The Connection Between Employer-led Child Care Benefits And Trickle Up Economics

Carol Miller
October 25, 2022

Access to childcare is a near-perfect example of trickle-up economics, often known as bottom-up economics. When a high-quality, consistent childcare system is in place, economies develop, productivity and performance improve, communities thrive, and children are more likely to become successful adults. 

How Child Care Impacts Business Culture And Community

Numerous studies demonstrate how outstanding schools in a community increase value benchmarks such as residential property worth, safety, and general quality of life. Now businesses see that they may lose out on these rewards by not offering quality early school resources for their workforce. 

Because of this, employers are considering how investing in childcare support through education technology partnerships yields rewards that keep labor talent stable for today and supply labor talent for years to come. 

Child care support offered by employers differentiates their business from competitors by providing work/life solutions for employees and committing to the overall health and safety of that which employees value most, their children and families.  

Does Child Care Reduce Employee Turnover?

An overwhelming majority of working parents with children under 15 are considering major career changes or leaving the profession completely owing to a lack of daycare. According to Child Care Aware, accessible childcare:

  • Can boost labor force participation and help states and regions grow economically.
  • Can assist parents in pursuing additional education and training, resulting in increased earnings throughout an individual's lifetime.
  • Can activate state-level responses in wage rates, the mix of low- and high-skilled labor employed by the state, the prices of goods and services, and trade patterns (via increased subsidy payments).

Conventionally, wages and health benefits were considered enough to support employees, but today there is a cultural shift to account for mental health and community support by designing holistic employee benefits packages. 

Providing child care assistance to staff is an actionable step that addresses this shift and prevents burnout from ever even occurring. 

According to Christina Maslach of the University of California, Berkeley, Susan E. Jackson of Rutgers, and Michael Leiter of Deakin University author of Making a Significant Difference with Burnout Interventions: Researcher and Practitioner Collaboration, “activities and policies that fit the local context are more likely to establish self-perpetuating cycles of actions and responses that maintain constructive change.” 

Is There Proof That Child Care Benefits Work?

Employers may have reservations regarding the proof or practicality of providing childcare assistance. However, these essential factors will alleviate doubts:

  • Historical evidence of childcare support has helped labor growth for generations.
  • New statistics on the growing demand for employee childcare. 
  • Metrics indicating the need for non-performative maternity and women's labor outreach.
  • Innovative childcare technology services such as Wonderschool can streamline processes and save firms time and money while enhancing a company’s employee engagement and loyalty. 

The Lanham Act of 1940 mandated universal child care for mothers of all economic groups. The bill provided funding for war-related initiatives and permitted women to work. 

The daycare services achieved a perfect score of 100 percent satisfaction. As adults, children born in high spending states outperformed those born in low-spending states in all labor markets and were more likely to work full-time than those born after the program stopped. 

Fast forward to 2009, in Washington, D.C., where an ambitious expansion of free universal child care increased maternal labor force participation among low- and high-income families. 

Women with young children experienced a significant increase in employment, which bolstered part-time work for unmarried women and full-time work for married women. While all of these examples directly pertain to universal daycare, any company that immediately addresses the demand for childcare and assistance (particularly for women) within their organization may acquire significant gains in the short and long term.

Can Child Care Support B2B Growth

Childcare programs facilitate the development of strong business-to-business relationships. Childcare programs are typically small, local businesses and often owned by women of color. 

Employers can affirm their relational support with diverse local businesses and simplify the communication process for employees as they communicate with smaller, local companies, some of which may be right down the street from their homes or workplaces. 

Subsequently, Wonderschool’s tools can transparently measure each business involved's value, which is key to ensuring worthwhile business-to-business partnerships.

How can you help retain female employees (a non-performative way)

Many employers hope to support women employees who make measurable contributions to the workplace's success and environment. Childcare support is one excellent way to turn that spoken commitment into action. 

