Elon Musk, the billionaire CEO of Tesla, SpaceX and NeuraLink, has been making a lot of headlines lately, but one remarkable announcement may have been overshadowed by other news. In a Tweeter on July 8, Musk shared his plan to dramatically increase childcare allowances at his companies with details to be unveiled next month. It’s worth noting that Tesla already offers generous family benefits, including five days of backup child care, 16 weeks of paid family leave, and $40,000 coverage for fertility services. Musk now completes the family benefits package offered to his employees. He also said other companies should do the same.
Meanwhile, JCPenney announced today that it extend childcare benefits to all of its 50,000 employees, including store and supply chain associates. He will take advantage WeeCareis national network of nurseries and nannies at home, to provide families with quality, reliable and affordable childcare options. For JCPenney employees, the new benefit should mean cost savings, greater proximity to childcare, and easier access to flexible, quality childcare options.
Musk’s message and call to action, along with JCPenney’s announcement, are indicative of the role child care is increasingly playing in the workforce. Musk and JCPenney aren’t the only ones raising this kind of incentive, either. Fifty-six percent of employers now offer childcare benefits in 2022, according to Care.com’s Future of Benefits Report interviewing 500 companies each year. In comparison, only 36% of companies offered childcare allowances in 2019.
But childcare as a job enabler may only be part of the news. In reality, the pandemic has significantly transformed both work and family, and child care benefits are following suit. Organizations must adapt to a future where more and more employees are working from home or in hybrid capacity, dividing their time between remote work and office work. Businesses are also increasingly adapting to changing family dynamics away from nuclear model. We see growing cohabitation and diversity of family structure. To accommodate these changes, child care is evolving to become flexible, relationship-centered, and focused on 21st century skills, such as creativity, collaboration, and empathy. It also increasingly transcends the boundaries between home and work, as many families yearn to be closer to care for their young.
No care. No work.
Employers are stepping in amid a trifecta of a severe child care supply crisis, a tight labor market and the failure of Congress to pass legislation supporting affordability and quality of childcare services. Childcare has become a top HR trends in 2022.
Over the past two years during the pandemic, more than 10% of child care provision has been closed, impacted by COVID-19 disruptions and, more recently, staffing issues. childcare driven by low wages. A Survey 2021 by the Pew Center noted that more than 50% of working parents struggle with child care. Many women have quit their jobs, putting their careers on hold or not returning to the workforce due to lack of childcare. There is now one million fewer women in the workforce than before the pandemic. According to United States Chamber of Commercenearly 60% of parents cite lack of childcare as a reason for leaving the workforce.
Rising child care costs (above food or gas price inflation) is another important factor. Twenty-six percent of parents said they left the workforce because they couldn’t afford child care. There is a strong business case to be made for supporting employees with childcare. It can reduce absenteeism by 30%, reduce turnover by 60%, increase recruitment and increase employee productivity, according to Early Years and Learning Council.
Employers are driving innovation towards a more flexible future of care.
Employers have long been innovators in childcare, especially during crises. Returning to World War II, historian Sonya Mitchell reports that while there were 19 million women in the labor force in 1944, only 130,000 childcare places were then available until an employer intervened. At two of its shipyards in Richmond, California and Portland, Oregon, Kaiser has partnered with key experts and leveraged government grants to set up ideal childcare facilities for workers can continue to build ships. The facilities operated 24 hours a day, offered meals for children and a well-designed program. This model will play an important role in shaping our country’s future child care system. Searcher James Hymeswho set up the Portland facility, would serve on the National Planning Committee for Head Start in the 1960s.
Similarly, during the COVID-19 pandemic, employers have also catalyzed innovations in child care, especially as the boundaries between work and home care have become more elusive and many employees work remotely.
Prior to the pandemic, employers offered two main modalities of child care benefits: on-site child care or emergency child care. These benefits either served a tiny fraction of employees or provided a small number of hours of care per employee, usually on a set schedule. Moreover, these benefits were mostly provided by large employers – think Google, Goldman Sachs, Adobe or Ernst & Young. But that is changing.
With the rise of remote working and a more widely distributed workforce, employers are now innovating to provide greater flexibility to employees through a new modality called “childcare as a benefit”. The employee receives a childcare allowance and has access to approved quality childcare places close to work or home. In turn, the employer benefits from tax credits. Employers are partnering with child care innovators to do just that. WeeCare for example, recently raised funds precisely to adapt childcare benefits to the future evolution of work. WeeCare has partnered with more than 90 major companies in the United States in many sectors, such as retail (JCPenney), hospitality (Dollywood) or healthcare (Eliot). WeeCare also provides childcare allowances to employees of small businesses through partnerships with municipalities. Their CARE and Back2Work programs in Cathedral City, Calif., provides free child care placement assistance for small business employees and respite care for job seekers.
The other trend is the shift to the use of on-demand child care. The School of Wonders partners with employers like Montage Health to provide personalized support for employees, leveraging flexible family child care close to employees and the hospital. In the same way, Kinside has partnered with 3,000 employers, while centralizing local daycare openings and offering a concierge service to help parents find convenient childcare. Meanwhile, TOOTris partners with employers seeking solutions for hourly employees and 24-hour coverage. An employee of soap manufacturer Dr. Bronner’s, an employer partner of TOOTRis, had 50% of her childcare costs subsidized by her employer. In the same way, Arvory helps employers maximize tax efficiency and make child care more affordable.
It should be noted that while employers focused primarily on high-wage employees, this is also evolving. McDonalds started offering supplementary childcare services during the pandemic to all employees of its restaurant and by testing it through its network of franchisees. Meanwhile, childcare provider Bright Horizons has signed a big contract in 2021 with a telecommunications company that pays a child care benefit that increases with employee needs. The lower the salary, the higher the childcare allowance.
Ultimate flexibility: reunification of work and family.
Ultimately, the flexibility allows families to care for their little ones during the workweek as well. The future of child care increasingly transcends the boundaries of work and home.
It starts with family leave, providing families with essential time to bond with their children. This also supports parents with “returns to work» and the standardization of holidays. LinkedIn now offers an option for “career breaks” on an individual’s LinkedIn profile.
The future of childcare also sees employers offering more family-friendly environments. vivi, for example, helps employers turn offices into child care centres. Vivvi is not just about flexibility, but about quality, promoting the joy of learning through play and themes inspired by children’s curiosity. A large technology company is currently testing an offer with DIY garden it would give employed parents the opportunity to attend outdoor play lessons with their toddlers.
This is not to say that employer-sponsored child care is a panacea. For one thing, child care benefits may not be here to stay during an economic downturn. Additionally, employer-sponsored child care benefits can increase existing inequalities by excluding part-time workers, independent contractors and freelancers, non-working parents, or workers in small organizations. Additionally, continuity of care for young children can be affected if a parent changes jobs. On this point, Care.com advocates a portable childcare portfolio solution between employers, similar to a 401(k) account.
But employers have a role to play in our current child care crisis, especially as the prospects for transformational child care policy dim in Congress. Employer-driven innovation supports an evolution of child care services toward greater flexibility, access, affordability and even increased quality. It may be time to embrace childcare and family support as the centerpiece of our professional future.