What to Know About the Growing Popularity of Employer-Sponsored Child Care

Early Learning

What to Know About the Growing Popularity of Employer-Sponsored Child Care

By Emily Tate Sullivan     Jun 13, 2023

What to Know About the Growing Popularity of Employer-Sponsored Child Care
Children playing at "the Eddy," an on-site child care center for Whirlpool employees in Benton Harbor, Michigan.

The last several years have served as one prolonged watershed moment for the early care and education sector.

The pandemic and its many aftershocks — including a hit to labor force participation among women and a severe early childhood staffing shortage — helped many Americans unacquainted with these issues begin to understand the integral role that early care and education play in economic and social stability.

Many employers became more aware of the challenges of raising children in the United States, where child care and early childhood education are not guaranteed and, in many places and for many families, are prohibitively expensive and inaccessible.

The national annual average price of child care in 2022 was $10,853. In some parts of the country, it can cost more than double that. A federal solution to this widespread and well-documented scourge has not emerged, though Congress came close to passing transformative legislation around child care in 2021. While other efforts have been proposed — and some have even passed — at the state and local levels, many working families are still left in the lurch.

As a result, some employers have stepped in, offering a range of child care benefits in hopes of attracting and retaining qualified workers in a tight labor market — the idea being that, if employees are happy with their child care arrangements, they will show up to work more focused and satisfied.

In a recent Care.com survey administered to leaders from 500 companies, 46 percent said they are prioritizing child care benefits in 2023. That probably has something to do with the fact that nearly 80 percent said they’ve found that child care benefits boost their company’s productivity, recruitment and retention.

But as far as solutions to child care go, is employer involvement a good one? Not everyone thinks so.

The growing popularity of this approach — and the controversy surrounding it — was the subject of a recent in-depth story that EdSurge co-published with USA Today, following interviews with a dozen early care and education providers, policy experts, advocators and employers, as well as a visit to an on-site employer-sponsored child care program.

Here are the key takeaways from that reporting:

1. Employer participation in child care is gaining steam.

KinderCare, a large for-profit operator of early care and education programs across the country, has seen its employer-sponsored child care program grow from 400 employer clients in 2019 to 600 today — representing a 50 percent increase. Those clients include companies such as Cisco, Google and Walgreens. Meanwhile, WeeCare, a network of mostly in-home child care providers, launched a concierge-style child care benefit service in late 2021, that now has more than 100 corporate clients.

Even the federal government is warming to the idea of employer-sponsored child care: In February, the Biden administration announced a plan that makes federal subsidies for semiconductor manufacturers contingent on companies’ commitment to providing child care assistance to employees.

2. Child care benefits come in many shapes and sizes.

On-site child care centers are a popular and visible approach to employer-sponsored child care, in which employers typically partner with a third-party operator such as KinderCare or Bright Horizons to build and manage a child care program in or near the facility where employees are centrally located. However, this is one of many models. Employers can also partner with established child care programs in their communities to reserve “slots” for employees. They can offer “back-up care” for employees when child care needs arise unexpectedly. And they can provide financial assistance to employees, via pre-tax benefits such as dependent care flexible savings accounts or monthly stipends to offset the cost of child care for families.

3. Families want maximum flexibility.

“On-site child care used to be THE thing,” said Dan Figurski, president of the KinderCare division that helps employers build out child care benefits. “Now, people want more flexible arrangements.” Today, many of the employees who once reported in person every day to company offices are now working remotely some or all of the time. As a result, on-site child care has lost some of its convenience and appeal. KinderCare’s Tuition Benefit program, which allows families to use their workplace benefits at any of the 1,500 KinderCare centers across the country, has seen a 40 percent increase in participation since the pandemic began. Financial benefits such as stipends toward the cost of child care seem more likely to prosper in this new era.

4. Workers have unequal access to child care benefits.

One of the arguments against employer-provided child care is that, like other job-linked benefits such as health care, it is typically available to some — not all — employees. A part-time worker likely wouldn’t get to take advantage of their employer’s child care benefits. People who work nontraditional hours — say a construction or health care worker on the night shift — are also less likely to be offered child care that meets their needs. Historically, job-linked child care benefits have been available to white-collar employees, not shift workers.

Some people — employers and child care operators among them — would argue this is changing. The Dollywood Company, which runs a theme park and resort in eastern Tennessee with 3,800 employees, offers monthly financial assistance for child care in lieu of an on-site center so that the benefit could be available to all workers, from the ride operators to accountants, regardless of their hours.

Still, data from the U.S. Bureau of Labor Statistics shows employer-provided child care benefits remain rare among low earners.

5. This approach is not embraced by all.

Employer-sponsored child care is an idea that has split the early care and education sector in recent months. One faction of the field believes that it is an acceptable solution in the absence of a perfect one, and that it will suffice while they wait for the large public investment that many have been advocating for for years. The other feels that employer involvement could distract and detract from the push for a new, better system.

Elliot Haspel, author of “Crawling Behind: America's Childcare Crisis and How to Fix It,” put it this way in a recent essay in the Atlantic: “As America learned with health care, if we get used to a service being tied to employment, that idea can become entrenched and very hard to change. Today’s stopgap measures become tomorrow’s status quo. Marching down such a path will make it even harder to gain the momentum needed to build and fund a child-care system that works for everyone.”

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