Are Workplace Benefits a Viable Solution to the Child Care Crisis?

On-site child care offers ease of access for families working in professions with traditional in-office structures. But this model often comes with schedule and capacity limitations and tends to be incompatible with employees who work nontraditional hours or who do their jobs remotely or in the field.

Yet this is far from the only model that exists.

Other approaches involve employers partnering with existing child care programs in the community to reserve slots for employees and a consortium model where multiple small- or medium-sized businesses come together to open a new child care program or partner with one that has already been established.

Some companies also offer “back-up child care” for employees who may need an alternative care option when their primary child care arrangements fall through — maybe their program is closed for a week during a school break or their caregiver is out sick. Back-up care is designed to fill child care gaps that occur unexpectedly, so as to avoid pulling the employee away from their job.

Then there are models that provide financial assistance to employees, such as offering pre-tax benefits like dependent care flexible savings accounts or providing monthly stipends to mitigate prohibitively high child care costs for families. This is what Dollywood is doing for its employees, contributing a fixed dollar amount each month toward child care, to lift some of that cost burden.

It’s not uncommon for employers offering on-site and near-site child care arrangements to also subsidize the cost of employees’ child care. Dan Figurski, president of the KinderCare At Work brand, which partners with hundreds of employers nationwide to help them build a customized child care solution, estimates the average employer contribution is about 20 percent of the cost of care, though KinderCare works with companies that cover up to 100 percent of the cost.

The idea of employers getting involved in child care has become more attractive for a number of reasons, most of which can be traced back to the pandemic.

In America, early care and education has long been treated as an individual responsibility. In a society that does not guarantee the right to early care and education the way it guarantees the right to a K-12 education, the onus falls to families to figure out where to find care, how to pay for it, and whether it’s high quality.

But the pandemic may have played a role in shifting the public’s mindset on this, with toddlers ambling into Zoom backgrounds and parents — primarily mothers — dropping out of the workforce to provide care during a time when it wasn’t widely available. These types of high-stress moments and difficult decisions were thrust into the foreground, making visible to many people who don’t have to think about it or haven’t had to think about it in a long time how little support this country provides to families with young children.

Employers are among those who saw these tensions first-hand and recognized the need for a better solution, not least because, for much of the last few years, companies have been struggling to recruit and retain qualified staff — a reality that exists, at least in part, because women’s participation in the labor force declined during the pandemic and is still recovering.

While considering how to fill open positions, many businesses, like the Dollywood Company, opted to begin offering child care benefits.

KinderCare has seen the company’s At Work program balloon since the pandemic began. In 2019, KinderCare worked with about 400 employers. Today, that number is about 600, including big corporations such as Google, Cisco and Walgreens. About 20 percent of the children enrolled across KinderCare’s 1,500 child care centers nationwide are from families whose employers provide child care benefits, according to company data.

“I’m not surprised about that at all, given the dynamic coming out of the pandemic,” Figurski says. “The employers we’re meeting with — why their interest has grown is they are having a hard time recruiting labor into their workforces.”

Plus, Figurski believes it’s a win-win.

“The people [using] a child care benefit today — they stay longer, they’re more engaged,” he notes. “The upside for the employer is retention. The upside for the employee is access to high-quality care.”

WeeCare, too, has seen rapid growth of its child-care-as-a-benefit program, which launched in 2021 and now includes more than 100 corporate clients serving a combined 300,000 employees, including Panasonic and the department store chain JCPenney.

“Families are desperate. What COVID did was put the brunt of child care issues on them,” Chang told EdSurge in 2021. “The missing piece to the equation was employers.”

While the pandemic raised the stakes for employers, it also helped transform the type of child care benefits many employees need and find attractive.

“On-site child care used to be THE thing,” Figurski says. “Now, people want more flexible arrangements.”

On-site child care is the most conspicuous manifestation of employer participation in child care — it’s a concept much more accessible to people than, say, flexible savings accounts and fixed financial contributions. It has also tended to serve a certain slice of the workforce — the staff who report in person to corporate headquarters during regular business hours, not the shift workers that undergird those businesses. The coalescing of those factors helps to explain why employer sponsored child care is a divisive topic in early care and education circles.

Today, the office staff of large corporations that could afford to host an on-site child care are still working remotely at least some of the time, making the convenience and overall appeal of those place-based offerings less potent.

Employers are adapting to that change. KinderCare’s Tuition Benefit offering, which allows families to apply their employer’s workplace benefit to any of the 1,500 KinderCare centers across the country, has seen a 40 percent increase in participation since the pandemic. So a remote employee of a California-based company that is partnered with KinderCare, for example, could take the same 20 percent tuition discount their colleagues are getting in California and apply it to the KinderCare center nearest their home in Houston.

Both Figurski at KinderCare and Chang at WeeCare are adamant that their employer clients are serving employees from all backgrounds and settings, not just the high-income professionals working at company headquarters.

Most employers coming to WeeCare for help, Chang says, are doing so because of acute staffing challenges in their lowest-paid positions.

“If you don’t have grocery store clerks, you don’t have a grocery store selling products,” Chang explains. “Most employers are looking at us to address the recruitment and retention of their essential workers.”

Chang describes one of WeeCare’s partners, a national retailer, whose greatest concern is filling the second and third shifts during the busy holiday season and on weekends.

KinderCare’s clients include a number of hospitals. In those settings, Figurski says, the target clientele of the child care benefit are nurses and administrative staff, not surgeons.

The highest-paid professionals — company executives and other management — are “finding other alternatives” to child care, Figurski says, suggesting that those individuals are hiring private nannies.

