Why the Talent You Need Can’t Afford to Work for You

There are plenty of reasons why returning to work following the birth or adoption of a child is a complex decision for parents worldwide.

But what should concern employers is this: the people your organization is trying to hire or retain following the birth or adoption of a child probably cannot afford the care needed for their children to go to work. Even if they want to come to work for you, or return following parental leave, they simply might not be able to afford to.  

Some data points to consider

• The U.S. does not provide federal paid parental leave protections—meaning that expecting parents don’t have guaranteed access to paid parental leave from their jobs.
• Only 13 states in the U.S. have passed paid family leave policies.
• Parents in the U.S. spend on average 27% of their annual household income on childcare expenses.
• The U.S. Department of Health and Human Services has established that childcare is considered affordable when it costs families no more than 7% of their household income. 
• 59% of U.S. parents surveyed in 2023 said they will need to spend more than $18,000 per child on childcare this year—up from the previous year’s $10,000.
• There were approximately 15 million families in the U.S. in 2022 with a female head of household and no spouse (second income) present, according to Statista.

Why alarms should be going off for every employer

Looking at U.S. demographic data alone should sound alarms for any organization not prioritizing the issue of working parents, who make up a considerable portion of the workforce: 

• People typically start and expand their families between the ages of 18 to 45.
• This cohort currently makes up ~60% of the U.S. workforce.
• Younger workers (defined as those between the ages of 16 to 24) are employed in a wide range of STEM occupations, with the largest concentration in technician-related ones. Workers between the ages of 16 to 24 accounted for 22% of all life, physical and social science technicians in the U.S. in 2021.
• The so-called "childcare cliff” could be catastrophic for business. Estimates are that the looming end of pandemic-era federal support will lead to the closure of 70 thousand childcare programs in the U.S.—leaving three million children without access to childcare nationwide. As a result, parents will be under pressure to find alternatives, they may leave or change jobs, reduce working hours, etc.
• Loss in earnings for parents per year across the U.S. are estimated to be $9 billion; loss in tax and business revenue could cost states an additional $10.6 billion in economic activity per year.

Unaffordable childcare is a global issue

In the UK, while the government provides 30 hours of free childcare for 38 weeks to parents, once their child turns three, the cost of fulltime childcare for two children under the age of three can amount to as much as 75% of one of the parent’s income if it's a two-parent home. Critics of the UK's current offerings want universal childcare coverage for 52 weeks to enable parents to return to work sooner.

• Daily care for children under the age of two in England can average upwards of 65% of parents’ wages (parents in London spend ~71% of their weekly earning on care for children). In Scotland, parents spend half (51%) of one parent’s salary on childcare annually.
• Gross fees for two children (ages two- and three-years-old) attending fulltime care at a typical childcare center as % of average earnings in 2021 ranged from as high as 64% in Switzerland to 1% in Germany, with an EU average of 20%. 

The Organisation for Economic Cooperation and Development (OECD) asserts that rising childcare costs are outpacing income increases, clearly resulting in financial disincentive to employment worldwide.

What employers are doing about it

There are many ways employers can aid working parents. The key is understanding the needs of your workforce, identifying what is realistically doable for the organization and its culture, and scoping and adjusting as needs and resources evolve. 

At DICK’S Sporting Goods’ headquarters in Coraopolis PA (just outside Pittsburgh), all employees follow a hybrid schedule, working remotely on Mondays and Fridays and collaborating in-office Tuesday through Thursday. An onsite daycare offers care and education exclusively for employee’s children (it’s not open to the public) ages six weeks to pre-K .

In an announcement about the opening of the Everbrook Academy at DICK’S Sporting Goods, chief people officer Julie Lodge-Jarrett said, “We’re thrilled to offer our teammates an outstanding early childhood education experience through our partnership with Learning Care Group. This gives our teammates peace of mind knowing that their child is in great hands, having a nurturing and empowering learning experience each day, here on our very own campus.”  

Norfolk Southern Corporation offers onsite daycare to the 3,000 employees who work at its Atlanta headquarters. The program includes full-time, part-time, back-up, drop-in, and school’s out programs. A cool feature of the daycare services: parents pull into a secure, private garage for the drop-off and pick-up of their children.

Wells Fargo provides employees with up to 16 weeks of paid parental leave for a primary caregiver (and up to four weeks for a non-primary caregiver) to focus on the new addition to the family. Wells Fargo also provides a breast milk shipment program, which enables employees travelling on business to ship breast milk home at no cost.

The Walt Disney World Resort in Orlando offers childcare assistance and affordable on-site childcare at The Learning Center locations, operated by the Central Florida YMCA. At California’s Disneyland Resort, cast members with children 12 and under may be eligible to receive support with childcare costs across more than 60 licensed childcare facilities.

