Do Employers Cover the Cost of Childcare? | Employee Childcare Benefits

Employees are more than an ID# on a spreadsheet. They have lives, families, and for many, childcare duties. So does adding childcare benefits require paying their childcare costs? No, not necessarily.

Listen, every working parent on your payroll would love to hear that their benevolent employer is now covering all or a portion of their childcare expenses. They would count themselves lucky. Tell their friends and family. Share the great news on their socials. But the reality is it’s not totally necessary as part of a childcare benefits program.

Even if they’re putting on a brave face at work, parents are struggling. The childcare crisis is stressing working families, pushing them to the brink, and in turn impacting the organizations that employ them. This is happening across the country and spans all industry sectors.

The good news is that employee childcare benefits are a great way to support the people you see every day — smiling in person, over Zoom, or on Slack. The cherry on top is that employer-sponsored childcare benefits actually benefit you, too. Really.

Childcare benefit programs address business challenges you’re probably dealing with right now:

• Employee retention
• Absenteeism
• Productivity
• Competitive recruitment

Employee childcare benefits are truly a win-win proposition.

And fortunately for you and your working parents, there are several different ways to structure a childcare benefits program at your company.

Childcare benefits options for employers

One misconception about employee childcare benefits is that they are incredibly expensive. The truth is this doesn’t have to be the case.

You can start offering childcare benefits for employees in a number of ways, including:

1. Backup care: Offer employees a designated number of backup care credits they can tap when their regular childcare plans fall through.
2. Childcare stipend: A set dollar amount each month/year which employees can use to offset their approved childcare expenses.
3. A childcare assistance program: Provide employees with access to a large childcare network and a dedicated care manager to help them find the high-quality, affordable childcare they’re looking for.

When shaping your employee benefits packages, much of the specific details are up to your discretion. This includes employer-sponsored childcare benefits.

Upwards provides customizable programs that let you chart your own childcare-as-a-benefit path. You can choose whether to pay for a portion of employees’ childcare costs, their full childcare expenses, or none at all.

Let’s break down these options in a little more detail.

Start with a childcare assistance program

One great way to test out the employee childcare benefits waters is by offering childcare assistance to help team members locate, connect with, and access a local network of childcare providers.

A childcare assistance program provides a dedicated care manager for your working families. Employees gain access to an expansive childcare network. Daycare providers, babysitters, and nannies are all included in the network.

Childcare assistance doesn’t cover any childcare costs. It does help your working parents find the quality, affordable childcare their family absolutely needs.

There are very real cost challenges for families when it comes to childcare. In the U.S., the average cost of daycare is $340/week. Annually, this amounts to $17,680 per child that families must cover if they have kids in daycare year-round.

This affordability crisis means that you likely have some parents on staff who are personally affected. They may be contemplating leaving their job to care for their children because childcare costs are simply out of reach. These employees are under severe stress. They need your empathy and support.

For some families, the high cost of childcare is not the biggest barrier. Many working parents struggle with searching for and finding suitable care for their kids. There are long waitlists and more childcare demand than available caregivers. It’s all a vicious cycle.

If your working parents can’t afford or access childcare, there are ripple effects on your organization. Issues like absenteeism, productivity, retention, and recruitment challenges negatively impact many employers on a regular basis.

Childcare assistance helps address these problems effectively. This way, employees can focus more clearly on their roles. They can be more present, productive, and satisfied at work.

At Upwards, we’ve worked with a number of employers who decide to offer childcare assistance as a starting place to support their workforce. Then later on, they add stipends or other programs down the line. There is no right or wrong way to provide childcare benefits for employees.

Subsidize childcare with benefit stipends

One possibility available to you is offering employees a stipend for childcare tuition. A stipend program allows you to:

• Cover the entire cost of childcare tuition for employees.
• Pay a portion of their childcare costs.
• Set the exact dollar amount at your discretion.
• Contribute $20 a month or $400/month per employee, or more.
• Or customize a monthly childcare subsidy to your and your employees’ unique needs.

The amount of an employee’s childcare stipend can be based on location, seniority, or other factors. A stipend program offers a flexible solution to your working parents’ pain point of high childcare costs.

Back your employees with backup care

Let’s face it: Life brings with it a certain amount of surprises. Parenthood, in particular, presents many shocks and emergencies along the way. A backup care program covers the costs of last-minute childcare when these situations inevitably come up.

Imagine it’s a typical Tuesday. You get through the busy morning routine at home and drop your child off at daycare. Then you head to work. Within 30 minutes, the caregiver calls to report that your kiddo fell and injured themselves and needs to be picked up. Ready to call it a day?

We all need a good backup plan when the unexpected hits, especially working parents. These employees generally juggle a few more heavy objects at once than your team members without kids.

Backup care has become an increasingly sought after childcare benefit as a result. Having reliable backup childcare in place truly makes all the difference for these families who are living paycheck to paycheck and taking things day by day.

Choose an impactful childcare benefits program

It is not necessary, of course, to cover any of the childcare costs for your employees. That said, it is very much appreciated by working families as part of a childcare benefits program. It also goes a long way to improve retention, productivity, and hiring.

Whether you decide to pay for the full cost of childcare or go another route, it’s important to select the right care benefits that will best fit the diverse needs of your employees.

Upwards helps organizations determine which programs can have the biggest impact on their workforce and tailors their employee childcare benefits accordingly.

We can help you crunch the numbers. Share relevant data with your team. Calculate ROI. But we can also help you guide senior leadership to support the individuals behind each employee ID# on a spreadsheet.

If you’re interested in getting started, have any questions, or want to learn more, you can reach us any time at benefits@upwards.com or by visiting Upwards.com.