Money Matters

How Unreliable And Costly Childcare Keeps People Off The Job


The third installment in this three-part series explores another challenge confronting the American workforce: access to affordable family and childcare. (See Part 1; See Part 2) .

The rising cost of childcare, especially for low-income earners, is insurmountable for many families. Depending on the state, childcare costs can burn up to 7-12% of a household’s income. Consider that a year of childcare on average costs $8,606 in the U.S. – the same as a year of tuition at a four-year university.

The burden is even heavier for low-income earners. The lack of cost-effective, center-based childcare forces many part-time and hourly workers to rely on local communities, which are more likely to result in childcare breakdowns than in center-based care. The impact is more dramatic even for part-time and hourly workers, who are often scheduled last minute via on-call shifts. Such fluctuating schedules certainly make it harder to forecast childcare needs and secure affordable, quality care. The inability to to do so often means parents simply do not show up for work. In fact, 45% of parents report being absent from work due to childcare breakdowns, resulting in an average of approximately 4.3 days of work missed every six months. That translates to $28.9 billion in wages lost by families that do not have access to paid leave and affordable childcare according to ChildCare Aware.

The lack of consistency is a critical impediment to childcare, parental employment, and local business productivity. ChildCare Aware estimates that U.S. businesses lose $4.4 billion each year as a result of childcare related absenteeism. So, what can be done? What should be done?

There is a clear business case for several employer-led solutions, some of which are based solely on basic productivity gains and cost savings from a lowered reliance on expensive last-minute staffing solutions. The first solution is employer subsidies, which can make it easier for employees to find affordable, consistent childcare. Employers that assign on-call shifts could offer specific credits for urgent childcare needs associated with fulfilling these shifts. The savings from lowered staffing firm expenditures could help allay some of the material cost increases and be a powerful perk in the recruitment and retention of more reliable and loyal talent. Given that employers spend several hundred to several thousands of dollars acquiring each new worker based on industry, any material increase in retention or acquisition conversion has as clear impact on the bottom line.

The data validates this fact as well. Of companies that offer childcare services or assistance, 54% report a positive impact on absenteeism, reducing days missed up to 30%. Perhaps even more importantly, many companies report decreased churn, reducing turnover by as much as 60% – a systemized incentive structure can both acquire and retain more effectively.

Another option is for employers to create home care pools across employees. Childcare could take place within an employee’s home on a rotating basis. Homegrown solutions like this often exist within communities, but businesses could make them even more effective by facilitating the pools and scheduling to ensure consistent availability of childcare. To make it simpler – the employer could also create a rotating pool of pre-vetted and certified babysitters/caregivers and make the scheduling easy and available as a perk across the home care pools.

A third solution might include assistance by local communities and governments. While it makes humanitarian sense, there is also a business case for such a role. A recent study in Louisiana found that the state economy alone loses $1.1 billion annually due to childcare issues, and $84 million in tax revenue from lost productivity. Spread out across the country – this is a multi-billion-dollar productivity and economic problem that only gets addressed via calls for increased funding. There are easier options that exist. Beyond further funding for early childhood programs, government and communities could, or should, open up existing real estate such as unemployment offices, churches and community centers for center-based care. Whether government managed or not, this alone would bring down the price of childcare, at little to no cost to local governments and can be a means of spurring local entrepreneurship. With this idea, local governments would provide the much-needed credentialing, security and real estate for the childcare. Meanwhile, local child-care providers could sign up to provide care within the center. Wages for the labor could be handled via a public-private partnership between the local agencies and employers. Alternatively, the fees could be paid by workers’ but at a significant discount because the fixed costs of center-based care are ostensibly managed by the state.

The ubiquity of shift jobs today has opened the door of opportunity for millions of families, but it has not lessened the need for quality, affordable childcare. Such a fundamental need presents a tremendous opportunity for employers and governments alike, and the time has come for all to work together to build an infrastructure to facilitate the changing way people work.

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