Closing The Gap

Only 32% of companies returning to work have plans for employees' child-care needs even as many schools postpone reopening full-time


Despite having four grown children, Jack McBride spends a lot of time thinking about child care these days. 

As CEO of South Carolina-based Contec, Inc., which produces disinfecting supplies and infection control solutions, McBride is concerned about how his employees are going to handle school and child care this fall, especially since 70% of his workforce cannot work remotely. 

"We are hearing a lot more concerns [from parents] going into this school year about what are they going to do?" McBride says. Early in the pandemic, with orders up 300%, Contec gave its employees a bonus worth 20% of their monthly earnings for the first three months South Carolina had shelter-in-place orders in effect, McBride says, as a thank you for continuing their frontline work. The company has also allowed employees to swap shifts with each other so that parents can be at home during the day with their kids and then work nights on the third shift. But McBride acknowledges that's not a sustainable long-term solution. 

Jack McBride, CEO of South Carolina-based Contec, Inc.

To offer more help, Contec created its own version of the paid leave program included in the Families First Coronavirus Response Act since the company's workforce of just over 500 employees is slightly too large to be covered by the federal mandates. Contec employees that have been with the company for at least six months are entitled to six weeks of pandemic emergency child-care leave. The company will pay them two-thirds of their salary during this time off, up to $5,000, through the end of the year. Employees who have worked for Contec for a year or more can get double that: 12 weeks, or up to $10,000 in paid time off. McBride says about 10% of parents have already taken advantage of the program. 

Yet with some South Carolina school districts proposing schedules that only include in-classroom learning a few days a week and the number of Covid-19 cases climbing, McBride wonders if his company's approach is enough. "Now all of a sudden we're in one of the worst hot spots," McBride says. "We're not sure what's going to happen. If people start getting sicker, then there will probably be a change in [our] policy."

What companies are doing to support working parents 

But Contec is a step ahead of many U.S. companies, many of which have yet to even formulate a plan that includes a child-care response. Among companies that have already had their employees return to the office, 42% do not have a dedicated plan to help employees balance child-care responsibilities, according to Society for Human Resource Management's recent research. And only 32% of organizations that are planning to return to work have outlined child-care plans.

Even some of the largest U.S. employers that require workers to be physically present at their jobs don't have all the answers. UPS, which is an operations-heavy company, did not implement any additional pandemic-related time off or child-care policies, a spokesman says, but added the company does provide discounts to regional and national child-care programs for its employees year round and offers part-time workers full benefits, which includes paid time off. 

During the pandemic, retail giant Target expanded its back-up child-care program, offering all of its U.S. employees free back-up child care for family members through its partner Bright Horizons, spokeswoman Shandra Tollefson tells CNBC Make It. "Our team members are able to receive free back-up care for any days they work at Target and their primary child care is unavailable to them," Tollefson says. 

While Bright Horizons temporarily closed more than half of its 700 U.S.-based centers in mid-March due to the pandemic, the child-care chain continued to operate some facilities, including several "hub centers" to support frontline workers. Bright Horizons reported on May 6 that it was operating approximately 150 centers nationwide, most of which are employer-sponsored centers.

Wills Towers Watson

Grocery chain Kroger has made $15 million available through the Kroger Family of Companies Helping Hands fund to provide financial assistance to associates who are facing hardship due to Covid-19, including lack of access to child care. The company also put together information for its employees on available child-care resources both locally and nationally, a spokeswoman tells CNBC Make It. 

About 59% of companies are offering employees flexible hours as of June, while only 19% have some sort of back-up care benefits available for workers, according to a recent survey conducted by Willis Towers Watson of nearly 550 public, private and non-profit U.S. employers with over 100 employees. 

Employers may need to consider offering more support

Companies are going to have to step up more, says Rachael McCann, senior director, health and benefits at Willis Towers Watson. Employers that don't offer any flexibility may force workers to either leave the company or find a new job, she says. 

It's something employers are keeping in mind, McCann says, especially because the cost of retraining, re-skilling and recruiting is so high. The question becomes does that greater flexibility actually prevent turnover? And the answer is usually yes. 

But beyond the cost of finding new employees, companies lose out on productivity when their employees have to take time to handle child-care responsibilities. During a typical year, employers lose about $13 billion in potential earnings, productivity and revenue due to inadequate child-care resources, according to a 2019 report from the Council for a Strong America.

There's an awareness at this point that there is not a "perfect answer," McCann says, but that doesn't mean that employers shouldn't even attempt to come up with creative solutions. Companies are approaching benefits like paid time off, child-care support and workplace flexibility with two questions in mind: What's affordable for the company to subsidize so that it's widely available in a sustainable way? And second, how can the company continue to offer flexibility in a way that moves from a short-term accommodation to how employees work going forward?

Many companies rolled out emergency back-up care, for example, but some organizations are discovering that's not a sustainable cost long-term, McCann says. While costs can vary widely by location and the type of child-care partner, the daily expense to employers generally ranges from $125 to $200 per child. "The costs quickly add up," McCann says. 

Instead, one of the fastest-growing solutions employers are embracing are concierge services like Cariloop and Wellthy, McCann says. More comprehensive than sites better known for their referral service like (which also offers some concierge services, according to their spokesperson) or UrbanSitter, these companies partner employees with a coordinator who finds a child-care provider that's the right fit for each worker. McCann says major employers are looking to this as the next go-to benefit, providing employees with a membership to these types of services to make it easier to coordinate care. "We've absolutely seen more interest in those type solutions as a longer term answer," McCann says.

Another option employers could consider adopting is a paid family and medical leave insurance program. With these types of programs, both employers and employees pay small amounts into a pooled fund so that workers can receive some financial assistance when they need time off beyond any time off policies offered by their organization. "That way, the financial burden isn't entirely on an employee, and it's not entirely on an employer," says says Ruth Martin, the senior vice president and chief workplace justice officer at MomsRising. Several states, including Washington, have adopted these insurance-style programs, giving employers the option of joining, rather than creating their own. 

But both experts and employers like McBride agree that more federal funding is also needed for both schools and child-care programs to afford the necessary PPE equipment, sanitation supplies and extra staff needed to adhere to the stricter operating guidelines issued by the CDC and state education regulators. "We would love to see some kind of stabilization fund be created in this next stimulus package because Lord knows we need it," McBride says. 

Supporting child care may help long-term economic growth

Beyond the child-care needs of his own employees, McBride and his board have been brainstorming how the company might be able to help support education on a wider scale because he believes education, particularly access to quality early childhood learning programs, is crucial to keeping the U.S. workforce competitive, both domestically and on the global stage. 

"We've got to get creative as a country to keep this industry alive and make sure our kids are getting educated, because otherwise I see this being a huge economic burden for us to bear for the years to come," McBride says. "If we want to stay as a world leader, we've got to take care of educating the next generation."

To that end, Contec's board is considering setting up a program for their sales team, which is based across the nation but is not currently visiting clients amid the pandemic. "We were thinking that if they wanted to take three-to-six month sabbatical and work in the child-care industry or help in schools where they live, we'd be willing to support that," McBride says, adding that Contec's production for the year is pretty much sold out anyway.

Another option the board is considering is adopting a local day-care facility or two, particularly those that may be in dire financial straits. "We would be willing to sort of adopt them, as it were, and make some contributions during the tough times to help them weather the storm and stay open if that was possible," McBride says, similar to the company's ongoing support of the regional Boys and Girls Club.

"The pandemic is just magnifying how important child care is, and if we don't protect it now, we're really just in a bad place as a country. I mean, it will be a short term economic blow, and that will turn into a long term, bigger economic blow," McBride says.

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