According to the 2023 Parent Confidence Index, one-third of Americans — approximately 50 million people — are raising children under 14. With parents comprising such a significant portion of the workforce, child care benefits are an increasingly in-demand employee benefit.
If your business is considering offering child care assistance as a benefit, here’s what you need to know.
What are child care benefits?
Child care benefits support working parents and their children during working hours. These perks can range from backup babysitting to on-site daycare to reimbursement for child care services.
Employer-sponsored child care benefits can alleviate some financial and logistical challenges working parents face in securing quality care. This shows you value your employees and can help parents achieve a better work-life balance, which is linked to increased job satisfaction and quality of work.
Providing child care support isn’t just a way to show you value your employees; it also keeps you competitive and attractive to prospective employees while retaining top talent. The Parent Confidence Index found that, after health care, child care is the top employer-sponsored benefit that keeps working parents in their jobs.
[Read more: Employer Guide to Childcare Assistance and Tax Credits]
Concerns of working parents
Working parents today must grapple with the cost of, and uncertainty around, child care. School closures, babysitter cancellations, or other schedule changes can leave parents scrambling for a sitter. This can be incredibly challenging given the rising cost of child care. According to a 2024 Care survey, families spend an average of 24% of their income on child care, with over one-third dipping into their savings.
The cost of child care and balancing full-time work, family responsibilities, and social obligations — can be highly stressful for working parents. A 2023 survey of parents, led by the Ohio State University College of Nursing, found that 57% consider themselves burnt out.
“A parent who’s trying to care for their child and work at the same time can’t adequately focus on either need,” Dan Figurski, President of KinderCare for Employers and Champions, told CO—. “Employers can help solve this dilemma and reduce their employees’ stress levels by offering a child care benefit.”
Types of child care benefits you can offer employees
Small businesses have several options for providing child care perks to working parents, including:
Subsidized child care
Employer-provided child care subsidies are payments a company makes to its employees to help cover child care costs. It can come in the following forms:
- A Dependent Care Flexible Spending Account (DCFSA); employers can contribute up to $5,000 in pre-tax funds per employee.
- Regular or one-time bonuses to cover child care costs, at the discretion of the organization.
- Reimbursements for child care costs, typically a percentage of the total.
If you subsidize employees’ child care costs, you might be eligible for the Employer-Provided Childcare Tax Credit, which provides up to $150,000 annually to offset up to 10% of costs.
On-site and backup child care
Offering on-site child care can eliminate the burden of school drop-off/pick-up for businesses with the resources to do so. Employers typically work with on-site child care companies to design and manage the program.
Alternatively, your organization can offer backup child care for last-minute coverage amidst schedule disruptions. For example, instead of an employee calling out on a snow day to care for their child, they can search for a backup provider through your company.
Though exact costs will vary by child care provider, these programs tend to have a strong ROI driven by reduced absences and increased productivity. This option also qualifies you for the Employer-Provided Childcare Tax Credit, offsetting up to 25% of the costs.
Not every employee has the same child care needs. Some want daycare for their toddlers while others will want schedule flexibility to accommodate their teenagers’ extracurricular schedules.
Additional family-oriented benefits
Child care benefits can go beyond traditional daycare or babysitting coverage. Offering a range of family-oriented benefits can go a long way with employees, including:
- Paid family leave, including parental leave (for biological, adopted, and fostered children) and family caregiver leave. Some states require businesses to offer paid family leave, while others have voluntary systems via private insurance. Employers offering employees paid family and medical leave may be eligible for a tax credit.
- A family stipend, which can cover various family-related expenses like senior care, fertility treatments, and pet care. There is no minimum or maximum dollar amount for businesses to offer a stipend.
- Parenting support groups, where working parents can network and share advice; these may also include referrals to more niche groups.
- Flexible work schedules, including remote or hybrid work, flex hours, and other arrangements to accommodate for variations in working parents’ schedules.
[Read more: How Baby Brand Bugaboo Created a Parent-Friendly Culture That Yields High Worker Satisfaction]
Tips for implementing child care benefits in your organization
Follow these tips to best meet the needs of your working-parent employees while maintaining the health of your business:
Learn about your employees’ needs
Not every employee has the same child care needs. Some want daycare for their toddlers, while others will want schedule flexibility to accommodate their teenagers’ extracurricular schedules. To truly know what your employees want, ask them what specific benefits would be most helpful.
“Employers should listen to their employees in whatever format works best for their workers — an open forum, a parent resource group, a survey, etc.,” Figurski said. “Once employers understand what their working parents need, then they’ll be better equipped to seek out and customize the solutions that will best support their employees.”
Provide what you can
While every business would like to provide full-time child care to their employees, many small businesses don’t have the resources to do so. Offer child care services that are within the means of the company and if they’re successful, look to grow them in the future.
“If opening an onsite child care center seems out of reach for your company, start small by offering a tuition discount,” Figurski said.
Implement benefits on a trial basis
If you’re concerned about the return on investment of child care benefits, you can implement new programs on a temporary basis to see how useful they are.
“Test out your new child care benefit for a year or so and then reevaluate: Go back to your employees and ask for their feedback,” Figurski said. “You might be surprised to learn how much the benefit helped with retaining current employees or attracting new hires.”
[Read more: How Minority-Owned Tech Business TOOTRiS Supports Working Parents]
This article was originally written by Dan Casarella.
Dan Figurski, President of KinderCare for Employers and Champions, was interviewed for an earlier version of this article.
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