“For us, it’s about serving children and the community,” Figurski says. As evidence, he shares that KinderCare is working with Tyson Foods to build an on-site child care facility from the ground up in the small town of Humboldt in western Tennessee. The site will serve up to 100 children of the eventual 1,500 employees working at the poultry processing plant. “In most cases for us, it is not the executives,” he emphasizes.

And at the Dollywood Company, it was important to Berry and his colleagues that all staff be able to use the benefit, including the employees who operate the roller coasters, those who clean guest rooms and those who lead marketing and sales. That’s part of the reason the company moved away from the idea of an on-site program and teamed up with WeeCare.

Still, if workplace child care benefits are becoming more common and more inclusive, data shows that it remains a rarity.

As of March 2022, 11 percent of all U.S. workers had access to some kind of employer-provided child care benefit, according to the U.S. Bureau of Labor Statistics.

It’s even less common for lower-wage workers. Just 6 percent of the lowest-paid quartile of civilian workers in the U.S. had access to child care benefits. By comparison, 19 percent of the highest-paid quartile did.

The data only refers to “child care benefits” broadly, so we can’t know the exact types of benefits employers at different wage levels are receiving. But it’s clear that child care benefits of any kind are, for now, an exception, particularly for the lowest-paid workers in the U.S.

The debate surrounding employer participation in child care goes something like this:

On one end of the spectrum, proponents posit that until large public investment in early care and education comes through, encouraging employers to have “skin in the game” by supporting families is one of a number of acceptable solutions that will keep the sector afloat.

Many of these supporters are pleased to see employers waking up to the problems that families have been shouldering in private for decades. They, too, want big, system-wide change. But after early care and education was cut during Build Back Better negotiations (later passed under the Inflation Reduction Act) and Republicans won back control of the House in Congress last fall, they saw a narrow window of opportunity slam shut — at least for now.

For them, the sentiment that has emerged in its place is along the lines of, Let’s not let the perfect be the enemy of the good, and employer involvement, as they see it, is ultimately part of the good.

At the other end of the spectrum, those against employers’ involvement in child care argue that any stopgap solution is only diverting attention and resources away from the larger movement toward a better, publicly funded system for early care and education and may ultimately damage the long-term outcomes of that movement.

Hedgepeth from Child Care Aware believes that it’s far too early to judge the Biden administration’s actions around child care and CHIPS funding. But instead of assuming it will go terribly wrong for educators, providers and families, she leaves open the possibility that it could go quite well.

“It could potentially lead to what is the best thing we can do with employers — having a plan, working with community partners to map needs and understand child care supply, [whether it’s] on-site or near-site or subsidies or partnerships,” Hedgepeth says.

Her sense is that the system may in fact be so dysfunctional that once employers are awakened to the realities of it, they will align themselves with those advocating for a major system-wide change.

“Employers are already involved,” she says. “They’re seeing how it’s impacting employees. We know these [semiconductor] manufacturers are probably already thinking about child care, but getting their hands dirty, using these funds, probably takes this to the next step” of bringing them on as allies.

Bornfreund at New America says she sees both sides of the argument and understands the appeal of employer support around child care, but with history as a guide, she worries where it will lead.

“I don’t think we’ve had a great track record in the U.S. of starting small and just putting the good in place and actually going back to make fixes — real fixes — to make it better later,” Bornfreund says. “We have a history of settling for ‘let’s get something in place’ without then really going back and making it what it should be, or making it better.”

If our society — families, policymakers, the general public — accepts the idea of employers bearing responsibility for figuring out child care, she adds, then it’s easy to see how this workplace benefit will follow the trajectory of another: health care.

In the mid-20th century, health care in the United States emerged as a job-linked benefit due to a confluence of political and circumstantial factors following World War II. And it stuck. Despite numerous efforts in the decades since, all aimed at improving costs and outcomes for the public, most people in America still have private insurance through their employers. The result is a needlessly expensive, convoluted health care landscape that tends to lock people into their jobs and yet still leaves millions uninsured.

If child care goes the way of health care, Bornfreund says, “it becomes even more of a challenge to fix than if we’d done it right from the beginning.”

Since rolling out its child care benefit in 2021, Dollywood leaders have watched a growing number of employees take advantage of the offering, most often first-time parents and new employees who did not have an established child care arrangement.

“Once it’s socialized,” Berry says, “I think it’s going to eventually become the new minimum expectation. We’re trying to be ahead of the curve a little bit. And as we go along, we can think about how we can increase our participation in this.”

Heading into the partnership with WeeCare, Berry wasn’t sure what to expect from employee participation. Would 50 percent take advantage of the new benefit? Ten percent?

As the company comes to better understand who is using the child care benefit and why, they are open to growing and expanding it. Perhaps they will increase the amount of money going toward employees’ monthly child care stipend. Or maybe they’ll find that, down the road, they can justify an on-site program.

“It’s why we chose this option,” he says. “It’s a very reasonable entry point.”

What Berry doesn’t want the benefit to become, in its current iteration or in future ones, is a form of so-called golden handcuffs.

“We always want it to be an option for people and never an obligation,” Berry says about working at Dollywood, noting that he would not want the hosts to feel “stuck” there. “That’s certainly not what we’re trying to do. We’re just trying to meet their needs where they are.”

So far, based on the increase in staff retention Dollywood has recorded, Berry says the program seems to be working well in both directions.

“We’ll stick with it. We think it has some legs,” he says, adding: “There’s some momentum building around child care in our nation.”