Employers offer stipends for babysitting and tutoring to sweeten child-care benefits and win over workers
- As working parents juggled their jobs and caregiving during the coronavirus pandemic, companies took notice.
- Companies have responded by offering new child-care benefits such as backup child care and stipends for college counseling services and tutoring.
- More than 100 of Bright Horizon's new clients added backup care benefits last year.
As offices reopen, employers are holding on to lessons they learned from the Covid pandemic about the importance of addressing workers' needs by offering benefits that stretch into child care more deeply than before.
As working parents juggled their jobs and caregiving during the health crisis, companies took notice. The result is more are looking to provide benefits like backup child care or are planning on-site day-care services. For companies that already offered these services, benefits are being expanded to include options like affordable tutoring as a way to hold on to skilled workers. These benefits, along with reduced hours or work-from-home days, are being crafted to break down barriers that are keeping some parents out of the workforce by doing more to help employees balance their work and caregiving responsibilities.
These benefits are particularly important to women, who are still bearing the brunt of family caregiving responsibilities — a point that became even more clear during the pandemic.
Although women make up less than half of the U.S. workforce, they accounted for a majority of the decrease in the labor force during the first year of the pandemic. Data gathered by the Pew Research Center showed that between February 2020 and February 2021, 2.4 million women left the workforce, compared with 1.8 million men.
One of the biggest barriers for working parents is lack of access to affordable child care. Only 39% of respondents to McKinsey's American Opportunity Survey who have incomes below $50,000 and children at home said they could afford child care. The online survey polled 25,109 people over the age of 18 throughout the U.S. between March 9 and April 8.
While lack of affordable child care was a barrier for many long before the pandemic, the crisis put greater stress on parents. Some dealt with closed facilities, more limited services or grappled with worries about the potential spread of Covid-19 at child-care centers.
With the number of Covid cases down sharply from their peak and vaccination rates rising, companies are trying to bring women back to the workforce — such an effort hasn't happened in a while.
"The last time we really saw child care — and efforts by firms to bend over backwards to increase the participation of women in the labor market — was really the late 1990s," said Diane Swonk, chief economist at Grant Thornton.
"There's no muscle memory, to what we're going through in terms of labor market tightness, there's something unprecedented about us all trying to open up at the same time," she said. "Consumers are spending and businesses are scrambling to ramp up faster than workers are either able or willing to come back."
Backup care usage on the rise
Bright Horizons Family Solutions, which manages employer-based child care and facilitates child-care and educational benefits, is seeing greater demand for its services. Some of its clients include General Motors, Amazon, Apple and Facebook.
More than 100 of Bright Horizon's new clients added backup care benefits last year. With this service, employees can take their children to a Bright Horizons day-care center at the last minute if their child care falls through.
During the first three months of the pandemic, usage of backup care was about 20 times higher than pre-pandemic levels, according to Maribeth Bearfield, chief human resources officer at Bright Horizons. And it continued to be on the increase throughout Covid, she said.
"People realize that, especially for essential workers, they needed child care in order to be able to come to work," she said.
In surveying its clients, Bright Horizons learned that without backup care during the pandemic, 50% of employees would have needed to reduce their work hours, 33% would have missed key deadlines, and 20% would have taken a leave of absence or quit their job, Bearfield said.
Companies that already offered backup care are also adding other services, she said. The number of employees covered by Bright Horizons rose by nearly 20% last year, according to Bearfield.
"Ten, 15 years ago, as an employer ... we wanted to do everything we can to support our employees, but we didn't reach as far into family support as we do today," Bearfield said. "An employer would have never thought that they would need to provide tutoring or nanny networks for their employees."
The benefits can reach as far as funding or discounting child care.
"Whoever thought your employer would pay your babysitter for you, but employers are starting to do that," Bearfield said. "Forward-thinking employers knew that, if they could help working mothers ... come to work, and help relieve some of that burden, and the mental load of taking care of children, they will have more productive employees."
Other employers may consider converting office space into day-care centers and hiring a company to come in and manage them.