Johnson & Johnson provides childcare centers at six locations in the U.S. and offers employees discounts for childcare in multiple countries.

T-Mobile's Childcare Subsidy program gives employees “free money” to help offset childcare costs. While  employees are not required to contribute their own money, they have the option of contributing up to the $5,000 yearly limit (including the funds deposited by T-Mobile as part of the Childcare Subsidy). Eligible employees may receive:

• $250/month if annual base pay is $63,000 or less
• $175/month if annual base pay is between $63,000.01 and $99,000

Other details:

• Contributions are deposited into employees’ Dependent Care FSA the first day of each month.
• Employees continue to receive Childcare Subsidy funding while on Leave of Absence, but cannot claim Childcare Subsidy expenses for services incurred during the Leave of Absence.
• Eligible Childcare Providers are private sitters, licensed daycare centers, and in-home providers, as long as the care provider is not a spouse, child's guardian or parent, under the age of 19 and/or someone the employee claims as a dependent for tax purposes.

At Intuit, fulltime employees (40 hours per week) or part-timers (fewer than 30 hours per week) may enroll in a dependent care FSA that allows them to pay for care for dependent children under the age of 13 with tax-free dollars. Intuit also contracts with a third-party provider that offers back-up child care services, elder care, parent coaching, and more. Employees are eligible for up to 20 back-up care days per calendar year for each person needing care (this includes dependent children and immediate family and spouse’s or domestic partner’s immediate family). 

Recommendations

The importance of fully and genuinely understanding the needs of the workforce bears repeating.

As i4cp’s CEO Kevin Oakes has pointed out, too often, CEOs and executives make decisions based on their own lived experiences rather than those of the organization’s workforce. Some senior leaders may simply not understand what it’s like to not have access to reliable childcare. Or to not be able to afford it. The impact this stressor has on workers and their ability to perform at their best levels is powerful.

Employers should invest time in employee listening in order to build a clear picture of the family caregiving needs of their workforces, particularly when it comes to benefits offerings and work models. 

As i4cp has reported for many years, flexibility in work arrangements is key to attracting, retaining, and developing talent—working parents especially. For example, we recently noted in our CHRO video series that parents of children may be compelled back to the office or worksite if onsite daycare were available to them. And our research on employee well-being found that offering flexibility for work/life balance is strongly correlated to better market performance.

What is called for now is a reframing of employee benefits—looking at what is offered and what is important to workers rather than delivering the same menu year-after-year. What some organizations consider perks and nice-to-haves are non-negotiable must-haves for others (and robust parental benefits should fall into the latter category).

Try this simple exercise to get the conversation going: In the context of employer brand, employee value proposition, and company culture, assess your organization’s current parental leave benefit, its caregiver support benefits, and its policy on flexible work. Consider what all of this could look like were it created from scratch today based on the understanding you have of your current workforce. Identify the risks facing your organization when it comes to working parents. What are you doing now that’s working? What needs to change? What can you do better? Set priorities and consider what the organization is positioned to do differently that creates impact in a short span of time. There’s no time to waste.

References & Resources

15 Companies with Great Benefits for Working Parents (2023). powertofly.com

Average Paid Maternity Leave by State: 2023 Statistics. annuity.org

The Century Foundation (2023). Report: Child Care Cliff: 3.2 Million Children Likely to Lose Spots with End of Federal Funds.

CEO Magazine (2023). “Inside the world’s 15 best female-friendly companies to work for.”

Etzel, N (2023). “59% of Families Plan to Spend Over $18,000 on Childcare Costs in 2023” The Ascent.

Great Places to Work for Women 2022 https://www.greatplacetowork.com/best-workplaces/women/2022

i4cp (2020) “Rosie Could Rivet Because She Had Affordable Childcare.” https://www.i4cp.com/coronavirus/rosie-could-rivet-because-she-had-affordable-childcare

i4cp (2020) Supporting Working Parents Pulse Survey
https://www.i4cp.com/coronavirus/survey-results-supporting-working-parents

OECD (2023) Net childcare costs  https://data.oecd.org/benwage/net-childcare-costs.htm

Statista https://www.statista.com/statistics/205000/number-of-families-with-a-single-mother-in-the-us/

U.S. Bureau of Labor Statistics www.bls.gov/emp/tables/civilian-labor-force-summary.htm

On Anniversary of Equal Pay Act, Signs of Progress and Remaining Challenges for Women in the Labor Market https://19thnews.org/2021/05/child-care-american-rescue-plan-for-the-industry/

The White House (2023). “On Anniversary of Equal Pay Act, Signs of Progress and Remaining Challenges for Women in the Labor Market.”  https://www.whitehouse.gov/cea/written-materials/2023/06/21/on-anniversary-of-equal-pay-act-signs-of-progress-and-remaining-challenges-for-women-in-the-labor-market/