“The economics of child care are broken.”
“The economics of child care are broken.”
Understanding what it takes to "math the math" of child care with Mirza CEO and co-founder, Siran Cao
On the maternal stressor map, child care has a complex and disproportionately impactful role. Two sides to a powerful coin – both a stressor and a broad stress-reducing solution.
The research studies we dove into in the last post highlighted these sides in an interesting way. Child care instability adds to parental stress and has a graded association with maternal depression – the greater the degree of instability, the higher the risk of maternal mental health issues. But perception of child care availability, specifically how mothers feel about accessible options, acts as a potential stress buffer – decreasing maternal depressive symptoms for those who report having access to “good child care options”.
If you missed it:
One area of child care that is far outside of my field of view but critical to the conversation is the impact of having access to affordable child care through government subsidies. Talking this through with
, CEO and co-founder of Mirza, a first of its kind benefit that rethinks access to government subsidy programs, was truly eye opening.Current structures around government subsidies for child care present another two-sided coin scenario – stressor and stress mitigator – that taps right into the neural circuitry assessing states of child care precarity and insecurity. Child care benefits are also deeply intertwined with other stressors across the map. It was fascinating to see how Mirza is bringing in other parties impacted — the Medicaid payers in our health system, the employers that rely on hourly workers — to provide innovation and services we want to see in the government sphere.
In her co-founding of Mirza, Siran has brought together both a desire for big, structural change, and an impatience to work within the system that befits her early Uber employee credentials, while tapping into her educational roots in Gender Studies and Economics. Siran is a first-generation immigrant, daughter of a single mother, extremely thoughtful human, and all around powerhouse. And her perspective on child care and child care benefits are beyond valuable to understanding the layers of maternal stress.
MOLLY
Siran! Can you start by telling us more about your path to co-founding Mirza?
You launched in March 2020 and whenever I see that date, I’m just a bit like “oof!” Child care wasn’t front and center and then as soon as COVID universally crushed the ability for parents to access child care, it seemed like more people recognized that, “oh, yeah, that is important.”
Did that fortunate/unfortunate timing help fuel it after founding? What was the momentum like pre, during, and post pandemic?
SIRAN
It's funny. A week before we went into lockdown, we had this sort of “Aha” moment. Our founding has the pandemic and the catalyst story, but then there is all the underlying stuff that led us there.
I’ll start chronologically with all the underlying stuff. I'm raised by a single mom. I’m a first generation immigrant. My mom was a biochemist in China who had to give up her career, once my family started moving around for my father's job. Then after we landed in Pittsburgh, my father gave up on us. So, I grew up with my biochemist mom rebuilding a life in a new country.
As a kid, it was really clear that this all falls on mom, and as a kid, all you know is that it feels deeply unfair.
“Child care and housing have the steepest benefits cliff. Losing your child care benefit is a huge financial obstacle. It makes that step up in salary impossible.”
Fast forward from kid to adult, to when I was at Uber. When I built the drivers onboarding team in New York City, a gigantic hourly workforce, child care was a massive obstacle for my employees – and an everyday operational disruption for us. But the human impact is what mattered most to me; [for example,] the single mom I tried to promote who couldn't take the promotion, because she would lose her government child care subsidy. That’s devastating.
Child care and housing have the steepest benefits cliff. Losing your child care benefit is a huge financial obstacle. It makes that step up in salary impossible. So child care is a barrier that also holds people down – having the benefits cliff be such a harsh drop off, when the extra dollar an hour loses you $10,000 (or, in New York City, $20,000) a year in child care benefits. So there’s a lot of that percolating in my head.
There's also the fact that 40% of parents are in debt due to child care. My co-founder and I saw this pretty stunning stat, that 80% of the gender wage gap comes down to the motherhood penalty, driven by unaffordable child care. With just one year of women feeling, “my entire paycheck goes to child care, and I can’t afford to work,” we wind up losing 39% of our lifetime earnings.
