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Companies worldwide learned important lessons in 2020, from figuring out how to operate in a completely remote world to recognizing the importance of creating a psychologically safe workplace during these times of historic civil unrest.
But there’s one more lesson that companies need to take away from the last year: understanding how much our economy is dependent on the availability of childcare.
When the pandemic forced daycare centers, schools, and camps to shut down, we saw the negative impact on our working parents. It brought to light how much the childcare benefits companies choose to offer (or not offer) can profoundly impact both employees and employers alike.
For many parents working from home during the pandemic, the lines between work and home have blurred — they were suddenly tasked with playing the role of teacher, coach, babysitter, and entertainer for their children simultaneously, all while trying to remain productive at work. As a result:
- 57% of mothers and 32% of fathers of kids under 18 reported worsening mental health during the pandemic.
- 52% of employed parents with children younger than 12 in the household say it has been difficult to handle childcare responsibilities during the COVID-19 outbreak.
- Roughly 1 in 5 parents said that they had to change or reduce work hours due to shifts in school or childcare as a result of the COVID-19 crisis, while another 7% had to leave a job altogether.
Even as the world returns closer to normal, childcare will continue to be essential in the workplace — whether it’s in a remote, hybrid, or in-person setting. In this guide, we’ll explore the value that childcare benefits offer and explain why every HR leader should consider offering childcare benefits to their own organization.
Why childcare benefits matter in the workplace
Childcare benefits typically involve giving employees a budget or reimbursing an employee for services like babysitting, backup childcare, or on-site daycare centers. However, the definition has expanded over the last few years to accommodate a more flexible range of offerings — whether that’s providing educational resources for children, offering coaching services for parents, or guiding families toward smarter healthcare decisions. Regardless of the specific offering, there are many reasons why childcare benefits play such a critical role in the workplace.
Provide financial relief to working parents
Benefits are evolving, and offerings like comprehensive medical, dental, and vision coverage are only a piece of the puzzle. Working parents rely on their employers for childcare support, especially in mid to senior-level roles, for a variety of reasons.
U.S. employees receive little to no support on childcare
In most advanced economies, childcare is typically paid for by families, the government, and the private sector. That’s not the case in the United States, where 55% of working families with children under age five are paying for childcare. Despite this, only 4% of U.S. companies currently offer a subsidized child-care center or program for their employees.
The cost of childcare is out of reach for most families
Childcare services are expensive. According to the U.S. Department of Health and Human Services, childcare is considered affordable if it costs families no more than 7% of their income. The reality? A family making the state median income would have to spend 18% of their income to cover the cost of childcare for an infant and 13% to cover the cost of a toddler. This makes high-quality childcare inaccessible for many working families, especially when they don’t receive support from their employer.
Financial stress is harmful to working parents
The lack of financial support for childcare can negatively impact the health and wellbeing of working parents — such as causing sleep disorders and elevating blood pressure. The health problems that come from financial stress cost employers an estimated $250 billion per year in lost productivity and absenteeism.
As a result of the pandemic, more than one in three women are considering downshifting their careers or leaving the workforce altogether, with a majority citing childcare responsibilities as the primary reason.
Give women more opportunities for advancement
While childcare benefits are important for all working parents, they’re especially impactful for the women in your organization. Here’s why:
Women continue to carry the burden of childcare
Despite improvements in past years, women still carry the bulk of the burden of childcare, especially in underrepresented racial groups. Mothers are 28% more likely to experience burnout than fathers due to unequal demands of home and work. And underrepresented racial groups are even more likely to experience burnout: 33% of Black mothers are experiencing burnout, in comparison to 25% of white mothers.
COVID-19 triggered the first “female recession”
As a result of the pandemic, more than one in three women are considering downshifting their careers or leaving the workforce altogether, with a majority citing childcare responsibilities as the primary reason. By not providing the appropriate resources in today’s extremely stressful world, companies are inadvertently pushing working mothers out of their jobs.
Invest in your employees for better business outcomes
Offering childcare benefits isn’t only good for your working parents. This investment can also have a positive impact on business outcomes, such as the ones we highlight below:
Employees who feel supported are likely to stay
There’s a growing appetite for childcare support among employees, affecting whether or not they want to stay with an organization. In fact, the Journal of Management found companies that introduced childcare benefits had lower collective turnover rates for female employees in subsequent years.
Considering it can cost around 33% of an employee’s annual salary to hire a replacement if that employee leaves, retaining parents in the workplace can pay for itself. Compare this to the average amount paid annually for childcare benefits, which is around $1,600 per employee.
Childcare benefits directly impact the bottom line
There’s a direct link between childcare benefits and your bottom line. A report by Ready Nation and the Council for a Strong America found that employers lose about $13 billion in potential earnings, productivity, and revenue during a typical year due to inadequate childcare resources. On the other hand, companies that invest in employees and their families see 5.5 times more revenue growth thanks to greater innovation, higher talent retention, and increased productivity.
Diversity correlates to better performance
Family-friendly benefits have also been shown to improve diversity and inclusion in workplaces. You’re also more likely to attract diverse candidates who are looking for inclusive, equitable benefits, especially LGBTQIA+ families. This, in turn, can improve the financial performance of an organization on measures such as profitable investments at the individual portfolio-company level and overall fund returns.
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