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Biden Officials: Chip Makers Wanting Federal Subsidies Must Provide Child Care

The administration is looking to leverage the CHIPS Act's nearly $39 billion funding to advance one of its priorities.

Secretary of Commerce Gina Raimondo listens as President Joe Biden participates virtually in a meeting on the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act, in the South Court Auditorium at the White House on July 25, 2022, in Washington, D.C.

The Biden administration is slated to unveil a rule this week that would grant access to child care to a small slice of the U.S. workforce in an effort to advance the administration’s goal of expanding and supporting the “care economy.”

On Tuesday, the Commerce Department is expected to announce a rule that will essentially require computer chip manufacturers seeking to access federal funding from last year’s CHIPS Act to ensure that workers involved in building or operating new chip factories have access to affordable, high quality child care. The rule, which will be released the same day the agency releases its application for the subsidies, was first reported on by The New York Times.

“Here’s the truth: CHIPS won’t be successful unless we expand the labor force,” said Commerce Secretary Gina Raimondo. “We can’t do that without affordable child care. That’s why we’re requiring companies that receive funding to tell us how they plan to provide affordable child care for workers.”

The CHIPS bill, passed by Congress last year with the aim of combating a computer chip shortage and boosting domestic manufacturing, provides nearly $40 billion to expand computer chip manufacturing in the U.S.

In order to receive a piece of those subsidies, the new rule will create guidelines for manufacturers to provide their workers with access to child care. According to The New York Times, that could include working with local child care providers to offer affordable costs for workers, building their own child care centers, or directly giving workers cash for child care.

The administration is hoping that the subsidies will help allow more women and parents to enter the tech workforce. “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,” Raimondo told the Times.

Expanding access to child care has been a priority for the Biden administration and Democrats in recent years. Early in his presidency, Joe Biden unveiled a slate of proposals to boost the so-called care economy in the midst of extremely high and climbing child care costs, including proposals like universal pre-school and guaranteed family leave, which he hoped to have passed in the Democrats’ budget reconciliation bill during the last Congress.

But those proposals have been shot down not only by Republicans, but by conservative Democrats like Sen. Joe Manchin (West Virginia), who worked tooth and nail to kill crucial child care and other proposals while Democrats controlled both chambers of Congress over Biden’s first two years in office.

Commerce’s new rule could use the heated battle for the subsidies to take a small step toward improving labor standards. As The Times previously reported, major chips companies are engaged in a fierce competition for CHIPS funding.

At the same time, some lawmakers have said that the Biden administration could be doing more to implement stricter standards on CHIPS recipients, which have benefited profit-wise from shortages during the pandemic.

A group of lawmakers, including Senators Bernie Sanders (I-Vermont) and Elizabeth Warren (D-Massachusetts), have urged the agency to “use its full authority” to ban CHIPS recipients from engaging in stock buybacks for the next decade, for instance. They say that, while the agency is saying that it will stop companies from using the money to directly fund buyback programs, companies could still indirectly use the money to enrich their shareholders and executives.

Progressive lawmakers and advocates have also said that the administration could be doing more to support child care and other provisions to help the working class; rather than asking for over $800 billion for the Pentagon in the 2023 budget last year, for instance, advocates have said that Biden could have asked for funding to fix the U.S.’s crumbling child care infrastructure.

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