Childcare increases net income and life savings for the maternal labor force. According to the National Women's Law Association: The average lifetime increase in net income for a woman with two children would be about $97,000 (or $94,000 after contributing to private savings), which would correspond to an increase of $20,000 in personal savings by age 64 (counting both contributions—own and employer's—and compound growth). 

If a company wishes to distinguish itself, it may want to consider childcare's lasting effect on its maternal labor force. More so, within the maternal labor force are Gen-Z employees who are substantially more likely to change jobs when the work-life balance is askew. 

In her recent book My Life In Full, former Pepsi CEO Indra Nooyi, explains today’s connection between child care and the workforce.  "Organized child care will bring more people who left the workforce back to the workforce, and they all tend to be predominantly women. The biggest crisis we have today is the cost of care is too high when it's available, most of the time, it's not available. And even when it is, the quality of the care is not good enough." 

Are There Tax Benefits To Employer-Sponsored Child Care

Top-performing companies are building a childcare program or voucher into their benefits plan and benefiting from more excellent employee retention; these companies are strengthening their culture and drawing in younger parents who do not want the stress or cost of finding childcare as they choose between other competitive organizations to work for. 

Additionally, according to an article by Kylie Ora Lobell for SHRM, employers that supply child care subsidies can take advantage of an annual tax credit of up to $150,000 if they use it for qualified child care facilities and services. According to the IRS, "the credit is 25 percent of the qualified childcare facility expenditures, plus 10 percent of the qualified childcare resource and referral expenditures paid or incurred during the tax year." To receive tax credits, employers must complete Form 8882

Laura Handrick, an HR consultant in Phoenix, further said flexible spending accounts (FSA) are an option.  "The benefit of providing a child care subsidy to employees in the form of an FSA is that the employer contributes pretax dollars, reducing its payroll taxes," she said. "The employee can choose how much or how little to contribute. Those who prefer to send their children to a more expensive program can fund and pay for it through the FSA using pre-tax dollars."

How Can Wonderschool Employer Program Help Your Business?

As workplaces reopen physical locations, HR can look for child care facilities in the immediate area through educational technology services. Platforms such as Wonderschool will absorb the cost of energy needed to screen quality, local, licensed programs, and present ranges of tuition affordability.

Creating a brick-and-mortar facility within a company is costly and difficult to scale. It requires oversight and recruitment. Some major companies have tested this model, but they have the funds to back such an endeavor, and even then, it comes with many variables outside of what they are equipped to handle at times. 

Wonderschool can simplify the process of supporting your employee’s child care exponentially. Wonderschool connects businesses to childcare by providing tools, product support, consulting, and customer service options for employers, parent employees, and childcare providers.

Benefits Of Partnering With Wonderschool For Your Business include:

  • Program creation: Wonderschool can create child care programs exactly where employees need them and customize the care in terms of hours and ages.
  • Concierge services: Employees can choose the type of school where they would like to enroll their child.
  • Saves Search Time For Quality Programs: Parents and Employers can save time on searching for quality programs as all programs on our platform are licensed, vetted, and offered continuous quality, safety, and curriculum support.
  • Greater Affordability: The Wonderschool network includes Family Childcare and Center-Based preschools, which offer a range of pricing and scheduling options, including 7-day a week and 24-hour child care.
  • Supports Local Businesses: Child care businesses are mostly women-owned and nestled in local communities and economies. 
  • Establishes Hyperlocal Communities: Company culture will deepen as parent employees can share the same school experience. 

As a result, companies can shift their focus from how to provide childcare to their employees to why that business is the best choice for working parents and communities. Smaller companies can align their offerings to top businesses (most of which offer childcare services). Larger companies can refine their offerings by leveraging Wonderschool’s technological, flexible, and national network. 

Caring For Your Employee's Child Care Needs As An ROI

Focusing on childcare as a building block to a company's success will create an upward effect of growth for today. And, in the days to follow, companies that support their employees with (streamlined, actionable childcare support) will also see superblocks of employee commitment, trust, and loyalty develop.

Let us help you improve your company's culture and employee retention rate through customizable child care benefits. Learn more here.

Featured image: Little Mandarin Wonderschool

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