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Can employers solve the child care crisis?

The Cariloop Team | February 21, 2024

By: Lee Hafner, Employee Benefit News

For working parents, a lack of affordability and a provider shortage have made finding quality child care challenging at best, and nearly impossible for many. With too few resources available, a desperate workforce is turning to their employers for anything resembling help. Are employers up to the challenge? 

Sixty-seven percent of parents spent at least 20% of their household income on child care last year — up from 51% of parents in 2022, according to Care.com. Child care payments have gone up 32% since 2019, according to the Bank of America Institute, and Care.com data shows the average monthly cost for a nanny is $3,190, while a daycare center spot costs parents an average of $1,230 each month.

For many employees, the numbers don’t add up. A 2023 survey from Motherly found that over half of mothers have considered leaving the workforce due to the cost of child care. For employers, the impact of these resignations would be substantial: The total cost of turnover can range from 90 to 200% of an employee’s salary, according to the Society of Human Resource Management.

“As organizations think about the cost of business and about their retention strategies, it’s critical that they contemplate child care,” says Michelle McCready, deputy executive director at Child Care Aware of America. The organization, which has branches nationwide, helps families find quality child care within their communities and advocates for policy changes around child care funding. “Employees are looking for flexibility; they’re looking for a supportive environment. The role that employers can play in helping stabilize child care for families is really important.” 

A financial strain on everyone

Yet cost is just one piece of the puzzle. Access is often at a minimum due to pay disparities for early education teachers and daycare workers, who often don’t make enough to live on: Salary.com reports the average hourly wage for a child care worker is $19, while the average hourly wage for an elementary school teacher ranges from $25 to $37. 

The pay discrepancy is a major part of what is keeping people from joining the industry, and is leading to exhaustion for those who stay. Recent data from the BLS found that as of September 2023, the child care industry was short 39,400 workers, and one in two early education teachers reported a high level of burnout, according to a survey from Teaching Strategies. None of this makes finding affordable, well-staffed child care facilities easy for parents.

“Early childhood educators do incredibly important work, but we see them leaving the field because it is not a livable wage,” says McCready. “Providers are losing spots within their programs because the math doesn’t work for them. The parent fees don’t cover what it costs to pay their teachers adequately. It shouldn’t come down to a parent having to pay more — public investment and conversation needs to be part of the equation.”

The federal and state funding provided as part of pandemic relief efforts — $24 billion was devoted to child care centers as part of the 2021 American Rescue Plan Act — worked to preserve the system, McCready says. However, the funding ended in September 2023, and reinstating assistance at some level is a major focus for Child Care Aware of America. McCready reminds employers that their voices are an important part of positive policy change as well. 

“Nobody can work if they don’t have the child care they need,” she says. “It’s a problem for businesses, communities and the economy as a whole. Businesses have a role to play in advocating for public investment from the federal government; they have an incredibly important story to tell about the impact. It’s a retention issue, a human issue, but also they can advocate in the policy space.” 

Child care solutions that work

To support working parents directly, employers can offer access to caregiving platforms, which can be used in a pinch, as well as for long-term child care planning. Employer caregiving benefit platform Cariloop, for example, provides care coaches who specialize in guiding members through their caregiving journey. To round out access to quality child care, they recently partnered with UrbanSitter, a platform that brings together community-based provider listings and client reviews to help parents make confident decisions about the best care option for their children. 

“Offering a Caregiver Support Platform® with a coaching model is critical,” says Julie Devine, Cariloop’s chief growth officer. “Some caregiving journeys are simple — they can be handled digitally — some are very complex and they need a one-on-one expert guide to get them through the phases.”   

Of UrbanSitter’s more than one million registered providers nationwide, 70% offer child care services. Employees can save time on research with features such as entering in their family’s specific needs, reading reviews and finding out if providers were hired more than once by other families. When their regular child care falls through, quick access to a reliable substitute can mean the difference between being able to work or calling out. 

“Providing a benefit that helps families find care when they need it, especially in those critical patch times — whether it’s a nanny cancellation or a couple of weeks when you’re in between daycare and preschool — engenders goodwill from employees and increases retention,” says Lynn Perkins, UrbanSitter’s CEO.  

Perkins also recommends providing flexibility with when and where employees can work, as well as robust PTO.  A recent report from McKinsey found that 78% of women said the opportunity to work remotely is second on their list of most important benefits, and 68% said control over when they work ranks third. When flexibility is not an option, offering employees the ability to switch shifts when a need arises can be a good substitute.  

Caregiving stipends are also greatly appreciated by employees, and have increased effectiveness when employees have the autonomy to use them for any care needs they may have, versus employer-defined parameters. Most importantly, employers should be broadcasting the benefits available as part of employers’ recruitment strategies, and consistently reminding parents already in their workforce of these resources provided or recommended by their organization.

“Employers should post [their child care offerings] in all of their recruiting efforts because not all companies offer these things,” says Perkins. “Also, make sure managers are aware of the benefits so that when an employee comes to them and says, ‘I’m contemplating what we’re going to do when I return from paternity leave,’ you’re putting it forward so that you get the most utilization.” 

To ensure discussion is not always coming from the top down, peer-to-peer gathering opportunities such as parent Employee Resource Groups can make a workplace more family-friendly. By adding these into the mix of existing benefits and communication efforts, employers can create a holistic support system and give their working parents confidence that what matters to them also matters to their organization.

“Employers have a responsibility to bring awareness to the challenges [of child care], make them OK to talk about and help solve them,” says Devine. “You don’t even consider joining an employer if they’re not offering medical insurance because you can’t work if you don’t have basic healthcare. The same is true for child care. Make room at the table for these discussions, because without solving this problem for your workforce, you’re not offering the benefits that allow them to work and focus.” 

Article originally appeared on Employee Benefit News.