Kelly is a mid-career professional with two children under 5 years old. Enrolling both children at a daycare or nursery during her working hours will cost Kelly about $20,000 per year. She makes $50,000 per year — the national average. Paying for childcare will nearly slice her income in half.
How can Kelly’s employer provide her support? Without help, will Kelly be able to stay and advance at her company?
For American businesses, situations such as Kelly’s are not hypotheticals: In 33 states and the District of Columbia, the cost of childcare is more expensive than college. Childcare benefits are as essential as paid time off, sick days, and 401ks for companies and employees.
We surveyed 505 employees to learn about the childcare benefits their jobs provide and how such benefits can be improved.
Overall, companies should:
- Evaluate which childcare benefits will improve their workplace and fit their budget
- Provide childcare benefits to all employees so that both men and women feel they can advance
- Offer childcare savings accounts to all employees whether their business is large or small
- Only 6% of companies offer employees childcare benefits, despite the fact that both parents are employed in 63% of American families with children. Companies should carefully consider what childcare benefits will improve their workplace and fit their businesses’ budget.
- Fewer than half of women (43%) believe people at their company have a fair chance to advance. Childcare benefits can improve women’s morale and should be offered to all employees to ensure everyone feels they can advance.
- More than 1 in 10 women (13%) are dissatisfied with the childcare benefits their company offers. Meanwhile, only 3% of men are dissatisfied with their company’s childcare offerings, meaning that women are 4 times more likely to be dissatisfied with their company’s childcare benefits. At businesses of all sizes, childcare savings accounts effectively address employees’ dissatisfaction with childcare benefits.
Evaluate Your Employees’ Childcare Needs
Both parents are employed in 63% of American families with children. Because working parents represent such a large proportion of the workforce, companies should be familiar with the range of childcare benefits they can provide their employees. Businesses should carefully evaluate which benefits will be most beneficial to their employees and cost-efficient for their organization.
Surprisingly, only 6% of companies offer their employees childcare benefits.
Experts say some companies fail to offer childcare benefits because of concerns about cost.
“Many companies skimp on childcare benefits,” said Randi Braun, executive coach and founder of Something Major Coaching, an agency that helps businesses boost women’s leadership and parent retention. “They tell themselves the story that benefits are just too expensive.”
In reality, businesses can offer childcare benefits of varying costs, including:
- Childcare subsidies
- On-site childcare
- Flexible employee schedules
- Predictable employee schedules
- Back-up childcare assistance
- Flexible childcare spending accounts
6 Employee Childcare Benefits
1. Childcare Subsidies
To reduce the cost of childcare, businesses can simply subsidize the costs employees incur.
Childcare subsidies are an effective and moderately inexpensive way to reduce employees’ parenting burdens.
Employers can offer childcare subsidies two ways:
- Make direct payments to employees with children. Workers can spend the money however they see fit.
- Partially subsidize childcare with select care centers or certain childcare workers. Employees and companies share the cost of childcare.
A company that subsidizes half the cost of childcare for a worker with two children under 5 years old will spend roughly $10,000 per employee each year.
2. On-Site Childcare
On-site childcare provides employees a company-sponsored childcare facility at or near their office. In-office daycarecan be offered during and after the traditional school day.
On-site childcare is a highly effective but very expensive benefit for businesses.
Businesses pursuing on-site childcare should decide if they want to:
- Contract childcare services from an outside company
- Operate and manage their own in-house childcare team
- Charge “tuition” or offer complementary services to employees
Generally, major companies such as Patagonia, Home Depot, Cisco, and Clif Bar are more likely to offer on-site childcare.
Cisco, for example, contracts on-site childcare services in its San Jose office to Kindercare. Daycare is offered to children from 6 weeks to 5 years old, and after-school and summer programs are available for school-aged children.
Despite tax benefits and improvements in employee retention, on-site childcare is a significant investment. Companies should expect to spend at least $500,000 per year for an on-site childcare program.
3. Flexible Employee Schedules
Determining their own work schedule is a top priority for employees: More than 4 in 10 employees (41%) say that flexible scheduling is their most valued perk.
Flexible employee schedules are also an effective and inexpensive childcare benefit.
They provide working parents the opportunity to work without missing their children’s activities and obligations.
With the rise of telecommuting, more employees can complete their work at home, so businesses typically need to spend nothing on providing their workers flexible schedules.
4. Predictable Employee Schedules
An unpredictable work schedule can make it hard for working parents to schedule for their childcare needs.
Predictable employee schedules are an effective and inexpensive childcare perk that make child-rearing easier for employees.
Consider the experiences of two different employees:
- Sandra is a mid-career professional with two children. She is on-call and in her office from 8:30 a.m. to 6 p.m. Monday to Friday. She is not expected to respond to emails or do other work outside those hours.
- Lily is also a mid-career professional with two children. Her day-to-day schedule varies. On some days, she wakes up, checks her email, and is immediately expected to start working. She regularly fields calls and sends work emails outside of core business hours and struggles to provide friends and family accurate estimates of when she is expected to be “on-call.”
Which employee is more likely to feel as if she has enough time to effectively parent? Which is more likely to attend children’s activities consistently and without interruption?