All of that was the catalyst for us to say let's figure out a solution for child care or, at the very least, make it so that no one has to have that moment of “my entire paycheck goes to child care, that doesn't make financial sense.” Let’s make it a real choice.
And then, [after launch], we went into lockdown a week later.
“With just one year of women feeling, ‘my entire paycheck goes to child care, I can’t afford to work,’ we wind up losing 39% of our lifetime earnings.”
I still went through months of investors being like, “Is child care really that big of a problem?” And then, of course, you have headlines: “2 million moms left the workforce because of child care” That's when it started to change.
MOLLY
We had this pressure cooker scenario, this natural experiment of “let's see what happens when we take away child care for everybody in the country.”
Oh, yeah, we lose 2 million women. That's what happens.
SIRAN
Yup, we got that data point.
AND we have a data point from Quebec, which has had $7/day child care since 1997. It is the second highest women's labor force participation rate in the world, second to Sweden. It pays for itself in economic output.
That's data. It's so sad that we can’t fix this when we have the data.
MOLLY
What are we missing? The will? The political will to give a shit?
On that note, why was your approach to go straight to employers and build the business the way you built it?
SIRAN
Well, I think there are two reasons.
One, from my own experience, I saw this come up every day as an employer and I needed something that could work for my team or for my workforce. But there was nothing that I could actually do. And that's a really disempowering place to be.
But then the other is that the math is just broken until we bring in external money. There is an artificial ceiling on what families are able to pay because all the economics of child care are broken. Our government spends roughly $15k/pupil/year for K-12 education. And that’s with classrooms of 10-20 kids. So let’s look at why child care, say infant care for example, needs to be more expensive. It can only be one teacher taking care of four kids, so the cost SHOULD be higher. And right now, that's all getting shouldered by the family with a ceiling on willingness to pay, because there’s that finite ceiling of our actual income.
“There is an artificial ceiling on what families are able to pay because all the economics of child care are broken.”
So the math doesn't math until we bring in external money. And, ultimately, why we are going to employers is because that’s someone else that has the financial incentive. If companies are losing $23 billion a year due to child care issues, what if we invest that into child care so that it's not happening at the front end?
MOLLY
One of the things you point out on your website is that Mirza offers the relief of the mental load for employers.
Honestly, I usually associate child care with the parent's mental load. Is it a little bit of both? The parents don't have to go down the rabbit hole of figuring out their own math and the employers don't have to shoulder the burden of going down the rabbit hole of illogical math with their employees.
How has that as part of the sell gone over?
SIRAN
On the parents' end, the mental load, especially given we are so focused on frontline workers, is substantial. It is a full time job to be poor in America and to get government benefits. And that is one of the goddamned worst full time jobs in the world.
For example, until Michigan consolidated their application and took it digital, to apply for child care subsidy, the form was 16 pages long and included a question of your date of conception.
MOLLY
Oh my god. Who knows that?!
SIRAN
That falls into the bucket of mental load.
Then after you apply, you’re thinking “at some point, someone's gonna call for an interview and I have to take that call and if I miss that call, I get shuffled to the back of the line, and what happens while I'm at work and I can't answer it because my employer doesn't understand…” That's also parent mental load.
“It is a full time job to be poor in America and to get government benefits. And that is one of the goddamned worst full time jobs in the world.”
Then for the employer, there are the staffing issues. And that’s assuming that they even know that government subsidies exist. From a deeply sad standpoint, I spend a lot of time educating companies about what a government child care voucher is or how subsidies work – you have to apply and not every application gets accepted and there can be waitlists and, by the way, you have to reapply every year. That's tough. It's education.
Is this something that a company wants to be able to support their employees with? Take on that employer mental load or just the sheer number of people you need in HR to do it? That’s pricey.
