Why more companies are considering employer-based child care benefits

WASHINGTON (SBG) — President Joe Biden and congressional Democrats are pushing investments in early childhood education as a critical component of the Build Back Better agenda. But outside Washington, there's a growing focus on the role of employer-provided child care as a benefit to make the service affordable, while attracting and retaining workers.

"I think it's fantastic that our lawmakers are pushing for more public subsidies. But that is not going to solve the overall issue," explained Alessandra Lezama founder and CEO of TOOTRiS, a digital platform that helps employers provide child care benefits.

"We need the entire community, especially employers, to step up to the plate, given that we recognized, especially through the pandemic that child care is not just a family issue, it's a business issue," she said.

Before the pandemic, employers lost nearly $13 billion every year due to absenteeism, workday adjustments and resignations related to child care needs. At the same time, parents have borne the brunt of the cost, paying $16,000 per year for children under 5, according to some estimates.

The pandemic brought the child care crisis into sharp focus as parents struggled to balance work and caretaking responsibilities. Women dropped out of the workforce in droves and were more than twice as likely as men to leave work to look after children.

Lezama noted the No. 1 way to get women back into the workforce is for employers to provide child care options. "Second to health care, child care benefits are on the 'I need' list of working parents, especially those women that left the workforce directly due to a lack of child care."

Businesses have long recognized the need to provide the benefit. Yet only 7% of employers offered child care to employees before the pandemic. Now, as more than three-quarters of businesses report difficulty hiring and many struggle to retain talent, employers are showing greater interest in child care.

A recent study by Care.com found growing recognition among 89% of employers that benefits, like child care, are an important part of a company's culture post-pandemic. According to the same study, 73% of all U.S. workers care for a child, a parent or a friend, yet less than one-fifth said their employer provided child care benefits. The lack of benefits has fueled job dissatisfaction, particularly among working mothers.

"We cannot move fast enough for the demand we see coming to us," Lezama said. "This is the subject of conversation and action in every organization that we have encountered. ... They are immediately attracted to this type of benefit and are in a big hurry to roll it out."

Lezama developed TOOTRiS in 2019 to connect businesses and working parents with a network of providers. She explained that the model of on-site facilities or employer contracts with a few providers was unsustainable for small companies and undesirable for parents who wanted options. TOOTRiS currently has a network of over 175,000 child care providers in 46 states. On average, the companies she works with provide $6,000 in benefits annually to employees.

Much of the attention of the Biden administration is around federal investments in child care. The Build Back Better agenda sets aside $400 billion to invest in universal pre-K for 3 and 4-year-olds. It would also cover a subsidy to ensure low and middle-income families don't pay more than 7% of their earnings on child care. The bill does not expand tax credits for companies that provide child care.

Lezama warned that the federal investment would not be a "silver bullet." She emphasized the need for companies to take a more robust role and noted that federal tax credits would provide a needed incentive for employers to provide the care working parents need.

The $1.85 trillion social spending plan is currently stalled in Congress. President Biden and Democrats are eager to pass it but it's unclear if they can rally the support among members of the party. The Senate cannot afford to lose a single Democratic vote and the House can only lose three.

Senate Democratic leaders have said they aim to pass the bill by Thanksgiving. Given the stumbling blocks during recent negotiations, it's unclear if they will meet that deadline.