Clearly, Sandra has a schedule that places a clearer division between work life and home life. A consistent schedule costs Sandra’s employer nothing and provides a stronger employee work-life balance.
5. Back-Up Childcare Assistance
Back-up childcare assistance gives employees a safeguard for when spouses get sick, schools close, and other unexpected issues arise.
For businesses, back-up childcare assistance is a highly effective and moderately inexpensive benefit.
Businesses partner with service providers to offer complimentary emergency childcare at an employee’s home or at the provider’s local location.
Companies can structure back-up childcare assistance benefits as they do sick days: Employees are entitled to a certain number of days but after are required to pay a partial fee of $25 to $50 per day for the services.
6. Flexible Childcare Spending Accounts
Flexible childcare spending accounts are a childcare benefit that provide employees choice and are highly effective and moderately inexpensive.
Dependent care flexible spending accounts (DCFSAs) can fund the care of children under 13 years old. Parents can withhold money from their paychecks before it is taxed in order to pay for preschools, nannies, and transportation costs. Employers can provide matching funds. This way, businesses can contribute to employees’ childcare without dictating how they spend their money.
Businesses can reduce employee turnover and improve worker performance by considering the costs and benefits of different childcare options and choosing to offer the programs that make the most sense for their employees’ lives and their company’s budget.
Provide Childcare Benefits Equally to Both Women and Men
All employees, no matter their gender, should have access to childcare benefits to ensure equal opportunities for advancement. Childcare benefits can provide an especially large and necessary morale boost to women workers.
Nearly 6 in 10 men (59%) believe people at their company have a fair chance to advance. Only 43% of women agree.
Offering childcare benefits can help reassure women, especially, that all employees have an opportunity to advance.
"Basic benefits like paid parental leave and back-up care make a huge impact on employee engagement"
“Basic benefits like paid parental leave and back-up care make a huge impact on employee engagement,” Braun said. Braun believes that many women “put themselves on the bench” because they don’t receive enough childcare support from their employers.
Braun says many women believe that balancing taking time off and paying for childcare makes advancing at work too difficult and contributes to their feelings that not everyone has the same opportunity to advance.
Both men and women value childcare benefits, despite the heightened importance of childcare benefits for women.
Robyn Flint, an insurance specialist at USInsuranceAgents.com, says that men appreciate the benefits of company-sponsored childcare help, too.
“If it means their spouse can continue to work and help financially support the family, it is a win-win,” Flint said.
Childcare is likely a valuable and appreciated benefit in a home in which both parents work full-time.
Offer Employees Childcare Savings Accounts
The specific childcare needs of every family are different. Businesses of any size can offer employees a dependent care flexible savings accounts (DCFSAs) to help working parents choose the childcare benefits that work for their family, though.
Both employees and employers can contribute up to $2,700 total to a worker's DCFSA. Businesses can partially or fully subsidize these tax-free contributions and provide employees a yearly savings account that can be used to pay for childcare-related expenses.
Thirteen percent of women (13%) are dissatisfied with the childcare services their company offers. Women are four times more likely than men (3%) to be dissatisfied with their company’s childcare options.
Women are more likely to hold strong opinions about the benefits that help their family because they are more likely to perform childcare duties.
For example, working mothers are 8 times more likely than men to look after sick children.
Childcare savings accounts are an effective option for businesses because they allow working parents to choose which benefits to use.
Imagine the experiences of Shelly, a small business owner. Shelly has a few employees who have children but does not have the substantial resources required to operate an in-office daycare or provide large cash subsidies to working parents.
Flexible savings accounts allow Shelly to contribute up to $2,700 per year to each of her working parents. She can also match a portion of an employee's $2,700 limit – offering to contribute $1,000 for every $1,700 an employee does, for example.
Her contribution level can also be adjusted based on her business’s profits, and her employees get to decide what benefits are most important to them.
Pedro Silva, co-founder and CEO of Küdos, a childcare benefits platform, says companies must offer benefits that are:
Dependent care flexible savings accounts are tangible because they provide measurable cash subsidies for employees to use.
DCFSAs are convenient because they allow employees to invest in the childcare that works for their family.
Ultimately, DCFSAs are effective. They reduce employees’ tax burdens and provide businesses a moderately inexpensive way to improve employee satisfaction regarding childcare benefits.
For businesses of all sizes, childcare savings accounts can improve employee satisfaction.
Offer Childcare Benefits That Fit Your Employees and Business
Childcare benefits are integral to reducing worker turnover for businesses and maintaining a sustainable work-life balance for employees.
Effective, affordable childcare benefits improve employee satisfaction and help them succeed. For women, childcare benefits prove that their company is committed to giving every employee a fair chance to advance.
Business must remember that:
- Not all childcare benefits cost the same: Some require major investment, and others simply require employer flexibility.
- All employees should be offered childcare benefits so that every employee — regardless of gender — understands they have an opportunity to advance.
- Dependent care flexible savings accounts (DCFSAs) are an effective way for large and small businesses to help fund the childcare each employee chooses.
With strong childcare benefits, businesses will retain their best workers and attract motivated new talent.