Then add in that nearly half of US states have some form of employer child care tax credit or incentive, and they all work differently. You have employer-share in Michigan. You have Kentucky ECCAP, which is a state match. Then Indiana launched and closed applications for a $25 million dollar grant, and it was pretty flexible and you just needed to go through all the right steps. When will it happen again? We’re not sure, but looking positive. So then add in, all keeping up with legislation to have your bases covered.
MOLLY
You know that that scene in Fantastic Mr. Fox, where the possum gets googly eyes whenever something is just way too much for his brain to handle? Honestly, I kind of feel like that right now. I have this “I don't want to do that” reaction. This scenario feels like a lot.
I can almost feel the load lifting to have a resource like yours. To know there is a Mirza that could say “hey, that's what we do. We help we navigate this for you and for your employees” Even just that piece of it, it’s really fascinating to me
How have you seen or how have you thought about this from a health angle? Especially with frontline workers, with burnout or mental health or absenteeism related to that?
SIRAN
So that is part of why we've been focused on Medicaid payers as another angle and distribution channel, not just employers. This is all very directly related to health care. This fits with the focus on social determinants of health.
Child care is the number one reason women of reproductive age miss doctor's appointments. That's a very real health outcome. This was from a study that was done in a hospital in Texas, predominantly serving Medicaid patients. Far and away, the reason for missed appointments, beyond not having transportation, not having insurance, is child care. And when looking at women of reproductive age, what are the appointments that they are likely scheduling? A good number are perinatal. That first trimester of appointments are critical. If we don't catch smoking or substance abuse or screenings for the baby? That’s what leads to complicated births or babies winding up in the NICU.
“This is all very directly related to health care. This fits with the focus on social determinants of health.”
All of that is preventable. But people don’t have the child care they need to go to those appointments.
MOLLY
This reminds me of when I was working on a research project on perinatal care accessibility and child care came up in a focus group. This one woman said something to the effect of “I live across the street from the hospital but I have four kids at home. I can literally walk across the street but I can't leave the kids and I'm not going to take them. What am I supposed to do?”
We normally think about accessibility of care in the maternal care desert sense – the closest hospital is 50 miles away and I can’t get there – when really, it's a “nope. Just child care” for anyone anywhere. Child care is absolutely an accessibility of care issue.
I feel like a lot of the social determinants of health operate on that level, but also have the undertone of stress. With child care even the idea of missing appointments, or scheduling appointments, or trying to navigate that all of that has that low current of stress, which is just fueling all the additional health issues.
Have you seen any of this reflected with improved health outcomes with Mirza? Or are you hearing anything anecdotally?
SIRAN
Not quite yet for us on health outcomes because it's too early in our work. But we’re launching a project that I’m hoping will have some of that impact, especially as it relates to child care you need for prenatal appointments. For the Medicaid payer, that is what leads to these million dollar births – baby is in the NICU, mom has complications. The insurance company is at risk for that so the incentive is to tackle this.
When we first launched, one of our clients had 80% of their employees on Medicaid. A really large hourly workforce. There is a pretty drastic overlap – if you are eligible for Medicaid, and if you have kids, you very likely will qualify for government child care subsidy. Child care subsidies have a higher income eligibility at times than Medicaid.
Our thesis was that a lot of these folks don't know these exist or it is too hard to access. There have been various studies to indicate that the knowledge barrier is a huge one. Within a week of working with this client, one single small site, we were able to get seven people to know about subsidies and help them through the application.
“Our thesis was that a lot of these folks [who qualify for government child care subsidies) don't know these exist or it is too hard to access. There have been various studies to indicate that the knowledge barrier is a huge one.”
That was enough to say “this makes sense to launch and to try.” It’s also deeply sad because… goddammit… it's good for my business to be right, but I don't want it to be the case that in this one single, small location, had seven of these folks who have kids young enough to be in child care and need this.
A lot of times it's also language barriers. Even if you do know that child care subsidies exist, but then you also have to fill out a 16 page long application and resource centers have limited hours and then a person who speaks your language isn't there that day. What are you going to do?
