Tomorrow’s workforce needs a childcare system that’s fit for the future

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Elon Musk, the billionaire chief executive of Tesla, SpaceX and NeuraLink, has been making headlines lately, but a noteworthy announcement may have been overshadowed by other news. In a tweet on July 8, Musk shared his plan to significantly increase childcare benefits at his companies, with details to be revealed next month. Note that Tesla already offers generous family benefits, including five days of backup childcare, 16 weeks of paid family leave, and $40,000 coverage for fertility services. Musk is now supplementing the family benefits package offered to his employees. He also said other companies should do the same.

Meanwhile, JCPenney announced today that it is extending the childcare benefit to all of its 50,000 employees, including retail and supply chain employees. It will leverage WeeCare’s national network of in-home nurseries and nannies to provide families with quality, reliable and affordable childcare options. For JCPenney’s employees, the new benefit should lead to cost savings, greater proximity to childcare and easier access to quality and flexible care options.

Musk’s message and call to action, as well as JCPenney’s announcement, are telling when it comes to the role childcare is increasingly playing on the workforce. Musk and JCPenney aren’t alone in amplifying this kind of temptation, either. Fifty-six percent of employers are now offering childcare benefits by 2022, according to Care.com’s “The future of benefits” report that surveys 500 companies each year. By comparison, in 2019 only 36% of companies offered childcare allowance.

But childcare as a driver of work may only be part of the news. In reality, the pandemic has changed both work and family in a meaningful way, and childcare benefits are following suit. Organizations must adapt to a future where more employees are working from home or in hybrid capacity, dividing time between remote and office. Companies are also increasingly responding to changing family dynamics that deviate from the nuclear model. We see an increasing diversity in cohabitants and family structures. In order to take these changes into account, childcare is evolving towards flexible, relationship-oriented and 21st-century competences, such as creativity, cooperation and empathy. It also increasingly transcends the boundaries between home and work as many families strive to be closer to caring for their little ones.

No care. No work.

Employers are acting amid a trifecta of a severe crisis in childcare provision, a tight labor market and Congress failing to pass legislation supporting the affordability and quality of childcare. Childcare has become a top HR trend in 2022.

In the past two years during the pandemic, more than 10% of childcare facilities have been closed due to the COVID-19 disruptions and, more recently, childcare staffing difficulties due to low wages. A 2021 survey by the Pew Center found that more than 50% of working parents struggle with childcare. Many women have quit their jobs, retired from their careers or stopped working due to a lack of childcare facilities. There are now a million fewer women in the workforce than before the pandemic. According to the US Chamber of Commerce, nearly 60% of parents cite a lack of childcare as a reason for leaving the job market.

Rising childcare costs (above food or gas price inflation) are another key driver. Twenty-six percent of parents said they left the workforce because they couldn’t afford childcare. A strong business case can be made for supporting employees in childcare. According to the Early Care and Learning Council, this can reduce absenteeism by 30%, reduce employee turnover by 60%, increase recruitment and increase employee productivity.

Employers stimulate innovation towards a more flexible future of healthcare.

Employers have long played an innovative role in childcare, especially during crises. Historian Sonya Mitchell, dating back to World War II, reports that while there were 19 million women in the workforce in 1944, only 130,000 childcare places were available until an employer intervened. At two of its shipyard facilities in Richmond, California and Portland Oregon, Kaiser worked with key child development experts and took advantage of government grants to establish ideal childcare facilities for employees to continue building ships. The facilities ran 24 hours a day, provided meals for children and a well-designed curriculum. This model will play a major role in shaping our country’s future childcare system. Researcher James Hymes, who founded the Portland site, 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 childcare, especially as the boundaries between work and home care became more elusive and many employees are working remotely.

Pre-pandemic, employers offered two primary modalities of childcare benefits: on-site childcare or backup childcare. Those benefits were either serving a small proportion of employees, or offering a small number of care hours per employee, usually on a set schedule. Plus, those benefits were usually delivered by large employers—think Google, Goldman Sachs, Adobe, or Ernst & Young. But this is changing.

With increasing remote working and a more widely distributed workforce, employers are now innovating to give employees greater flexibility through a new modality dubbed ‘childcare as a benefit’. The employee will receive a childcare allowance and access to quality vetted childcare places near work or home. In turn, the employer benefits from tax credits. To this end, employers work together with innovators in childcare. For example, WeeCare recently raised funding to scale up childcare benefits for the evolving future of work. WeeCare works with more than 90 major US companies across many industries such as retail (JCPenney), hospitality (Dollywood) or healthcare (Eliot). WeeCare also offers childcare benefits to small business employees through partnerships with municipalities. Their CARE and Back2Work programs in Cathedral City, California, provide free childcare placement assistance to small business employees and backup care to job seekers.

The other trend is the shift towards the use of on-demand childcare. Wonderschool partners with employers such as Montage Health to provide personalized support to employees and take advantage of flexible childcare facilities close to employees and the hospital. Similarly, Kinside partners with 3,000 employers while centralizing local childcare openings and providing a concierge service for parents to find suitable care. Meanwhile, TOOTRis is partnering with employers seeking solutions for hourly workers and 24-hour coverage. An employee of soap manufacturer Dr. Bronner’s, an employer partner of TOOTRis, had 50% of its childcare costs subsidized by its employer. Likewise, Arvorie supports employers in maximizing tax efficiency and making childcare more affordable.

Note that while employers previously focused mainly on high-wage workers, this is also evolving. McDonalds began offering additional childcare benefits to all of its restaurant employees during the pandemic and piloted it through its franchisee network. In 2021, childcare provider Bright Horizons signed a major contract with a telecom company that pays out a childcare allowance that grows with the needs of employees. The lower the wage, the higher the childcare allowance.

Ultimate flexibility: reuniting work and family.

Ultimately, flexibility allows families to take care of their little ones during the work week as well. The future of childcare increasingly transcends the boundaries of work and home.

This starts with family leave, giving families the essential time to bond with their children. This also supports parents in “going back to work” and normalizing leave. LinkedIn now offers a “career break” option on a person’s LinkedIn profile.

The future of childcare will also see employers provide more family-friendly environments. For example, Vivvi supports employers in converting office space into childcare. Vivvi focuses not only on flexibility, but also on quality, promoting the fun of learning through play and themes inspired by children’s curiosity. A major tech company is now testing an offering with Tinkergarten that would allow parent workers to attend outdoor play classes with their little ones.

That’s not to say that employer-sponsored childcare is a panacea. First, childcare fees may not be there to last in an economic downturn. In addition, employer-sponsored childcare benefits can exacerbate existing inequalities by excluding part-time workers, independent contractors and freelancers, parents who do not work, or employees of smaller organizations. Also, continuity of care for young children can be affected if a parent changes jobs. At this point, Care.com advocates a portable childcare wallet solution for employers, similar to a 401(k) account.

But employers have a role to play in our existing childcare crisis, especially as prospects for transformational childcare policies wane in Congress. Employer-driven innovation supports an evolution from childcare to greater flexibility, access, affordability and even quality. Perhaps it is time to embrace childcare and family support as a centerpiece of our future of work.

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