Pennsylvania House Passes Bipartisan-Supported Bill, Proposes Tax Credit to Aid With Childcare Expenses

By Moon Harper

May 29, 2024 06:26 AM EDT

The Pennsylvania House of Representatives passed a bill to encourage employers to assist their employees in covering childcare costs.

The Expensive Cost of Childcare

According to the US Department of Health and Human Services, child care in Pennsylvania is too expensive, and few childcare providers meet the needs of working families.

Diane Barber of the Pennsylvania Child Care Association acknowledges the challenges families and childcare providers face. Local childcare expenses can exceed $11,000 annually, consuming up to 14% of a parent's income, surpassing the government's recommended 7%, and the costs are going up as childcare centers are experiencing workforce shortages. Barber also highlights concerns about starting wages ranging from $12 to $15 per hour in childcare centers, which are notably lower compared to other job opportunities like Target, where wages start at $20 per hour.

The Pennsylvania House Bill for Childcare Tax Credits

The Pennsylvania House overwhelmingly passed a bill with bipartisan support of 155-47 vote, offering employers a tax credit to aid their employees with childcare expenses. Under the proposed legislation, the first $500 of assistance provided to an employee would qualify for the credit.

Although intended to encourage companies to support their employees, some local lawmakers who opposed the bill argue that assistance should be directed straight to families.

Varying Tax Credit Bill Oppositions

Republican state Rep. Aaron Bernstine opposed providing additional funds to employers through targeted tax breaks, preferring instead for the money to benefit those who bear the expenses. Despite opposition, three-quarters of House lawmakers supported the measure, advancing it to the Pennsylvania Senate, where supporters are hopeful for its passage.

State Representative Liz Hanbidge (D-Montgomery), who co-sponsored the bill with state Representative Morgan Cephas (D-Philadelphia), emphasized the importance of childcare access for maintaining a functional economy because, without access to childcare, there would be no workforce, resulting in a halt to tax revenue and economic activity.

According to a statement issued by House Democrats, the suggested tax credit amounts to 30% of the entirety of an employer's contributions towards childcare for all its employees, with only the initial $500 in contributions per employee being considered, which would not be classified as income on an individual's income tax returns.

During her floor speech, Hanbidge criticized what she termed "inadequate wages" for childcare workers in Pennsylvania, attributing the shortage of such workers to the low wages. According to the US Bureau of Labor Statistics, the mean hourly wage for childcare workers in Pennsylvania last year was $14.18 per hour, which is $1.24 less than the national average. According to Hanbidge, fostering partnerships with employers willing to assist in covering essential employee childcare expenses can also enhance the economy and fortify the future.

Pennsylvania, West Virginia, and New York, two neighboring states, already offer incentives for businesses that support employees with childcare expenses or offer childcare services. Additionally, similar proposals are under consideration in Alabama, Connecticut, and Wisconsin.

The bill's approval comes after Governor Josh Shapiro's December signing of the expansion of Pennsylvania's childcare tax credit, which also garnered bipartisan support.