So Mirza is available in your native language. We make to be accessible and to be helpful.
MOLLY
Yeah. And then through the stress lens, I just can’t imagine the load that is layering on.
Taking it to the stressor map– What am I missing?
What other connections do you see? Where is the lifting of the pressure from all of this?
SIRAN
This IS all connected just the and it's kind of stunning to just see.
You understand it, but seeing it visualized like that. Wow, the stress of it all, in a visual format.
MOLLY
Thanks, Siran!
Zooming into child care issues – stable child care or even access to stable child care options – I see something like Mirza as a stress buffer, stress alleviation.
Reflecting back on things you’ve brought up – this is deeply connected to the mental load; it's deeply connected to unpaid labor. In terms of the workplace, as you know, we can talk about discrimination and the motherhood penalty and like all the elements that come with that.
When you have an employer supporting or acknowledging that child care and access to child care and options for child care is part of your journey, what do you think that speaks to? I haven't seen that explored much, that connection?
SIRAN
We actually put it in business cases for companies – child care is one of the most popular benefits from employees who do not have children. It’s this unspoken but very real recognition that “I see you and I’m building for a workplace where different people need different things” That’s something that is beautiful and why it's so popular and so deeply appreciated.
MOLLY
I think the other thing that you really touched on too is this deep connection between child care and financial stability. How it works both ways.
SIRAN
That's one of the most fascinating things. We are paying for child care at the same time that our earnings potential starts to increase. The slope of earnings potential is a lot higher in our late 20s, 30s, for a decade or so. But that’s also when we're paying for child care.
“[for mothers], child care is this enabler to actually see that higher slope of earnings potential. It's an accelerant, in a way. But it's also a hindrance because when you can’t afford it, you don't get that acceleration.”
So, [for mothers], child care is this enabler to actually see that higher slope of earnings potential. It's an accelerant, in a way. But it's also a hindrance because when you can’t afford it, you don't get that acceleration.
If you're a family that relies on government subsidies, it is very common for those families to change their hours throughout the year to make sure they're staying under the income threshold. It’s that extra dollar-an-hour. You can't lose those government benefits. It’s devastating – close to a decade of your working life that you are forced to decrease your own earnings potential. And then it's exacerbating that cycle of poverty.
MOLLY
I keep thinking about that cycle too. And, again, adding in the cognitive load of constantly doing mental math to stay below the benefit cliff. But then, because you're below that cliff, you are at a different income bracket that you could be above.
That mental math and the loop of staying in that range just seems like its own complicated web. And then wind it through the social narrative and access to services.
SIRAN
And there is stigma. There is so much stigma around receiving government benefits.
“For child care, every single state has work requirements attached. Some of them allow for you to at least be actively looking for a job, but not all of them. For some of them, you need to be in a job. How do you get that if you don't have stable child care?”
What is meant to be a social safety net, and give people a step. In reality, it's not. We've designed it really, really poorly. And then we've imbued it with racism and all of these tropes. Now, we also add this highly stigmatized view that people are unwilling to work or they're trying to take advantage of the system. None of that is true.
For child care, every single state has work requirements attached. Some of them allow for you to at least be actively looking for a job, but not all of them. For some of them, you need to be in a job. How do you get that if you don't have stable child care?
MOLLY
It sounds like a really frustrating positive feedback loop – one thing affects the other and it circles right back.
Is there anything else in the stressor map that feels connected that you would like to see explored more or even talked about more?
SIRAN
I think that connection to pregnancy. I love that you have pregnancy and birth complications and NICU on here already. That connection to child care issues. That’s a really big one.
For child health issues. That is one that we don't think about a lot. Because we don’t think of child care being so critical to overall mom and baby health outcome. And we need to.
MOLLY
I think that has a feedback between the two too.
