Workplace Trends
November 21, 2023

How the Child Care Crisis Hits Home in Every Business Sector

Prior to the pandemic, the United States already grappled with sky-high child care costs and unequal access to quality child care services. Unfortunately, the pandemic only exacerbated the child care crisis. As daycare closures went into effect across the country, working parents were suddenly responsible for balancing project deadlines with toddler care and “Zoom school” supervision. Many parents ended up cutting down on hours or leaving their jobs to balance caretaker responsibilities. 

Daycares were also hit hard by the loss of revenue, leading to the permanent closure of approximately 10 percent of centers. The industry was dealt another blow as federal funding abruptly expired for 220,000 child care programs on September 30. And this drop in funding had an immediate impact—the Bureau of Labor Statistics revealed the number of Americans who reduced their work hours due to child-care problems jumped sharply in October. All of this has culminated in a dire situation of child care staffing shortages and struggles for working parents who need to balance their professional and personal obligations. 

Caregiving demands anticipated to grow

Similar to the ongoing healthcare labor shortage, the child care shortage is only expected to continue—with caregivers fed up with inadequate wages, burnout, and dwindling support after the federal cuts were made. Today, turnover rates for child care workers remain as high as 40 percent in some states, with a gap of 500,000 positions nationwide as the industry struggles to recover from the pandemic. Many child care workers have already left the profession altogether, finding jobs with better wages and benefits at places like Starbucks or Target.

While many other countries provide subsidies to parents to pay for child care—which helps child care workers charge adequate tuition—the U.S. doesn’t follow suit. In fact, we trail almost every other developed country in terms of how much we spend on early education—a fact that leaves both child care workers and the families they care for in a lurch. 

How the current child care crisis impacts your business

It’s tempting to see child care as existing in a bubble, but in fact the implications for the current crisis affect every sector of business—making it imperative for employers to get involved. Just how dire has it become?

In 59% of households with children under 5, a parent or guardian has needed to either cut back on work hours or leave a job because they couldn’t find reliable child care within their budget. In places with a higher cost of living, such as New York City, 80% of families cannot afford childcare for children under five. This could exacerbate current shortages in many sectors. A report from ReadyNation forecasts that the child care shortage could cost $57 billion in revenue, earnings and productivity losses annually, for both employers and employees. 

Without supporting working parents, businesses will continue to see high turnover rates from working parents who either leave for jobs with more family-friendly policies, or leave the workforce entirely. 

Finding ways to support working parents

According to a KinderCare study, 60% of working parents would stay in their current jobs if they had subsidized child care and 55% said they would take a pay cut to work for a company that provided quality childcare. An additional 81% of working parents said a company’s child care benefits were a key criterion in the consideration of a job. Providing subsidized child care to your workforce may not be feasible, but there are plenty of family-oriented benefits you can provide that can move the needle on helping working parents. Whether you are actively recruiting or trying to retain your existing workforce, exploring these offerings can signal to employees that your company acknowledges the challenges of being a working parent and wants to help.

Flexible Hours

Flexible work hours empower people to tailor their schedules around personal needs. For parents, that may mean starting work earlier in the day and wrapping up in time for bedtime routines. It can also give parents the flexibility to attend school plays or sports games around work commitments. And when the inevitable happens and children need to stay home sick from daycare or school, flexibility allows parents to prioritize caring for their little ones and make up lost work hours later on.

Child Care Stipend

Even if you can’t offer subsidized childcare, offering a daycare stipend of any amount is helpful for parents. That can take the form of reimbursement at a particular daycare chain or offering a flexible spending account (FSA), which allows parents to use pretax dollars for tuition. For daycare businesses or schools, that could also include offering free child care for the children of employees. It is worth noting that businesses who can offer child care subsidies benefit financially from a major tax credit.

Faster Pay

Paying people a livable wage is one thing, but did you know that actually changing the pace of pay can be meaningful as well? Whether in the form of instant cashless tips, independent contractor payments, or earned wage access, providing faster payments improves cash flow for your workforce while also helping them handle unexpected expenses. Accelerating payments makes it easier for all workers to stay on top of essential bills—not just daycare payments—including keeping a car full of gas and groceries in the fridge.

Affordable Healthcare

Offering affordable healthcare benefits not only enhances employees' physical and financial well-being but can also be a reason that a professional says yes to a job offer. Ensure that you have plenty of options that cover the whole family, not just the individual employee, and account for those more-frequent trips to urgent care of after-hours clinics that parents of little ones know all too well. 

The bottom line

Regardless of your parental or guardianship status, the child care crisis affects us all. Business owners should support working parents and make family-friendly policies a standard part of their benefits package if they want to retain workers, foster a supportive environment, and maintain morale and productivity.

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