Employee Childcare Benefits: A Business Necessity?

Neelabja Adkuloo

Neelabja Adkuloo

Published 14th Dec 2022

Ever wondered about leaving your job and looking after your kids yourself instead of sending them off to daycare?

You are not alone.

The challenge of finding a workplace that has an inbuilt childcare infrastructure for working parents has intensified recently. Struggling to meet workplace demands while attending to their homebound young children is a big stress factor – affecting employee productivity and mental health which has been at an all-time low.

What the pandemic started and almost brought to the edge of the cliff, the economic downturn now seems to provide the final push. What has made matters worse is that inflation linked with the economic downturn has driven away private nannies and babysitters and led to mass shutdown of daycare centers, pushing the final nail in the coffin.

In this scenario, how can employers retain their best workers and provide them an uplifting environment to uphold their parenthood and workplace responsibilities with equal rigor?

This article takes an in-depth deep dive into why the childcare infrastructure built into the workplace is imperative for improving employees’ productivity and mental well-being, ultimately impacting business success.

Table of Contents

Factors affecting the childcare industry

The recent wave of economic recession, followed by mass layoffs across industries and verticals, has adversely impacted childcare owners, teachers, and the parents of infants and toddlers.

Although the research we’ve relied on is focused on the US, its perspective is broader than one region as it exposes the childcare industry is in shambles for the most part.

The childcare owner

Due to staff shortage and rising costs for safety and health supplies, 8,899 childcare owners closed centers across 37 US states between December 2019 and March 2021. Licensed home daycare owners were no better off, with 6,957 home-based care center owners shutting shop in that time period.

Although Congress, as part of the American Rescue Plan in 2021, authorized $39 billion for the childcare industry, 50% of the childcare owners reportedly used the money to pay off their debt they took during the pandemic rather than keep their childcare programs open.

And this is not US specific. Pick up any region, and you’ll see a similar trend.

The childcare worker

The assumption that parents should pay the person entrusted to look after their child little money because it’s not a labor-intensive job is widespread and concerning. Some people still think of this role as babysitting.

What’s worse is that recent reports have confirmed that the average childcare worker makes $12 hourly in the US. This puts them dangerously close to the federal minimum wage of $7.25, hinging on borderline poverty. Moreover, around 95 percent of child-care workers are women, with more than a third being women of color who slog 10-12 hours daily. (Source: The Cut)

According to Vox, childcare workers are quitting their jobs to join big corporations like Target, Amazon, Starbuck, McDonalds, and Walmart because they pay competitive wages, along with benefits. The Washington Post reported in 2021 that women in their 20s with a teaching degree are being drawn towards jobs such as bank tellers, administrative assistants, and retail clerks.


The parent juggling childcare and work

The childcare infrastructure for working families was broken and in complete disarray even before the pandemic hit. However, the wave of Covid-19 has pushed matters to the brink.

As employers expect working parents back in the office, daycare closures have made finding affordable childcare centers challenging. A vast majority of mothers consider leaving their job at the peak of their careers due to the difficulty and cost of finding childcare.

As compared to February 2020, there are 808,000 fewer women in the workforce today. Many couldn’t complete their college degrees without facing the guilt of leaving their child behind in a cesspool of death and disease, rendering them unemployable now.


According to Vox, daycare waitlists in many US states are running into thousands. The liberal think tank ‘Center for American Progress’ found that 50% of the Americans lived in “childcare deserts,” where 1 childcare existed for every 3 kids in need of it.

So much so that, new mothers rush to get on the waitlist while they’re still pregnant. In San Diego, shocking reports have emerged that parents have to pay nearly $2000 monthly to hold a spot for their child who isn’t even born yet. The Cut reports that a mother in Pittsburgh, US, had to wait for 2 years to send her daughter to the daycare of her preference. She had no choice but to enroll her child into a “lower-quality facility” while whiling her time. She sighs,

“It was a very small room with a kind of sad playground, and there was really high teacher turnover.”