One woman that I interviewed [for the NYT op-ed] brought up something I hadn't even thought of. She has a special needs child, a child with medical complications, and there were a few after school programs that will take him and those are places she can't afford. So it feeds back into that financial piece. How does child care benefits work when you have a child with medical needs?
SIRAN
That is one of the things that's really painful.
For families of children with special needs, there is a higher income eligibility and child's age eligibility criteria. But it still comes with complications. It is so complicated for providers to take those vouchers and the level of work and care that providers are doing. I can also understand why there are folks that stick to private pay because it's also emotional and physical.
MOLLY
Even just what you mentioned – the emotional load. That is one thing that is especially under-studied, and one of the things that is just simmering under the surface. And the emotional load disproportionately falls on mothers.
SIRAN
Yes, and there is the emotional load that is tied into the social narrative around what is a “good mother.”
“We have the “good mother” narrative in the context of someone who relies on child care vouchers to be able to work and put food on the table and take care of her family. But then, also, that person has the emotional load of ‘what I want for myself’ too.”
If we look at it from the income bracket perspective, we have the “good mother” narrative in the context of someone who relies on child care vouchers to be able to work and put food on the table and take care of her family. But then, also, that person has the emotional load of what I want for myself too.
MOLLY
That is such an important point. Adding in the identity of me without you and the gravity of having a mismatch. Like your mother who was a biochemist – how do you feel she struggled with that emotional load of the me without you, the “I am still this whole other person”?
SIRAN
Just those sacrifices!
When I was a kid I never fully understood. My mom used to talk about her work in China and how her job in the lab had given us housing and it was this really prestigious job. So why didn't she go back to that in America?
“That alienation of ‘I'm going to now take myself away and make that sacrifice because now my identity is a mother — my responsibility and my caregiving’, and now fold that into all of the parents, all of the moms.”
Now, I understand the barriers for that. She would have to go back to school and the pay is not as good. The fastest way for her to be able to provide the life she wanted for me was to go into accounting and her thinking “it’s quick. That's going to be how I take care of my family.” But is that actually the person she wanted to be when she was younger and aspiring for what she wanted in her life?
That sort of alienation of “I'm going to now take myself away and make that sacrifice because now my identity is a mother — my responsibility and my caregiving”, and now fold that into all of the parents, all of the moms.
“62% of [moms of young kids] who are working part time or not at all actually want to be working BUT for the cost of child care…How many of those folks are artificially constrained? How many of those families are on Medicaid who wouldn't need to be if we actually tackle child care.”
Let’s take government benefits out of the equation – just purely go to a middle income or upper middle income family – we're still facing those issues. If you are focusing on your work, you're a “bad mom.” You're not at every school play. You’re not doing every drop off.
But then who are you at work as well? And who was that person before you had your child?
MOLLY
It’s so infuriating to me that the way mothers are devalued in society and the working world feeds right back into our own identity struggles.
You're the same person. You have the same value. Just because you can't work the same hours because the system is broken, doesn't mean that your value is less than. It should not be diminished.
Last parting thought – What do you hope for? What are you hopeful for? And what are you looking towards?
SIRAN
So one of the things that I find really interesting, there is a Financial Health Network study last year that found that 62% of women who are working part time or not at all – moms of young kids who are working part time or not at all – actually want to be working BUT for the cost of child care. What I find interesting, as the study progresses, is figuring out how many of those folks are artificially constrained. For example, how many of those families are on Medicaid who wouldn't need to be if we actually tackle child care.
That's another example of it's just a poor use of money. If you spend it differently, the same money can go to fund the same people in a way that actually unlocks their income in the economy in a larger way. That's really powerful.
That's something I'm hopeful that we can actually start to prove out over time.
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Thank you so much Molly for this in depth interview, it was so eye opening to me on so many topics. Especially for moms on subsidies, it’s heart breaking they can’t advance in their careers because they’ll fall into the abyss of no subsidies but salary is still too low to cover full priced care. Also I’m so excited to discover Mirza, I’ll be sending to my benefits team.