Report: Only 6% of US companies offer comprehensive child care benefits
| February 27, 2020
According to the latest data from the U.S. Bureau of Labor Statistics, 33.6 million U.S. families (around 40%) have at least one child in the household under the age of 18. (This doesn’t include grandchildren, nieces, and nephews.) In 90.8% of these families, the BLS reports that at least one parent is employed — and among married couples with children, 63% of households have two working parents.
However, a new report by Clutch reveals that only 6% of U.S. companies offer significant child care benefits. The report also reveals that the average annual cost of daycare for one infant or toddler is $11,666 — but it could be much higher depending on location.
Why so few companies offer child care benefits
It turns out that a lot of companies do offer something. “Many companies (60%+) offer moderately inexpensive child care benefits, such as Dependent Care FSA,” explains Pedro Silva, co-founder and CEO at Küdos, which offers an employee-sponsored solution to make child care and education affordable.
However, he says these benefits tend not to be well-publicized, so employees don’t know about them. “Additionally, such benefits alone hardly make primary care affordable to families, who have been facing increasingly expensive child care options,” he says.
At the other end of the spectrum is the 6% of companies that offer the type of benefits that can truly help working parents, such as on-site care facilities.
How the lack of child care benefits affects parents
“Child care benefits, when relevant and material for families, are very effective in attracting and retaining talented professionals, sustaining productivity, and keeping careers’ momentum,” says Silva. “As a result, the workplace morale increases across the employee base.” That’s because parents view child care benefits as a sign that the company cares for them and their families, and this increases loyalty.
However, failing to support working parents produces other, very negative, effects. According to Silva:
- 27% of mothers quit working to raise their kids; 10% of fathers do so.
- In addition, 40% of mothers switch from full-time to part-time jobs.
- 63% of parents say child care costs play a central role in their career decisions.
And women are more likely to have stalled careers as a result of their role as primary caregiver. Among single women (who rely on one income), both child care costs and career limitations are more acutely felt.
Types of child care benefits
Silva says it’s important to note that there’s no such thing as “good” vs. “bad” child care benefits. He admits that there are many ancillary benefits that may not be enough to keep working parents at a particular company. “However, companies who build robust ‘stacks’ of child care benefits can achieve meaningful impact,” Silva says.
Clutch outlines six different types of child care benefits that companies can offer:
Child care subsidies: direct payments to employees with children, or payments to select care centers/child care workers.
On-site child care: a company-sponsored child care facility either at or near the employee’s office. This can be achieved by contracting child care services from an outside firm, operating an in-house team, or offering complementary services to employees. One example is Cisco, which contracts services on-site to Kindercare. Children six weeks to five years old have daycare services. School-aged children can utilize after-school and summer programs.
Flexible employee schedules: letting employees determine their own work schedule is an inexpensive child care benefit compared to subsidies and on-site child care.
Predictable employee schedules: another inexpensive option. For example, an employee/parent is on call and in the office from 8:30 a.m. to 6:00 p.m., Monday through Friday. However, there is no expectation that the employee will work outside of those hours — this includes responding to phone calls and email or text messages.
Backup child care assistance: as opposed on ongoing child care, the company partners with service providers to offer emergency child care at an employee’s home or the provider’s local location. Backup child care assistance would be used when schools close, or there are other types of unexpected issues. Clutch recommends structuring this like sick days. Employees can utilize a certain number of days, but after reaching the limit, they would pay a partial fee for the service (like $25 to $50 a day).
Flexible child care spending accounts: With dependent care flexible spending accounts, parents can have money withheld from their paychecks (before taxes) to pay for such things as preschools, nannies, and transportation. Employees can provide matching funds.
“The government has made some progress in enabling businesses to support their working parents through tax incentives over the past decades,” says Silva. “At Küdos, we’ve developed tax-efficient, convenient and effective solutions so that companies can get the highest ROI from providing meaningful child care benefits to working parents.”
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