Why On-Site Child Care Isn’t Catching On

Why On-Site Child Care Isn’t Catching On

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. …

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The ROI of On-Site Child Care

The ROI of On-Site Child Care

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.

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