Driving Economic Growth Through Child Care: The $63 Billion Opportunity

American businesses know that a competitive tax code drives growth. But even the best tax policies can't deliver results if employers can't find and keep workers. Today, the high cost of child care is creating a barrier to workforce participation that threatens our economic momentum. 

Numbers tell the story. When child care costs consume 20-30% of a family's income, everyone picks up the tab. The Department of Labor estimates families spend 8.9% to 16.0% of median income on full-day care per child. According to the Buffett Early Childhood Institute at the University of Nebraska, access is just as strained, with  28.2% of children under age five living in areas without sufficient child care options. 

The result? States lose an average of $1 billion in economic activity annually due to child care breakdowns. Increased absenteeism, higher turnover, and a shrinking talent pool means the economic growth that builds communities is stifled. According to the Federal Reserve Bank of St. Louis, in 2019 the child care sector contributed $63 billion in gross output, representing 0.3% of U.S. GDP. That number would be higher if the system met families’ needs. Businesses watch skilled employees walk away—not because they don't want to work with them, but because they can't access the child care they need.

Congress recognized this growing issue and included an enhancement to the Employer-Provided Child Care Credit in the One Bill Beautiful Bill Act, which was signed into law earlier this year. 

The enhanced Employer-Provided Child Care Credit, also known as ‘45F’ in reference to Section 45F of the Internal Revenue Code, is smart policy for all Americans. Starting in 2026, the credit gives employers—particularly small and mid-sized companies—powerful new and enhanced tools to address child care shortages and bolster support for their own workforces. Higher credit rates, expanded caps, and the ability for small businesses to pool resources mean practical solutions are within reach. 

Taking the Issue on the Road 

That’s why the Chamber and the U.S. Chamber Foundation launched a national road show to highlight the 45F credit and provide businesses and workers with information about their options.  

This road show began in Kansas City, MO, a bi-state economic powerhouse facing the same workforce challenges as every American metro: logistics companies competing for drivers, manufacturers filling production lines, and tech startups building teams. Kansas City also demonstrates what works—strong chambers, innovative employers, and collaborative solutions. 

The event brought together local chambers of commerce and experts from organizations such as the Five Years Fund and Excel by Eight to educate employers about the expanded 45F tax credit and empower them to explore innovative ways to enhance childcare options in Kansas City and surrounding communities. 

The Chamber and U.S. Chamber Foundation invite local chambers to help deliver what businesses need: a clear roadmap for leveraging 45F, best practices for stacking federal and state incentives, proven models for small business collaboration, and measurable return on investment (ROI) strategies. No ideology. No politics. Just practical solutions that get parents back into the workforce. 

Pro-Growth Tax Policies are a Win for Americans 

The U.S. Chamber's broader tax priorities remain unchanged: permanent full expensing, competitive rates, and a tax code that keeps America winning globally. An enhanced Employer-Provided Child Care Credit is one way the business community can convert these policies into filled positions and more productive employees, and growing businesses. 

This road show is about giving businesses the tools to help. When employers can help workers access quality childcare, everybody wins. Parents stay in careers, businesses retain talent, and our economy keeps its competitive edge. 

Interested in hosting a road show event to empower local businesses? Contact sferguson@uschamber.com to learn more. 

About the author

Stephanie Ferguson Melhorn

Stephanie Ferguson Melhorn is the Executive Director, Workforce and International Labor Policy. Her work on the labor shortage has been cited in the Wall Street Journal, Washington Post, and Associated Press.

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