created by exorbitant costs. Allowing funding to lapse only exacerbates that problem, and she feels pushing people out of their jobs will not only make that worse, but it will fail at curbing inflation, too.
Two, our inflation problems are in part due to simple corporate price gouging — what has come to be known as "greedflation," and has resulted in outrageous and unprecedented corporate profits during a time when the costs of producing goods are supposedly through the roof.
Many pundits of a conservative bent like to claim the very notion of "greedflation" is nonsense, a bold claim to make given those skyrocketing profits and the fact that, for example, gas prices immediately plummeted in the fall of 2022 after President Biden publicly scolded oil companies to stop gouging people at the gas pump.
The math ain't mathing, as the internet likes to say, and we're frankly in "don't pee on my foot and tell me it's raining" territory when it comes to denials of rapacious corporate price manipulation being part of the problem. How exactly Powell and the Fed continuing to tinker with "market forces" — especially in ways as draconian as pushing people out of their jobs — is supposed to address this part of the inflation equation is anyone's guess.
But that's all largely beside the point when you're a parent just trying to figure out what on earth you're going to do now that your already usurious childcare costs are skyrocketing.
As all too often happens, we as citizens have little recourse in this astonishingly incompetent and inept situation, except for one thing — there is an election next year. And you can bet your bottom childcare dollar that a lot of the candidates running will be addressing the issue. Choose wisely.
John Sundholm is a news and entertainment writer who covers pop culture, social justice and human interest topics.