Nov 10, 2020 - Economy & Business

The business case for child care

Illustration of an upward trending bar graph made of legos
Illustration: Eniola Odetunde/Axios

The coronavirus pandemic has exposed the inextricable link between child care and the economy — and it's pushing businesses to confront the cost of working parents' unpaid side gig.

The big picture: Child care is denting the workforce, preventing a huge swath of Americans from contributing to their firms and to the economy at large. To chip away at the problem, and protect their bottom lines, employers are bulking up child care benefits for workers.

  • "COVID has brutally revealed that child care is not just a family issue," says Alyssa Johnson, a VP at Care.com. "It's a business issue."

By the numbers:

  • Working parents — who make up about a third of the U.S. workforce — are losing an average of eight hours per week due to child care responsibilities during the pandemic, per Northeastern University research.
  • Even before the pandemic, inadequate child care was costing working parents $37 billion a year in lost income and employers $13 billion a year in lost productivity, according to Care.com's data.

What's happening: Companies across states and industries are bolstering existing benefits and adding new, creative ones to help their employees with kids.

  • New services: Citigroup is offering discounted test prep and tutoring to employees with school-age kids, reports Fortune.
  • Making connections: Home Depot and Dell have established support groups for working parents to swap tips or just vent.
  • Good, old cash: Many working parents are saying the best benefit is simply money, which gives them the flexibility to seek out the specific type of child care that makes sense for them. Bank of America and Deloitte, among other firms, are offering up to $100 a day in child care reimbursements during the pandemic.

Worth noting: Before the pandemic, on-site child care was considered the gold standard benefit, Johnson says.

  • Patagonia, which has offered in-house day care since 1983, has long been held up as an example. The company says employees who use its child care program have turnover rates that are 25% lower than other staff.
  • The pandemic has closed offices and, by extension, companies' on-site care centers, but, when things go back to normal, look for more companies to add this option as a perk to recruit and retain workers.

What to watch: "Employers benefit from a strong child care system," says Karen Schulman, director of state child care policy at the National Women's Law Center. "That being said, it's not necessarily the best solution to tie it all to the employer. We see this as needing large federal investment."

  • "But Congress has really left the child care industry to fend for itself," says Alicia Modestino, an economist at Northeastern. Day care centers got just $3.5 billion in aid under the CARES Act in March. Economists say they need at least $50 billion to stay afloat.
  • And parents need another round of stimulus checks for money to spend on child care, she says.
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