Should Your Organization Consider Offering Onsite Childcare?

Childcare — or the lack of it — is increasingly becoming a factor that prohibits some parents from joining or staying at an organization.

As return-to-office (RTO) mandates continue to pick up steam and COVID-19-era childcare subsidies fade out, many businesses are feeling the pinch when employees or job candidates cannot access childcare.

Some employers are deciding to do something about it.

While onsite childcare currently is a benefit offered at only a small percentage of companies, more organizations are exploring or introducing the option. Walmart is a recent example, while others, such as Mattel, have offered onsite childcare for years.

“We’re still seeing RTO mandates pick up, and childcare is a ‘sticky’ benefit to get people back in the office day after day,” said Melinda Izbicki, a senior principal for health and benefits, and leader of the caregiving vertical at Mercer. “We’re seeing a lot of employers considering creating their own access because they’re not necessarily satisfied with the access they’re seeing broadly.”

Why to Consider Onsite Childcare

Working parents face a childcare “trilemma” — access, affordability and quality, said Priya Krishnan, the chief transformation officer at Bright Horizons, which partners with employers to offer childcare and other care benefits.

“More and more employees are speaking up and asking for these benefits — and leaving their jobs to find companies that will provide them,” Krishnan said.

In fact, 78% of working parents are more comfortable bringing up family-related responsibilities with their employer, and 70% consider benefits that support work-life balance “non-negotiable,” according to a study commissioned by Bright Horizons.

“In tight labor markets, offering onsite childcare is certainly a recruitment and retention tool for those with young children or those planning to start a family,” said Julie Stich, CEBS, the vice president of content at the International Foundation of Employee Benefit Plans (IFEBP). She cited benefits such as a simpler commute, improved work-life balance, access to childcare at below-market rates, reduced worker stress, increased opportunities for career development and boosted employee morale.

Lack of access to childcare, or an inability to afford care, is a major contributor to working parents’ stress — and employers can help, according to “Parents Under Pressure,” the U.S. Surgeon General’s annual advisory on parents’ mental health and well-being.

“The employer-sponsored childcare model is a viable step toward rebuilding our nation’s childcare infrastructure,” Krishnan said.

But there are a variety of factors employers should consider before deciding to take the leap.

The Challenges of Setting Up a Center

When considering an onsite childcare center, Stich and Izbicki said employers should think about:

If they will repurpose existing office space or buy land and break ground for an entirely new facility.
Zoning, licensing, insurance and liability requirements, and regulations in their state. For instance, some require centers to be on the ground floor of a building, or to have certain amounts of indoor and outdoor space.
How many of their employees have children and need childcare.
Their facility’s size, number of seats and classrooms, ages of children served, fees and hours. Some employers are exploring targeted solutions for parents who work nontraditional hours, for whom accessing childcare can be even more challenging.
Hiring and training the center’s staff — who generally are full-time and benefits-eligible.
Plans to scale the center as the workforce grows or shrinks, and open enrollment to community members or employees at other businesses if the center is below capacity or establishment of a waitlist or a prioritization process for when the facility is at capacity, which, Stich noted, can affect recruitment, retention and employee morale.

“This benefit offering can be a challenge for employers with a multi-state workforce, or multiple locations within a state, to provide equitable benefits,” Stich said. “Additionally, there is a compensation and equity issue for employees who don’t need or use the benefit.”

Generally, organizations should expect the process of building and opening an onsite childcare center to take between 18 and 24 months, Izbicki said.

Setting up and running an onsite childcare center is expensive. While some are profitable, many run on tight margins, Stich said.

“Companies and employers should see these familial benefits as investments in their workforce, not costs,” Krishnan said. “Their people are their best assets. Our clients have seen the returns on these investments in the form of less absenteeism, higher productivity rates and loyalty, not to mention happier workforces.”

Options for Smaller Organizations

Onsite childcare may make more sense for certain types of employers, Izbicki said, including:

Those in industries (e.g., manufacturing, education, healthcare) where employees are generally unable to work remotely;
Organizations with a heavily female population or a significant proportion of younger workers; and
Large offices or headquarters with many onsite employees.

While 6% of organizations currently offer or are planning to offer onsite or near-site childcare, that number grows to 9% of employers with 500 or more employees, and between 13% and 18% of organizations with 5,000 or more workers or more, according to additional research by IFEBP and Mercer.

But considering the breadth of planning, expense and space required to develop a childcare center, sometimes an onsite building doesn’t make sense or isn’t possible.

According to the experts interviewed for this piece, other options — some of which may be more possible for smaller employers — include:

Contracting with an already-existing community childcare center or an onsite center at a nearby business.
Partnering with other local businesses to build a new center together for employees.
Contracting with in-home centers — particularly helpful in childcare deserts.
Offering financial support for childcare through lifestyle spending accounts, dependent care flexible spending accounts, tuition discounts for local centers or monthly subsidies.
Providing concierge care to do the heavy lifting for employees by researching local childcare options.
Offering access to “back-up childcare,” either through a smaller onsite facility or by contracting with a local center.

An Expanded View of Caregiving Benefits

Izbicki encouraged employers to consider that for many of their employees, their definitions of family and caregiving go beyond young children — and onsite childcare may only help a small percentage of employees.

Look into wrapping childcare benefits with services and programs such as pet care, tutoring or college prep assistance, eldercare and support for employees caring for a loved one with an illness or disability, she said.

“Eldercare is the next big wave as the sandwich generation in the workforce gets older and their parents get older,” Izbicki said. “We should think of caregiving and family support as everything from a brand-new baby to end-of-life support. A significant amount of people are caring for not just young kids but also aging loved ones. We don’t want to forget about them.”

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics: