Organizations spend significant time and energy on recruiting and retaining valuable talent, but those efforts can be dashed if workers are so stressed over the cost and availability of child care that they can’t concentrate on work. So, what solutions can help employees manage their family responsibilities and benefit employers, too?
Understanding the Costs for Employees
Online platform Care.com’s 2024 Cost of Care Report says the U.S. Department of Health and Human Services considers child care affordable when it costs no more than 7% of a family’s household income, but according to Care’s survey, respondents were spending, on average, 24% of their household income on child care. The survey showed that 84% spent 10% or more, and 60% spent 20% or more.
And it’s not just the cost of care that’s worrying working parents. It’s also availability. The Care report shows that parents are spending more time on waitlists now than in the past.
The report says, in general, 65% of the responding parents spent time on a daycare center waitlist, and 81% of those parents had been on multiple lists. The report adds that 43% of those parents waited four months or longer.
In commenting on the findings, Brad Wilson, CEO of Care.com, believes “the crushing weight of child care costs” doesn’t hurt just parents.
“The child care crisis should be a major red flag for everyone, not just parents,” he says. “It is a systemic failure that will impact our nation’s economic growth, and that affects us all.”
Time Off Is Another Need
Because of the struggle employees face, many employers are taking on the childcare challenge, which includes more than just the cost and availability of care. Working parents also need—and are demanding—time off, and employers are responding.
For example, in June, banking giant Citi announced enhancements to its parental and caregiver leave policy, which grants all new parents 16 weeks of paid leave. In addition, birth parents receive an additional paid recovery time of up to eight weeks.
The Citi policy also makes employees eligible for two weeks of paid leave annually to care for an immediate family member.
Just One More Expense or a Smart Investment?
When employers explore options to help employees balance their work and family responsibilities, they must consider cost. In March, consulting giant Boston Consulting Group (BCG) released research that found employer-offered childcare benefits can deliver returns of up to 425% of their cost.
According to BCG, a childcare benefit program that retains as little as 1% of eligible employees can cover the cost of offering the program.
BCG also studied five U.S. companies: Etsy, Fast Retailing, Steamboat Ski Resort, Synchrony, and UPS. The companies vary in size and represent different industries: e-commerce, retail, hospitality, financial services, and supply chain management.
The study found that childcare benefits improved employee retention and reduced absences, producing payoffs for the employer, as well as the employees.
“The results debunk a widespread perception that employer-sponsored childcare benefits are strictly a cost center,” BCG reported. “Instead, we found that all five companies obtained a positive return on investment (ROI) – from 90% to as high as 425%.”
Options for Employers
Employers have an array of options to offer employees. Employee benefits provider Benepass points out that benefits like paid family leave, backup child care, on-site day care, and flexible spending accounts (FSAs) are among the options.
A dependent care FSA (DCFSA) is one of the most popular pretax benefits in the United States, according to Benepass. Such accounts can result in significant tax savings because employee contributions to their DCFSA are deducted from their gross income, reducing their taxable income.
Benepass also notes that some employers offer employees subsidies to ease the pressure caused by the high cost of child care. Sometimes, regular reimbursements are based on receipt of childcare expenses. Other times, a onetime allowance is paid, and sometimes stipends are paid on a monthly, a quarterly, or an annual basis.
Tammy Binford is a contributing editor.