SPOTLIGHT: The ongoing child care crisis is impacting workers and employers
March 2024
Spotlight (March 2024)
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According to the federal government, child care is "considered affordable" when it "costs families no more than 7% of their household income."
A recent Care.com survey found that "respondents are spending 24% of their household income on child care (vs. 27% in the prior year), with 60% spending 20% or more and (as compared to 67% last year) and 84% spending 10% or more (compared to 89% last year)."
Over the last three decades, the "cost of child care has increased 220%," according to the Annie E. Casey Foundation.
Even prior to the pandemic, there was an "already insufficient" child care workforce.
The number of child care workers "dropped by more than a third in two months as the pandemic took hold, from nearly 1.1 million workers in February 2020 to 677,000 in April" of 2020.
The lack of workers willing to work in the child care sector has increased costs and made finding child care more competitive for working parents.
“With the majority of families in America being dual income, there is widespread demand for child care and not enough supply to meet it. Following the child care cliff, the situation has gotten even worse as many daycare centers have had to close, shrinking availability even further. If this seems familiar, it’s because it is. The imbalance of supply and demand existed pre-pandemic, got worse during and because of the pandemic, and is now at its most extreme due to the child care cliff.”
According to the Annie E. Casey Foundation, "13% of children under the age of 5 live in a household where caregivers had to make job changes because of child care issues."
91% of respondents to a Care.com survey said they or their partner or spouse "had to make at least one major change to their work, life or finances to afford child care last year, such as: working multiple jobs (28%), reducing hours at work (27%), moving closer to family (25%), going into debt (19%) or leaving the workforce (17%).
A recent survey by KinderCare found that 74% of parents either are considering or have already switched jobs as a result of child care challenges. 73% of parents are considering or have already opted to move to a less demanding role.
"Too many of those raising children are unable to secure care that is compatible with work schedules and commutes. High costs burden families, yet child care workers themselves, virtually all women and disproportionately women of color, are poorly paid and often unsupported on the job. Parents and workers struggle, as do employers: Valuable contributors leave the workforce because they cannot find child care."
Parents are increasingly spending their savings to fund child care.
35% of parents reported "tapping" into savings to pay for child care, according to a recent Care.com survey, with the average "spending up to nearly half of their savings (42%) on child care and 25% using more than two-thirds of their savings." 68% of respondents told Care.com they "have only six months or less until their savings are depleted."
Parents are increasingly looking to their employers for help.
Respondents to Care.com's survey said employers could help reduce child care expenses in the following ways: providing on-site daycare (30%), offering child care subsidies (28%), offering flexible spending accounts (FSAs) (22%), and providing backup care (21%).
Read more via KinderCare, Care.com, U.S. Department of Health and Human Services (HHS), PBS, Annie E. Casey Foundation, Care.com
According to new analysis published by the Bank of America Institute, the United States “has the second most expensive child care system among developed countries.”
The rising cost of child care poses a "risk to women's progress," according to the report, which found that "as the expense has increased over the last several decades, the percentage of women in the workforce has stalled."
The report found that the "average US couple with two children spends over 30% of their income on child care."
In January 2024, the "average family's child care costs" were "32% higher" than the 2019 average.
Because "child care responsibilities have traditionally fallen disproportionately on mothers," the report notes that the "rising cost of child care sparks concern about the progress of women's participation rates in the workforce."
The only country with child care costs that exceed those of the United States was New Zealand.
The "most affordable" child care systems of the 30 countries the report covers were in Germany and Austria.
Bank of America relied on OECD data for its analysis.
"Caregiving responsibilities still disproportionately fall on women and are ultimately a factor in keeping them from getting into, remaining, and progressing in the labor force."
Read more via Business Insider, Bank of America Institute
A new report by the International Labour Organization (ILO) suggests there is a “compelling social investment and gender equality case for transforming child care policies so that they universally and effectively cover children from birth until the start of mandatory primary education.”
The existing child care policy gap impacts 90% of "actual and potential parents (nearly 3.5 billion people) worldwide," according to the ILO.
Offering "continuous child care to parents from the birth of their child to the start of compulsory primary education" could result in a "return on investment (ROI) of more than US$3.7 for every dollar invested," according to the International Labour Organization.
The ILO studied the issue across 82 countries and found that "one US dollar invested in closing this child care policy gap could result in an average increase of US$3.76 in global Gross Domestic Product (GDP) by 2035."
What's more, closing the "child care policy gaps" could "also reduce the global gender gap" by a significant margin.
Investments that closed existing child care policy gaps would further have the “potential to create around 300 million jobs by 2035, including 96 million direct jobs in child care, 1.36 million direct jobs in long-term care and 67 million indirect jobs in non-care sectors, the brief says.”
Read more via ILO
Working parents continue to face unaffordable child care options, and that's if they are lucky enough to even find options at all.
Staffing shortages have made the number of child care spots dwindle, and those spots that are available have become increasingly unaffordable.
Workers are "desperate," experts say, and are "turning to their employers for anything resembling help."
In 2023, 67% of parents "spent at least 20% of their household income on child care last year." That's up significantly from 51% of parents who spent over 20% in 2022, according to Care.com.
Since 2019, studies show that child care costs have increased 32%.
Experts say the high cost of child care is prompting many to leave the workforce.
Employers are feeling a "substantial" impact from resignations of working parents. According to the Society of Human Resource Management, the "total cost of turnover can range from 90 to 200% of an employee's salary."
"As organizations think about the cost of business and about their retention strategies, it's critical that they contemplate child care. Employees are looking for flexibility; they're looking for a supportive environment. The role that employers can play in helping stabilize child care for families is really important."
Employers can't solve the problem alone, but they can play an important role, according to experts.
Businesses can advocate for "public investment from the federal government," for example.
Employers can also "offer access to caregiving platforms, which can be used in a pinch, as well as for long-term child care planning."
Beyond that, employers can provide "flexibility with when and where employees can work, as well as robust PTO."
Employers looking for a competitive edge in retention and recruiting can put their child care offerings front and center, especially given that “not all companies offer these things.”
Read more via Employee Benefit News
More employers are beginning to offer child care benefits, but those that do are “still in the minority.”
Employers see the link between the lack of child care options and their ability to attract and retain workers:
The pandemic "laid bare to employers their workers’ child care struggles," and the "subsequent tug of war over returning to the office has further underscored it."
For this reason, some call the pandemic a "blessing in disguise," that made employers "realize that no longer is child care just a social issue but a business issue."
For employers, experts say solving the child care crisis is about ensuring employers can continue to attract and retain employees.
Many employers still don't offer any child care benefits:
According to Mercer, 54% of employers with 500 employees or more "do not offer any child care benefits."
Of employers that do offer child care benefits, "less than a third selected any single benefit such as subsidized child care services (11%), child care referrals and consultations (28%); and back up child care (26%), which gives parents access to a daycare center or babysitter when their usual child care arrangements fall through on a given day."
37% of employers with 5,000 or more workers offer " access to backup child care, 16% subsidize child care and 10% provide onsite child care."
Working mothers say employers could do more:
75% of working mothers say their employer "could be doing more to support parents with young children," according to a recent survey.
Some employers are looking to do more:
Providers of "early education and child care centers as well as backup care" say they are "hearing from a growing number of employers that are seeking to offer child care benefits for the first time or expand the ones they have in place."
Employers are increasingly interested in on-site child care options to ensure parents can return to working from the physical office.
Read more via CNN
