The Great Resignation is still in full swing, with over four million American employees quitting their jobs in January 2022 alone. The phenomenon has left many employers scrambling to find a solution. Employee retention is a bigger struggle than ever, and competition between employers is fierce.
Despite what some claim, employees aren’t leaving to do nothing. The surplus of employment opportunities leaves skilled workers with plenty of options, and many are leaving for better pay, more flexible hours, and more attractive benefits.
In order to compete, your company might need to improve the benefits you offer. One of the biggest demands is for child care benefits. Let’s explore if offering child care benefits to employees is right for your company.
Why offer child care benefits for employees?
Raising children is expensive. While maternity and paternity leave benefits are helpful in the early stages of childhood, where does that leave parents for the next ten to fifteen years that their children need to be cared for while they work?
Daycare costs are highly dependent on where you live, but the average cost per year per child is around $12,000 for infants and $10,000 for toddlers. The cost goes down a little for older kids, but not by enough to relieve the immense financial pressure involved.
If you’re paying an employee $50,000 per year but not offering child care benefits, that can mean they’re forced to relinquish 20% or more of their paychecks just so their child has a place to go while they earn money. This can be devastating to both morale and productivity. It also might make your employees seek out different opportunities.
Working parents are already heavily favoring companies that are adapting to their needs. Major employers are catching on. Companies like Citi, Goldman Sachs, Intuit, Intel, Patagonia, Microsoft, Google, and Best Buy all offer some form of employee child care. It’s likely this list will continue to grow. Those that don’t offer care might get left behind.
What do child care benefits cost companies?
There’s no one answer to the cost of offering child care benefits. It varies based primarily on the size and scale of your company and the level of benefits you decide to provide. You have options.
Before we explore these options, remember that money put into these benefits should be looked at as an investment rather than a burden. Offering high-quality child care benefits attracts a larger pool of employees, boosts company morale, and helps prevent turnover. All of these things benefit your company finances in the long run, so the cost might be less than you think. The IRS will also reward you for your effort.
Tax breaks for offering child care benefits
Paying for child care benefits may feel like a lot of money out of pocket, but the federal government does offer a major incentive: tax breaks. The IRS allows businesses to claim 10 to 25% (or up to $150,000) each year when they pay directly for childcare expenses. This can make a huge difference.
Types of employer-sponsored child care benefits
You might be envisioning a full-on daycare facility in your workplace, and while that is an option, it’s far from the only one. Most companies still offer no childcare benefits at all, so anything is better than nothing. Providing childcare for employees takes many forms, so let’s explore a few options.
Yes, on-side childcare is expensive, but it can be your best option. While it might be a hard sell for the bosses upstairs, employees absolutely love it. Not only is it easy and convenient for parents, who can avoid adding a trip to a third-party daycare as part of their commute, it also gives your employees the rare opportunity to interact with their kids during the work day.
This model is working out extremely well for some companies. Patagonia, for example, has maintained a 100% return to work rate for women who have given birth while employed over the past five years. This compares to a 79% average at other companies.
Some companies contract services from outside companies, while others choose to staff their in-house facilities themselves. It all depends on your company and your needs. If your office space is sparser thanks to a new hybrid scheduling policy, consider converting the extra space into a daycare facility. If space is tight, consider a facility in a neighboring building. Regardless, daycare benefits will be appreciated.
A simpler and less expensive way to offer child care benefits is through subsidies. This is mainly done in one of two ways. Some companies offer direct payments for a specific amount to employees with kids, and those employees can do what they want with the money. Other businesses partner with specific child care facilities to share the cost of enrollment. Many facilities offer child care corporate discounts, so ask around.
Childcare friendly scheduling
How about a schedule that benefits more than just parents? A recent survey by Bankrate showed that 55% of working adults care more about a job with flexible scheduling than before the pandemic.
For parents, the reason is obvious: they can work around their kids’ needs rather than the rigid demands of a traditional schedule. In some cases, they can work while kids are in the house, so no external care is needed.
Workers who aren’t parents love flexible scheduling too. Flexible schedules are more conducive to travel and allow workers to create a schedule that works for them. It builds trust between employer and employee. It also might cost your company nothing. After all, if the work is getting done, it may not matter when and where it happens.
Back-up assistance for childcare
Back-up assistance is essentially an extension of paid time off that applies in case of extenuating circumstances. If a family member gets sick or hurt, schools close for weather-related events, or some other emergency occurs that stretches workers beyond their allotted PTO, this can act as a safeguard.
Back-up assistance is an inexpensive option that gives flexibility to parents, but it might not be enough of an incentive to parents who still have to pay for daycare most days. However, it does benefit employees who aren’t parents. Not all family emergencies are child-related. Alternatively, you can give your employees more PTO from the start.
Flex spending accounts for childcare
Like back-up assistance, flex spending accounts are more of a perk than a full-on child care benefit, but they can come in handy for parents. Essentially, parents can opt to have money withheld from their paychecks before being taxed to pay for child care expenses. Employers often match opted-in funds. The money has to be spent on child care-related expenses.
Choosing the right childcare benefits for your company
The options outlined above aren’t the only possibilities, so we encourage you to get creative and think about the needs and resources of your company. One of the best ways to choose the right type of child care benefits is to analyze the needs of your employees.
Talk to your employees about what would work best for them. Chances are, you’ll be able to compromise on a form of corporate child care benefits that makes everyone happy.
Let CCA support your team
Offering child care benefits to your employees is a wonderful way to offer support, but it’s only one part of the equation. One of the most common elements of care provided by Corporate Chaplains of America is to help employees navigate family relationships, especially in the areas of parenting and marriage. CCA offers 24/7 chaplain services to you and your team, so everyone gets the individual support and care they need.
Contact Corporate Chaplains of America today to learn more about what we can do for you.