The Surprising Reason Why Companies Today Can't Hire

It's not just that workers are being picky and holding out for better opportunities.

You may have heard that we're in the midst of the Great Resignation, and there's some truth to that. Given the number of available jobs in today's labor market, many workers aren't hesitating to leave their employers in search of more appealing opportunities.

But not everyone is resigning or holding off on taking a job due to hopes of better benefits and pay. For some people, a lack of workforce participation boils down to not having access to reliable childcare. If that problem persists, the hiring struggles so many companies are facing right now could get even worse.

A major issue

A recent report by Wells Fargo found that roughly 460,000 families lack access to reliable childcare, thereby exacerbating ongoing labor shortages. These days, employment levels within the day care services industry are 12.4% lower than where they sat before the pandemic began, compared to a total employment deficit of 1.9% across the broad labor market. All told, that leaves many families in the lurch when it comes to securing the care they need to hold down a job.

But a lack of access to childcare isn't the only issue at play. The fact that childcare has gotten so expensive is another reason why some parents are opting to take an extended workforce break.

While many parents can piece together somewhat affordable childcare by hiring after-school babysitters or enrolling in after-school care programs, this option only works for children who are school-aged. Those requiring full-day care for younger children may find that by the time they're done paying a nanny or covering the cost of a day care center, their paychecks are virtually gone.

In fact, women with children under the age of 3 have a workforce participation rate that's 28% lower than that of men with children under age 6 (for some reason, federal employment data doesn't include a subset of men with children under age 3, so it's hard to do a more direct comparison). Ironically, no industry has a greater share of female employees than day care services, where women account for 96% of employees. It seems like right now, the labor force is in a bit of a catch-22.

Without enough day care workers, labor shortages will continue. But because day care workers earn an average of under $12.25 per hour, according to the Bureau of Labor Statistics, day care workers who need childcare themselves can't afford to go back to work.

An ongoing problem

Affordable childcare has long been an issue for families who are tired of depleting their bank accounts to have their kids looked after while they work. But right now, the issue is really coming to a head as labor shortages persist.

Offering childcare subsidies could prompt more parents to reenter the labor force at a time when higher participation rates are sorely needed. But whether lawmakers are able to take action in that regard is yet to be determined.