Labor Market
Why almost no one loses their job over childcare in the Nordic countries
My new People’s Policy Project report compares childcare systems in the United States and four Nordic countries: Denmark, Finland, Norway, and Sweden. The United States has no universal public childcare system, so families with young children either pay high prices for private childcare or have one parent leave paid work to stay home. That parent is usually the mother.
The Nordic countries built a different system. Public childcare is widely available, charges low fees, and employs a stable, professional workforce. On top of paid parental leave for both parents, Finland pays a home care allowance to a parent who stays home with a child under three.
A typical Finnish family has real choices through the early years: public childcare with both parents working, paid leave followed by job-protected care leave with the allowance, or part-time work. Families move between these arrangements as their circumstances change, and a parent keeps the connection to a paying job throughout.
How many US parents are home caring for family
One way to see the gap between the two systems is to count the parents who are out of paid work, caring for family. In the United States, this comes to 3.8 percent of working-age adults. That is about 7.3 million people. Nine in ten are women, and more than two million hold a bachelor’s degree. The figure, from the Current Population Survey, leaves out anyone still looking for work or who says they want a job, since for them time out of work can reflect the job market rather than childcare.
In the Nordic countries, about 0.4 percent are in the same situation, roughly one-tenth the US rate.
US parents leave work for childcare at ten times the Nordic rate
Age 20–64, out of workforce for childcare, 2022
Employed, but not at work
The Nordic number is low for a reason worth understanding. A Nordic parent home with a small child is usually still employed, on paid leave or drawing a home care allowance, with a job held open. Labor statistics put that parent in a category called employed but not at work: the job exists, the parent is simply away from it for a while.
A US parent who leaves paid work for childcare is in a different category: out of the labor force. The job is gone. That difference is not a bookkeeping detail. It is the difference between a paycheck that continues and one that stops, a pension that keeps building and one that does not, and a job to return to rather than a search to start over.
Leave, and affordable childcare
Two institutions keep the Nordic parent connected to a job. The first is paid leave. A parent on leave is home with the child and still employed, the job protected by law. The United States guarantees only unpaid leave, and even that reaches only about 56 percent of workers. Otherwise, paid leave depends on the employer, which for low-wage workers often means nothing. A restaurant server may return to work within weeks of giving birth, or lose the job for staying home. The United States is the only wealthy country with no national paid leave, though more than a dozen states have begun to build their own programs.
The second institution is affordable childcare. When leave ends, a Nordic parent can enroll the child in public childcare and return to work. A US parent often does not: private childcare is expensive, with center-based infant care averaging about $15,000 a year. A parent who cannot afford it leaves paid work to care for the child at home.
Out of work for decades
After a first child, a woman’s earnings fall by about half, and the loss often runs far longer than people expect. Once parents have been home for years, getting back to work is hard: skills atrophy and professional contacts fade. The years of constant infant care are behind them, and they remain at home.
For some mothers, the years away stretch to the end of their working life. A woman who leaves paid work in her early thirties may spend the 30 years to retirement at home, in place of the career she would otherwise have built.
Time away from work also shrinks retirement income. Social Security computes benefits from a worker’s highest 35 years of earnings, and years at home count as zero. Women take more of those zeros than men, and retire on smaller benefits.
Where reform is possible
US parents suffer from a lack of choices. If given the option, many parents now home caring for family would work part-time, use public childcare, or be on leave from a job. Other parents would prefer to be more active in care, and a home care allowance would help them. Public institutions create these choices for families in other rich countries.
For now, the federal door toward building similar institutions in the US is closed, so the openings are at the state and municipal levels. The status quo is weak enough that almost any step would improve on it: public childcare, paid leave, or a home care allowance. A coalition that links these interests would serve families even better. Families want a change that helps them, and to get it they may accept a structure that helps other families too. This is how a society creates choice.
The full data, country comparisons, and policy detail are in the report.
