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Data: Child care had modest impact on labor market, but school reopenings may help

·2 min read

Parents having to leave the workforce to care for their kids have had a relatively modest impact on the labor market, according to a Bank of America analysis.

However, the bank suggested the slow but steady reopening of schools around the country may help bolster a jobs market that’s suffering the after-effects of the COVID-19 pandemic.

There are a number of storylines that complicate the recovery from the pandemic — including over 8 millions Americans that remain unemployed, even as a wide variety of companies are reporting difficulties in finding workers. 

In addition to supplemental unemployment benefits that dozens of states have begun rolling back, child care for parents who need to care for young children —or supervise remote learning activities — has also emerged as a flashpoint in the debate.

In a recent research note, economists at Bank of America, using data from the Peterson Institute for International Economics (PIIE), explored the link between school closures and those displaced from the labor market — and found the relationship tenuous at best.

The PIIE data “pushes back against the idea that parents of young children have been disproportionately displaced from the labor market,” Bank of America noted, finding “very little difference between changes in employment rates among people who have and do not have young children.”

To be sure, parents of young children have suffered “major challenges due to the pandemic,” BofA’s analysts wrote, citing research that found that employment dropped more among women with children under the age of 13 than among other females.

Yet that impact is modest, the bank noted — mostly because women with kids under the age of 13 make up only 12% of the employed population, and the difference between job losses among that group and other women were “small.” 

The findings suggest that “ to the extent that childcare issues have hurt the employment of parents, women have borne the brunt of the problem,” BofA said.

With that in mind, “school reopening may not spur significant job market gains in the fall but rather other factors such as reduced fear of contracting COVID, and expiration of unemployment insurance benefits may play a bigger role,” the bank added.

Some of those mitigating factors may already be in play. On Thursday, the Labor Department reported that new jobless claims tumbled to yet another COVID-19 era low, hitting 406,000 — its weakest level in 14 months.

And as pandemic benefits run out in September, BofA’s analysts expect the U.S. economy to create a monthly average of 678,000 jobs for the rest of the year — even after April’s big letdown — as reopenings accelerate.