For families in which both the husband-wife are working, the matter is more complicated. If any one of the partners wants to quit because they don’t feel strongly about their job or want to take a career break, it would impact the relationship dynamic. A mother in Chicago shares the same sentiment,

“I’m not a teacher. I don’t think I have the capacity to keep my kids engaged and learning all day. But then I have days where I’m drowning in work. There are a lot of moments where I’m like, why am I basically working so that my kids can go to daycare, when I don’t have a ton of passion for what I’m doing?”

The laid off worker

For an employee who’s been recently laid off, finding reliable childcare is a pain.

Daycare tuition in Washington DC went up by $100 a month in 2022. In New York, parents are compelled to pay their nanny extra to cover rising gas prices. The cost of full-time childcare in the US, on an average, has risen to $45000 annually, which pushes furloughed employees to take on two or three jobs simultaneously. (Source: The Cut)

In addition to lost wages, employees who are laid off lose access to health insurance and a retirement program.

Employer-provided childcare benefits - a stickiness factor for employees at work?

As per the latest McKinsey report, here are the statistics on the expectations and demands of present-day working parents with respect to childcare.

1. Hiring Stage

69% of the women with children aged 5 and under who are looking for employment said they’d be more likely to choose an employer that allowed them to take breaks for their kids or provided access to on-site childcare. That was the number one reason 26% ranked predictable hours as first priorities. More than half of respondents cited flexible working arrangements as top considerations, with 52% of those respondents ranking it in their top two.

2. Employee Retention

83% of women and 81% of men surveyed with children aged 5 or under said that childcare benefits would be a very important factor in their decision whether to stay with their current company or switch. About 40% of respondents considering moving to a less-demanding job said onsite childcare services at their current company may cause them to reconsider. 38% noted that the assistance with childcare expenses from their employers would also be a key factor in their decision.


3. Employee Advancement

Research has shown that working mothers receive fewer professional development opportunities due to their childcare responsibilities. 57% of mothers are held back professionally because of childcare responsibilities. 40% say having access to on-site daycare would have made them pursue promotion again if they were not able to before.

9 ways companies can support their ‘working-parent’ employees

The cost of childcare is making it difficult for many families to meet their needs. Here are 9 ways organizations can support employees in the economic slowdown.

1. Provide subsidies

Companies might offer full or partial tuition subsidies for center- or home-based care, compensation for dependent care, or creative financing models to cover childcare costs in the first five years of a child’s life (which are the most expensive months).

Many working parents rely on relatives, parents, or grandparents to provide childcare. Imagine the scenario where those family members could get some compensation for the care! UnitedHealth Group, from March to December 2020, reimbursed employees $100 a day for childcare.

These kinds of subsidies help the company by reducing expenses (instead of setting up an office on-site childcare) and assisting family members support working parents.

2. Offer flexible arrangements to working parents

More companies are offering flexible arrangements, like changing when you start and end your workday so that you can better meet childcare center drop-off and pickup times. Additionally, more accommodating programs are becoming available including “bring-your-baby-to-work” which helps new mothers ease into their routines at both home and work, as well as telework and hybrid work arrangements for both salaried and hourly employees.

For example, Synchrony’s improved flex schedules allow team members to work through a centralized system in order to determine how and where they may be able to take hours off, making them up later. They also have split shifts in which employees can complete a 4-hour shift in the morning, followed by another 4-hour shift in the evening; with extended time off in the middle of the day. Employees are even given vacation or personal time off on an hourly schedule until their quota is reached.

3. Give backup childcare services

Some companies offer backup childcare services that are subsidized by the company, in part and in whole. Synchrony’s backup childcare benefit is notable in that they’ve made it easier for employees to choose different providers ahead of time, all while maintaining their efforts to provide personalized care.

