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Child care benefits at work: Employers are increasingly offering resources to parents with daycare needs

Being a working parent seeking affordable, accessible and high-quality child care in the United States can be as tricky — but much less fun — than solving the Rubik’s cube.

The good news: More employers have started to offer child care benefits. The bad news: They are still in the minority.

The average cost of daycare per week is $293 for one toddler and $556 for two, according to Care.com. But the actual cost of care to a family varies widely based on zip code, a child’s age, and whether a parent is seeking home-based care or center care.

All in, however, data from the US Department of Labor show the annual cost for care of just one child — whether infant, toddler, pre-school or school-age — can easily eat up 15% to 20% of the median family income in many counties across the country.

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That is well above the 7% of family income that the US Department of Health and Human Services set as a federal benchmark for affordability.

As for availability, while the number of child care programs has gone up since the pandemic, there are now fewer employees per program, according to HHS.

Making matters more precarious is the expiration of pandemic-era federal child care stabilization funds. That may lead to higher prices, exacerbate staffing shortages and lead to licensed child care program closures, according to the Century Foundation, a progressive think tank.

“Paying is the largest issue. But there also are not enough child care providers, period,” said Jessica Chang, CEO and co-founder of Upwards, which partners with employers and federal and state governments to make child care more accessible to all families, especially low-income earners. 

It also helps to create more licensed child care providers through training and practical support for obtaining a license and handling the administrative work of running a business.

More employers step up

The pandemic laid bare to employers their workers’ child care struggles. And the subsequent tug of war over returning to the office has further underscored it.

“Covid was a blessing in disguise,” Chang said.“Employers realize that no longer is child care just a social issue but a business issue. When you have trouble attracting and retaining employees, it affects your bottom line.”

A survey last year by human resources consulting firm Mercer found that 54% of employers with at least 500 employees do not offer any child care benefits. And among those that do, less than a third selected any single benefit such as subsidized child care services (11%), child care referrals and consultations (28%); and back up child care (26%), which gives parents access to a daycare center or babysitter when their usual child care arrangements fall through on a given day.

It’s not much different for employers with 5,000 or more employees. Among those, 37% offer access to backup child care, 16% subsidize child care and 10% provide onsite child care.

So perhaps it’s not surprising that three-quarters of working mothers surveyed by Moms First and the Adecco Group US Foundation last year said their company could be doing more to support parents with young children.

Among respondents who said they were thinking of quitting their jobs, 41% said their compensation was not high enough to cover child care costs, and 30% said they didn’t have adequate child care.

At the same time, Upwards and Bright Horizons, a leading provider of early education and child care centers as well as backup care, are hearing from a growing number of employers that are seeking to offer child care benefits for the first time or expand the ones they have in place.

“There was a very large uptick in clients’ interest in offering backup care (during the pandemic). We’ve seen that interest continue post-pandemic,” said Bright Horizons CEO Stephen Kramer.

Kramer said he is also hearing growing interest from employers about providing on-site child care to help make it easier for working parents to return to their physical workplace.

“The most critical issues employees are raising with employers is about RTO or working at all,” he said.

An onsite child care center like one from Bright Horizons can provide licensed and trained care providers and well-qualified early education teachers. And it prioritizes admission for a company’s employees, which might be attractive for parents who are still on a waitlist at a child care provider near their home and who can afford the cost of an onsite center.

Other options to ease working parents’ experience

For many employers, though, an onsite child care center may be tough to swing. But they’re just as interested in attracting and retaining workers, and can find other ways to make the quest for good child care easier.

Like many companies, One Workplace, a California-based office design and solutions provider with roughly 950 employees, hadn’t offered child care benefits before Covid-19 hit.

As the company started experimenting with return-to-office in the latter part of the pandemic, it surveyed its working parents to learn about what they wanted, said Carmen Perez-Seda, the company’s talent director.

In response to that survey, it partnered with Upwards in January 2023 to offer all employees free access to Upwards’ care provider network and a free, dedicated care manager who worked with parents individually to find them attractive care options based on their needs and location.

The company also offered employees three free days of backup care a year through the Upwards network. But that backup benefit was replaced this year by cash stipend of $200 a quarter to help them pay for any kind of child care or after-school programs of their choosing.

To date, Perez-Seda said, 93% of employees who have used Upwards’ services found licensed and accredited child care within their home zip codes.

The help for working parents whose employers don’t offer a direct financial assist with child care may come through state and local subsidies if their income is low enough, Chang said.

And for all parents, they can get some help through the federal tax code, whether by contributing to a tax-advantaged dependent care account, claiming the child tax credit or, if their income is low enough, claiming the Earned Income Tax Credit.

The downside for any parent living paycheck to paycheck, however, is that they usually only get that financial assist through a refund, which typically comes months after they have had to pay their child care bills.

Correction: An earlier version of this report incorrectly spelled the name of Bright Horizons CEO Stephen Kramer.

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