Lawmakers look at how policy hurts employee retention

The U.S. is coming to a crossroads in its quest to maintain a healthy economy. Experts suggest expanding child care support and parental leave policies to boost labor supply.

U.S. population growth is slowing, with the birth rate falling below what it takes to replace an aging population, and many workers who could contribute to the economy are exiting the workforce because of a lack of affordable child care options, lawmakers were told this week. These two trends make employee retention and hiring harder for the private sector. Without immigration, the U.S. population will decline, hurting the economy, according to policy experts who testified before Congress this week.

In the business world, employee retention is mostly a matter of pay and benefits. But lawmakers on the U.S. Senate Joint Economic Committee asked how public policies could keep people from quitting jobs because of family demands. The answers from experts included expanding child care and parental leave programs and providing support for people caring for aging parents.

Independent economic policy consultant Kathryn Anne Edwards testified that tens of millions leave their jobs due to hardships and never return.

The first step in expanding labor supply and increasing the number of people working is retention.
Kathryn Anne EdwardsEconomic policy consultant

"The first step in expanding labor supply and increasing the number of people working is retention," Edwards said. She added that "the U.S. needs paid medical and family leave."

Demographic trends undercut workforce

The pressure on the workforce will only grow, panelists said. The U.S. population will increase by 44 million in the next 30 years -- from 342 million in 2024 to 386 million in 2054, said Julie Topoleski, director of labor, income security and long-term analysis at the Congressional Budget Office, during the hearing. But that growth rate of 0.4% per year is half of the 0.9% growth rate the nation saw in the prior 20 years, she said.

The current birth rate is around 1.7 children for women ages 14 to 49, below the birth rate of 2.1 needed for the population to replace itself, Topoleski told the committee. Over the following decades, immigration will account for most of the overall increases in U.S. population, she said.

Many people want to have more children but face barriers, including costs and inadequate health insurance, Edwards argued, pointing to survey data. Policy reform could help with this. Infertility treatments, for instance, are cost prohibitive, and coverage from health insurance could help provide access to these services.

Programs such as an annual child tax credit of up to $2,000 "is not even an eighth of the way to paying for one year of child care for one kid," Edwards said.

Committee member Sen. Amy Klobuchar (D-Minn.) noted the positive effect that immigration reform could have on Medicare and Social Security solvency and meeting the need for caregivers.

"There are almost too many benefits to immigration to list," said Ben Harris, vice president and director of the economic studies program at the Brookings Institution, who also testified.

Harris said that according to a large body of economic literature, increased immigration can bolster innovation and lower the price of goods and services. He cited the caregiver shortage, in particular, and said this shortage of workers raises the cost of care because employers are competing to hire in a smaller labor pool.

This shortage of labor and rising costs puts the burden on unpaid workers, mostly middle-aged women, who have little choice but to become caregivers "right at their peak earning years," he said.

Increased immigration will also reduce the budget deficit and shore up Social Security since immigrants tend to be younger, according to experts.

Patrick Thibodeau covers HCM and ERP technologies for TechTarget Editorial. He's worked for more than two decades as an enterprise IT reporter.

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