‘High cost and scarcity of daycare’ is contributing to labor shortage, says Cleveland Fed President Mester

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Employment of daycare workers is still down about 12% from where it was pre-pandemic, Cleveland Federal Reserve President Loretta Mester said.

Ending enhanced unemployment benefits hasn’t helped businesses solve their hiring woes, and the lack of affordable child care is holding employees back from rejoining the workforce.After nearly three months without extra unemployment benefits in Ohio, employers are still struggling to fill open positions, Mester said.

Many employers blamed unusually high pandemic unemployment benefits for their labor woes, because unemployed Americans on average collected the same amount of money in benefits that they had earned in wages at their former jobs, according to University of Chicago researchers. Some thought that when the enhanced benefits expired by Labor Day, jobless Americans would return to work.

Ohio’s unemployment rate currently hovers at 5.4% — 0.2 percentage points above the national unemployment rate, according to data from the Bureau of Labor Statistics. The state’s unemployment rate has been consistently increasing month-to-month from April, when it hovered at 4.7%. “Employment of daycare workers is still down about 12% from where it was pre-pandemic. That is worse than the 3.5% gap across all sectors and the 8% gap for the hard-hit food services-restaurant sector.”

On top of this, child-care centers saw operating costs increase by 47% on average during the pandemic from implementing enhanced health and safety measures — including reducing program sizes and buying more cleaning supplies, a separate CAP report found.

 

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