"It reduces the cost of child care greatly to their employees," said Cindy Lehnhoff, director of the National Child Care Association. Lehnhoff supervised employer-based child-care centers at Mercedes-Benz and Carnival. The overhead of renting space can be between 25% and 35% of a normal child-care center's operating cost, but if employer's cover that expense it can reduce the rate parents pay.
Supporting the whole person
All told, nearly half of companies started offering or expanded access to parenting and home-schooling resources for employees, according to a McKinsey survey conducted from June to August 2020.
Carter's, a children's apparel retailer and one of Bright Horizon's clients, held several sessions last year to hear working parents' problems. That conversation revealed how important family support was becoming.
"Our employees were looking for mental and emotional health support for both themselves and their children," said Jill Wilson, Carter's senior vice president of human interest and talent management. "They were looking for ways to entertain, educate and occupy their children while they were at home instead of at school or day care. They needed options for how to try to work while managing child-care responsibilities."
Those discussions inspired the creation of a resource list on Carter's benefits website with tools, resources and organizations that can offer parents support, organized by child age group. The company also added enhancements to the package it offered through Bright Horizons. New benefits were added including tutoring for school-aged students, preferred enrollment and discounts in Bright Horizons' network of child-care centers, and discounts to enrichment programs and camps.
These family centered perks were added along with additional help for mental and emotional health as well as tips on how to get better sleep.
"We will continue to pursue supporting wellbeing for the whole person – whether physical, emotional, social or financial. When schools and day cares closed, we saw the true value in having a benefit like Bright Horizons' backup care, and we continue to see valued use of it as employees transition back into more of a routine," Wilson said.
Services for older children, elders
The shift to a greater focus on family oriented benefits by companies is not just limited to helping workers with young children. Benefits are also expanding to fill the needs of older children or even employees' parents.
Since many high schoolers were taking classes from home, employers are looking to help parents fill in the gap left by remote learning with tutoring services or access to test prep, assistance in navigating college admissions or writing applications.
"During Covid, those kinds of resources weren't just available to high school students anymore. So I think that's where employers are going 'we have to do whatever we can to retain our employees,'" Bearfield said. "I think bottom line is employers are going to risk losing people if they aren't flexible."
Best Buy, which offers backup child care to its employees through Care.com, began to provide $100 monthly reimbursements for tutors for children between the ages of 5 and 18 and the retailer expanded its paid leave program, giving workers up to six weeks of paid leave. And Best Buy became more flexible in offering employees the option to reduce their hours or share a full-time position with another employee.
Its caregiver pay benefit, which provides employees with four weeks of full pay to care for family members, was expanded to include siblings, in-laws, grandchildren, grandparents and children 18 and older. The benefit had previously only included a spouse or domestic partner, parent and children under the age of 18.
The electronics retailer also rolled out Wellthy, a care concierge that helps individuals find care for family members with complex, chronic and ongoing care needs as well as find nannies or child care.
With an aging U.S. population, it is important for companies to offer help with older parents.
"We have an economy where we need all hands on deck because of the aging demographics, and this is across the developed world," Swonk said.
It is still too early to tell if these efforts at drawing more people back into the workforce are effective. It will likely be more evident around the same time schools reopen, making it hard to disentangle the two, Swonk said.
"One of the things that the pandemic has done is ... [push employers to start] seeing workers as human beings that have needs, instead of as commodities that can be swapped out and easily replaced," Swonk said. "That's a major shift and it is giving workers a moment of bargaining power they have not had, particularly for women who have already gotten the short end of the stick."
The shift could be here to stay. Both the government and consumers are putting a greater emphasis on the importance of diversity in the workplace. Expanding family benefits could make it easier for people from different backgrounds to join or rejoin the workforce.
"We're going to see this become more and more important not only because we know that more diverse labor markets and more diverse employee bases across [companies], particularly in the C-suite, deliver better financial returns, but also we're seeing the requirements of the market and governments shifting to require more diversity, equity and inclusion," Swonk said.