As COVID Subsidies End, Employers Should Consider Childcare Benefits
Workspan Daily
September 19, 2023
Key Takeaways

  • Childcare subsidies ending. This month pandemic-era subsidies for childcare providers will expire, causing a likely rise in prices and a drop in access for many workers with children in daycare. 
  • Employers can step up. While many employers are now requiring that employees return to the office — either part time or full time — many employees lack affordable childcare solutions. Offering childcare benefits recognizes this challenge and helps address it head-on.  
  • Subsidies can bolster productivity. A new survey found 77% of working parents feel childcare programs contribute to productivity. 
  • Gather feedback before implementing. When considering the implementation of any care programs, perhaps the most important step is taking a step back to ensure that the solution fits the need.  

This month, many workers will likely find themselves with sticker shock when they receive their monthly childcare bill.  

That’s when COVID-19 pandemic-era subsidies expire for many childcare providers, who will have to choose between closing their doors or increasing their prices to stay in business. 

In fact, according to a recent National Association for the Education of Young Children survey on the subsidy grants, four in 10 directors and owners nationwide said they would have to raise tuition when grants ended this fall. 

“Federal funding made a huge difference,” said Julie Kashen, a senior fellow at the Century Foundation and an author of a new report on the topic. “There are going to be huge and dire consequences for childcare employees, for families, for employers.” 

Some observers say the end of these subsidies creates an opportunity for employers to begin offering their own childcare programs to employees and their dependent children. 

Why Employers Should Care 

Among its many effects, the pandemic shined a spotlight on the myriad struggles employees face in balancing work and family life, including the rise of remote work, said Andrew Coccia, a senior manager in Deloitte Consulting’s rewards and well-being practice. 

As the public health emergency subsided, companies began bringing employees back to the worksite.  

“But at this point, the world had changed,” Coccia said. “A new awareness around flexible work arrangements, child and eldercare, mental health and health equity matters had blossomed in our social consciousness.” 

Webinar: Control Costs and Reduce Risks: Pave the Way to Personalized Benefits 

To be considered an employer of choice today, he said, organizations are reexamining ways to leverage their workplace policies and programs to address these social needs. And, childcare benefits and related programs are a key consideration. 

“Offering childcare benefits is a great message to send to employees,” Coccia said. “It speaks to a culture of caring about workers — and taking an employee-centric view to the design of benefits.” 

Childcare as Productivity, Retention Tool 

While many employers are now requiring that employees return to the office — either part time or full time — many employees lack affordable childcare solutions. Offering childcare benefits recognizes this challenge and helps address it head-on, Coccia said. 

“It can help reduce absenteeism because parents are often forced to miss work when they lack childcare,” he said. “Offering childcare benefits can lessen this lost productivity.” 

Indeed, 77% of working parents surveyed in Bright Horizons’ “Modern Family Index”  think childcare programs contribute to productivity.  

Any program that can increase feelings of productivity can also lead to positive outcomes in recruitment and retention, said Priya Krishnan chief digital and transformation officer at Bright Horizons, a provider of early education and childcare, back-up care, and workplace education services. 

“It’s more expensive to rehire for positions versus retaining current employees,” Krisnan said, adding that organizations offering childcare resources are doing so through a personalized approach with a diverse set of options.  

Many employers now offer care benefits at an onsite center or offer employees support to attend a community-based center or use emergency care days, Krishnan said. She added that it’s important to customize any program to its specific workforce’s needs, such as daycare centers with overnight hours for hospital employees.  

“One of our manufacturing clients has added onsite centers with early hours to support the first-shift workers and a bus stop for the older children to make it more convenient for their working parent employees,” she said.  

Action Steps 

It’s crucial to understand employee preferences and to invest dollars into the programs that generate the greatest value to your workforce, Coccia said. 

When considering the implementation of any care programs, perhaps the most important step is taking a step back to ensure that the solution fits the need, he said.  

“Not every employer can implement an onsite childcare program,” he said. “But even if you could, does it meet the objectives if it can accommodate 20 or 30 kids?” 

His organization often recommends conducting a conjoint benefit preferences survey to evaluate different benefit options, using the data to guide benefits strategy.  

“You may learn that employees would actually prefer the ability to work from home periodically or emergency backup care to another option,” he said. “Once you have the data, you can be confident that your strategy will drive the returns you seek.”  

And don’t be afraid to flaunt it if you’ve got it when communicating to employees about the available programs, he said.  

“Even if employees don’t have children, communicating that you’re implementing a childcare program or some of the above policies can create goodwill in the organization.” 

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: 

Related WorldatWork Resources
Workspan Daily News Bytes for July 19, 2024
Employees Don’t Understand Their Health Plan: That’s a Big Problem
Workspan Daily News Bytes for July 12, 2024
Related WorldatWork Courses
Benefits Outsourcing - Selecting, Contracting and Managing Service Partners
Regulatory Environments for Benefits Programs
Retirement Plans - Design Considerations & Administration