Benefits and Compensation, Talent

Countering the Child Care Crisis

As an HR professional, you are likely keenly aware of the child care crisis. Parents spend exorbitant amounts of money on child care, if they can even find child care in their area. Costs and constraints lead to large percentages of new mothers not returning to work, not because they don’t want to but because they can’t.

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I recently spoke with Charles Bonello, an expert on child care, about the crisis and his company’s efforts to meet it head-on. He is the CEO of Vivvi, an organization that provides employer-sponsored on- and near-site child care in the New York City area.

The Crisis

Bonello says that “child care is the single biggest pain point for families across America.” Indeed, the situation grows more dire all the time. Let’s take a brief look at some of the features of this crisis.

Child Care Deserts

Just acquiring child care is not a surety. Bonello defines a child care desert as “an area where there are three times the number of children than available seats in an early childhood or preschool center.” In other words, many will be unable to find care for their children. Bonello puts that figure at 50% of all parents in most places in the United States.

Limited Hours

For those who are lucky enough to get coverage for their children, it can be a real challenge getting as much as they need. While some facilities, such as day care, do have extended hours that would typically cover the span of an average working day, such facilities can lack in quality and might not be available at all. Facilities like so-called nursery universities typically only run for a few hours a few days a week. Finding more personalized help like a nanny or babysitter can come with serious inconsistencies in coverage. Bonello says that “it’s just incompatible with the way that families live their lives today.”

Towering Costs

Whatever option parents go for, none of them is cheap. “There simply isn’t a market for discount child care,” says Bonello—and for a good reason. Parents do not want substandard facilities. That leaves virtually all parents with some pretty extreme costs. According to Bonello, parents spend more on child care than they do on housing, health care, food, and college. Average costs change from place to place, but in New York City, average child care costs are $40,000 a year. That doesn’t include nannies or babysitters to handle gaps in coverage or additional programs that children may be sent to.

Return to Work

When looking at the above challenges, it’s hardly a wonder that 50% of full-time mothers do not return to work after having their first kid. In most cases, it’s not that they don’t want to return; it’s that they can’t. Many cannot afford to spend that much on child care. Still others might be able to afford it but simply cannot find it. Others who work irregular and changing hours might be unable to coordinate coverage for their children. Whatever the case may be, that is a lot of institutional knowledge and talent walking out the door, never to return.

Federal Employer Child Care Tax Credit

Given low unemployment and other hiring and retention concerns, it’s incumbent upon the workplace to help parents find affordable child care. Larger organizations can afford to implement various solutions like on-site care, reimbursement, or other forms of assistance. Smaller organizations, however, have a few lesser-known but excellent options available to them on a federal and sometimes state level.

Prominent among them is the Employer Child Care Tax Credit, which uses what is known as Form 8882. “It’s literally the only form that an employer needs to file for the federal tax credit,” says Bonello. He continues by explaining the program: “If you spend $100,000 on child care, you’re going to get 25 grand back. Then, you can write off the rest as a normal business expense.” The program allows up to $150,000 per year, making it an excellent option for small to midsize businesses.

There are some state programs, such as one in New York, that allow participants to get more reimbursements.

Bottom Line

Anything you can do to help new parents in your workplace will benefit you in the long run. Even marginal improvements in retention rates would be a great return on investment. The costs of programs like what Bonello’s organization offers or the Federal Employer Child Care Tax Credit are very affordable. Bonello rates them as equal to “a beer or coffee budget for a company.”