The high cost and limited availability of child care is one of the major burdens facing working families today, particularly in the US, but also in the UK and other countries: Parents are spending a sizable chunk of their incomes on child care, making career decisions based on these costs, and sacrificing earnings by pursuing flexible schedules or part-time work in order to make more time to spend with their children.
Unable to afford full-time child care, many mothers (and it’s almost always mothers) are forced to work part-time or drop out of the workforce entirely to take care of their children, especially when they have more than one. Because responsibility for child care still falls predominantly on women, this factor contributes heavily to the gender pay gap.
In the US, a historically tight labor market is driving employers to reckon with this problem, now that they are feeling it more acutely than ever, Jennifer Levitz reports at the Wall Street Journal. Levitz hears from employers around the country that are increasingly concerned about retaining female employees amid a dearth of child care options and have begun to look for ways to expand these options for their employees, including lobbying state governments for legislative solutions. Some coworking spaces have also experimented with child care programs as a benefit for their members.
The gold standard of child care benefits are on-site facilities, such as Patagonia famously offers at its Ventura, California headquarters and its Reno, Nevada distribution center. While these services are expensive to implement, Patagonia maintains that this investment nearly pays for itself between tax incentives, better retention, and lower turnover. From an employee perspective, on-site daycare is the family benefit most preferred by employees all over the globe, according to our research at CEB, now Gartner. This is particularly true in the US, where employees are twice as likely as in other markets to say they would prefer on-site daycare over a 5 percent increase in pay.
As the coworking market grows, we’ve seen vendors experiment with some quirky innovations, combining flexible workspaces with gyms or restaurants. But as they look to expand beyond their traditional client base of freelancers and startups and pitch their services to large organizations as well, coworking vendors may face greater demand for the kinds of structure and benefits employees tend to expect from a traditional office—such as the protections that come with a dedicated HR function.
On the other hand, some coworking programs in the New York City area are now offering something most US employers don’t: namely, child care. Last month, Ronda Kaysen at the New York Times Real Estate blog took a look at how these programs were trying to combine flexible workspaces with child care arrangements for independent working parents:
At the Workaround, members pay $150 a month for about 15 hours a week of desk time at Rough Draft, a Williamsburg co-working space. (The program rents four desks a month from the co-working company and divides the hours among its members.) Members also participate in a babysitting swap, earning babysitting credits for the hours spent watching one another’s children. …
Child care expenses are an onerous burden for many working parents, most of whom wish their employers would provide child care benefits. Patagonia, which offers on-site child care at its Ventura, California headquarters and its Reno, Nevada distribution center, is a high-profile advocate of this benefit: Factoring in tax credits, decreased turnover, and engagement gains, Patagonia calculates the return from its child care program at 91 percent of its costs, while other organizations have found such programs to have positive returns. Why, then, Rebecca Greenfield asks at Bloomberg, is the number of employers who offer this benefit small and declining?
[U]nlike other family-friendly benefits that are on the rise—such as paid parental leave—on-site child care is on the verge of extinction. Only 3 percent of organizations offer unsubsidized day care services, according to the Society for Human Resource [Management] 2016 benefits survey. That figure is down from 9 percent in 1996. “It certainly would be an advantageous benefit, I think, that many people would enjoy having,” said Tanya Mulvey, a researcher at SHRM. …
The latest survey from Care.com sheds light on how the cost of child care affects American families in terms of its impact on their debt burdens, retirement savings, and career choices. More than half of the families surveyed (54 percent) said they were spending more than 10 percent of their income on child care, while one in five said they spent more than a quarter. Rachel Gillett at Business Insider highlights some other salient findings, including several that could be of concern to employers:
- 67% of working parents overall say that child care costs have influenced their career decisions, while 72% of young working parents say the same thing.
- 43% of parents say they feel they have to work harder to make more money to cover child care.
- 34% of families say they worry about job security and the cost of care’s impact on their families financial future.
- 85% of working parents say they wish that their employers would offer child care benefits.
- 74% of families say their jobs have been impacted because their child care plans have fallen through. This resulted in having to use a sick day (78%), falling behind on work (37%) and even losing a day’s pay (28%).
The most common ways working parents say child care affects their careers are when they ask for flexible work schedules to save on child care, change jobs to increase pay, and switch from full-time to part-time in order to also save money, the Care.com survey found.
With the cost of child care increasingly out of reach for many working parents, Alissa Quart, executive editor of the non-profit Economic Hardship Reporting Project, writes at Time of a widening inequality between families that can afford child care and those that can’t:
Child care is a major concern for working families in the US, many of whom struggle to afford it. Employers who want to help ease this burden for the parents on their payroll might like the idea of on-site child care facilities in theory but worry that they’re too expensive to introduce. However, at Fast Company, Patagonia CEO Rose Marcario runs the numbers and argues that her company’s child care benefit is almost entirely paying for itself. Here’s how:
The federal government recognizes the value of on-site child care to both working parents and the economy, and grants a qualified child-care program a yearly tax credit of $150,000. In addition, the government allows a company to deduct 35% of its unrecovered costs from its corporate tax bite. To date, costs after revenues (tuition fees) for running Patagonia’s child development center are approximately $1 million. With a yearly tax deduction of $150,000 and a second deduction of 35% of costs (35% of $1 million = $350,000), that’s a total of $500,000 in costs recouped, or 50%.
Turnover costs (of losing an employee and training a replacement) include lost productivity while the position is vacant, plus recruitment, relocation, and training time. This can range from 35% of annual salary for a non-managerial employee, to 125% of salary for a manager, to a couple of years’ pay for a director or vice president. In the United States, 20%–35% of working mothers who give birth never return to their previous job.
At Patagonia, for the past five years, we’ve seen 100% of moms return to work after maternity leave. Moreover, the availability of on-site child care remains important for allowing mothers to breastfeed infants on demand. For the past five years, our turnover rate for parents who have children in the program has run 25% less than for our general employee population.