In 2020, KPMG quadrupled the number of backup care days provided to employees to 60, just in time for the early stages of COVID-19. Most companies will partner with a provider to offer coverage in either a daycare center or at home for employees who are left without their usual childcare service because, say, their nanny caught the flu or storms closed the daycare center.

This benefit is so popular that before COVID-19 came along, more than 1,800 working moms at Amazon, dubbed Momazonians, began pressuring management to provide backup childcare benefits.

4. Have a working parents in-office community

Employers can help working parents find quality care for their children in many ways—including as a conduit to critical community information. One company, a large clothing retailer, conducted a childcare census to understand the challenges and needs of working parents. Armed with such data, the company reached out to service providers and other key stakeholders in the community to identify the most relevant resources and share them with working parents.

Having a community inside the office will ensure the working parents feel at home and they will appreciate the gesture.

5. Participate in political advocacy

Companies shouldn’t be the only ones taking responsibility for helping working parents. “Companies must become political advocates for themselves and the women they hope to hire and attract,” says Care.com before pointing to publicly funded childcare centers and tax credits as examples of how employers can collaborate with the government on this issue.

6. Offer a paid sabbatical or let new parents work remotely

Some employers offer employees sabbaticals and other forms of parental leave, giving them the opportunity to address childcare needs without losing their job. For example, PwC has offered employees one- to six-month leaves during which they continue to receive full benefits and 20% of their regular pay.

Moreover, many companies that allow remote work are using up less office space. Imagine taking some of that space and retrofitting it by adding a few play spaces and a couple tutors. Orion Industries did just this in 2020. They used an empty call center to create the Orion Learning Pod where employee children can attend school remotely together. Parents who switched to a four-day workweek schedule oversee their kids on weekdays.

7. Offer on-site childcare facilities

Patagonia, the outdoor clothing retailer, has long trumpeted its Great Pacific Child Development Center, an onsite daycare facility with a garden, playgrounds, climbing walls and space for 100 children. They believe that this choice helps them recoup more than 70% of their childcare expenses through tax breaks, avoid turnover costs and increase productivity and work quality. Other companies have calculated an even higher return.

Historically, onsite childcare centers, either fully or partially subsidized, have been the top standard for companies that care about their employees. But the pandemic has changed the way companies are going about caring for their working parents. The Care.com survey found that many companies are expressing less interest in onsite childcare options and more in flexible options.

8. Provide the choice of online schooling

A Massachusetts-based pharmaceutical company called Agios took online education to the next level, partnering with Outschool for full-time and fee-based classes for employees’ families. Some major companies are even getting in on the action, too! Twitter has blended Outschool’s classes into a program called Camp Twitter.

9. Create support structures at your workplace

Employee Resource Groups of parents and other caregivers are generally a positive and powerful group. They foster connections between people and help provide advice, support, and experience. LinkedIn’s Families at LinkedIn ERG is just one example of the many groups that exist today.

No matter what, it’s important to remember that there is more than one way to support working parents. Some companies offer services such as tutoring, counseling, and mental health care. However, flexible work hours are the number one way that businesses show they care about their employees and make life easier for them. Employers are experimenting with flexible start and end times and even time-banking, where employees work a few more hours per week and then take some time off the following week accordingly.

Childcare management made easy with Illumine - for centers, teachers, and parents!

The need for childcare is significant. It’s essential to innovation, productivity, and efficiency because it allows parents to focus on their responsibilities. It helps in building a diverse talent pipeline and so that we don’t limit opportunity with our assumptions about what women can do without child care. It was seen as a luxury in the past, but childcare is an essential component of today’s business environment.

With more than 500 customers, Illumine, is emerging as the leader in child care management software, helping daycare centers and teachers connect better with parents.

If you’re the director of a child care center, or know someone who can benefit, then talk to an Illumine expert today , to learn how Illumine can help your childcare business enhance its operational rigor and transform itself into a successful organization that working parents love.

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