Providing support for working parents helps employers retain talent and revenue.
Employers can no longer afford to overlook America’s escalating child care crisis. According to the Council for a Stronger America, businesses lose an average of $1,640 per working parent annually due to increased hiring costs and reduced productivity — an issue that collectively drains an estimated $122 billion from the U.S. economy each year in lost work, productivity and tax revenue.
A recent KPMG index report reveals that 1.2 to 1.5 million workers — 90% of whom are women — are forced to reduce their hours or miss work each month due to inadequate child care options. For just six hours of missed work per week, parents can experience an annual income loss of anywhere from $4,680 to $9,026.
This financial loss heightens an already difficult situation. Child care costs consume between 8% and 19.3% of the average family’s income per child, reports the Department of Labor. Since 2019, the cost of child care has risen over 30%, pushing some parents to shift to part-time employment or leave the workforce entirely. A BabyCenter survey found that 45% of mothers of young children ages 0-8 have considered reducing their hours or leaving the workforce altogether to save on child care expenses, while another 13% have already left their careers due to child care’s unaffordability.
As labor shortages and rising child care costs persist, employers are placed at a crossroads: Either adapt to support working parents or continue to lose revenue and trained talent.
Finding Flexible Work Arrangements
For many, one of the positives to come out of the COVID-19 pandemic is the ability to work from anywhere. Flexible working arrangements, including full-time remote and hybrid models, have changed the game when it comes to creating a more harmonious work-life balance.
According to the LeanIn and McKinsey & Company’s 2023 Women in the Workplace Report, the largest study on women in corporate America, flexibility, such as the option to work from home, is highly valued by working mothers, with 57% stating they would leave their employer or reduce work hours without the option to work remotely.
Covering the Cost
Another approach employers have taken is offering child care benefits, such as tuition reimbursement and stipends.
A recent study released by Boston Consulting Group (BCG) analyzed five businesses across different industries, company sizes, employee mixes and child care benefit types and found that employer-offered child care benefits can deliver returns of up to 425%. BCG reports that retaining as little as 1% of eligible employees because of child care benefits can cover the cost of offering them.
Of the eligible working parents surveyed at Etsy, one of the companies highlighted in the study, 82% said that child care benefits were an important factor in selecting their employer. Etsy employees may be eligible for up to $4,000 per year in child care credits, which they can spend with a contracted provider that offers onsite or at-home care options, or on their own private care plan.
On-Site Options
Several companies have taken the initiative to establish on-site child care facilities.
When Walmart began designing its new 350-acre headquarters campus in Bentonville, Arkansas, employee input was integral to the planning process. From this feedback, the company decided to create the Little Squiggles Enrichment Center, a 73,000-sq.-ft., on-site child care facility with capacity for over 500 children, making it the largest child care center in the state.
“We want our associates to feel supported, both at work and at home, because we know that when our workforce feels supported at home, they can come to work and be their full selves,” says Megan Klosterman, senior manager of child care programs at Walmart. “In addition to an on-site child care facility being the most requested amenity, we also listened to them talk about what was important to include in that amenity.”
Walmart designed the Little Squiggles Children’s Enrichment Center to help parents achieve a healthy work-life balance.
Photo courtesy of Walmart
In partnership with Bright Horizons, a leading provider of employer-sponsored child care solutions, Walmart worked to blend its employees’ requests into various aspects of the center’s operations. Together, they introduced a holistic curriculum focused on discovery-driven learning and purposeful play, as well as STEM and Movement Matters programs.
The two-building facility not only features bright, open classrooms and plenty of outdoor space but also areas for parents to connect with their child throughout the day without affecting their work schedule. Walmart and Bright Horizons’ team of architects were able to accomplish this by adding three small rooms to the building’s designs for work-related needs.
“If they are dropping off at the beginning of the day and they’ve got an early meeting on their calendar, parents can hop into one of the parent ‘touchdown’ rooms, take their call and then head into the office,” says Klosterman. “Or if they happen to be having lunch with their kiddo and they need to catch that one o’clock meeting, they don’t have to worry about rushing through traffic to get back to the office and join that call.”
“Employers can play a role in providing affordability, access and peace of mind,” says Priya Krishnan, chief digital and transformation officer at Bright Horizons. “If it’s on-site, parents are able to visit their children in the middle of the day. Think of a nursing mom — she’s able to look after her child during the course of the workday. These are aspects employees truly value.”
Therefore, Bright Horizons urges companies not to view providing child care benefits as a cost, but as an investment instead.
“When you invest in your employees, you not only have high retention, but you are able to attract the best talent,” says Krishnan. “If the choice is between quitting because the cost of child care is really high versus coming back because a mother or father has access, you’re not only getting the retention benefit, but the need for retraining and rehiring goes away. There are costs associated with it, but the ROI on this is real.”
