Childcare costs are causing a crisis across America.
Families on average spend more on childcare costs than on housing, healthcare, food, and college. This totally unsustainable trend is a key driver of economic disparity in our society. Parents are faced with a tragic, double impact of both being unable to work because of childcare needs and costs, and their children falling behind their peers who have access to high-quality programs.
Even families that everyone would consider solidly middle- to upper-middle class, who don’t qualify for government assistance programs, are questioning their identities, careers, and families. In many ways, it comes down to simple math: does the work they do and the income they bring in exceed the cost of childcare?
By way of example, in New York City, a high-quality, full-time program for an infant costs at least $2,200 per month, according to Care.com’s calculus, and a nanny easily exceeds that. The hours of these programs don’t typically line up with a regular workday, meaning that either a parent would have to leave their job early (and miss out on professional opportunities because of it) or hire a nanny, too. For a family making $150,000 annually, that would mean spending more than 20% of their income on childcare. Other cities in the U.S. are just as unaffordable.
Unsurprisingly, when faced with the choice of their career or their families, parents (both moms and dads), choose their families. Women, in particular, are more likely to leave the workforce after the birth of their first child. Over a six-month period, 45% of parents are absent from work at least once, missing an average of 4.3 days, due to breakdowns in childcare. This takes a massive toll on these families, who surrender their professional dreams and income, and on our whole society, which sees more attrition from the workforce due to childcare than any other factor.
But this is really a false choice that working families are forced to make, largely because there’s another stakeholder that has nearly as much to lose as these families: their employers. We are experiencing a historically tight labor market that has engaged employers in a talent war, and they are increasingly competing with each other on the fringes of perks–from meditation rooms to ping-pong to happy hours–that are precisely that: fringe. The fact is that working parents value childcare as much as they do raises, fringe perks, equity, and paid time off.
While our whole mission at Vivvi is to honor the potential of working families by reducing the burden of childcare costs by working with their employers, it’s also an experience I feel very personally as both a new father and CEO. As a father, having access to childcare that is aligned with my schedule (7 a.m. to 7 p.m.) with world-class providers is quite literally the only way to make my and my wife’s careers work. As a CEO, offering free or heavily subsidized childcare to our employees has been a no-brainer, even as a growth-stage company. In fact, it has allowed us to attract the very best talent who are in many cases being paid more elsewhere but are in the throes of this crisis and want to work for a company that honors them for their entire person, not just the role they fulfill.
Leaving aside that providing relief to an issue so pressing is the right thing to do, the ROI of providing access to high-quality childcare relief measures speaks for itself as the single most effective recruiting, retention, and productivity tool that exists. According to data compiled by the Child Care Council, it’s associated with a 20%-30% reduction in absenteeism, 37%-60% reduction in turnover, 75% higher likelihood of remaining at the same company for the long term, and 80% higher likelihood of attracting new hires.
This ultimately helps the entire organization as direct reports and colleagues are able to better do their jobs, as well as reinforces a culture that values each person for their whole selves. By our calculations, providing childcare to 10 employees at one of the most heavily subsidized rates generates a 17x ROI. Put another way, by keeping even one person who would otherwise leave, the investment pays for itself.
So what can other employers do to help their people and themselves today?
Offer flexible work options
We’ve heard of companies that actually won’t allow people to work from home if they have children unless they can prove they have full-time care. The easiest and lowest barrier to entry option for employers is to afford their employees the chance to work from home when needed. If you trust your people, this should be a no-brainer, though it still does not address the real crisis of full-time care.
Provide backup care
Backup care options help fill the cracks in someone’s schedule when a nanny is sick, school is closed, or there’s inclement weather and provides parents with the opportunity to take back those days per year they otherwise miss. The ROI on this is pretty easy to calculate. If the average cost of a day of backup care is less than the value of having someone at work, this is a no-brainer.
Provide employer-sponsored care
The gold standard for relief from the childcare crisis, as headlined by Patagonia, is to provide highly subsidized, high-quality, on-site or near-site childcare. While historically these options have been limited to the largest companies that could sustain the expenses of building their own centers, Vivvi and some others work in a more flexible fashion that don’t require capital expenditure or long-term commitments. This opens the offering to companies of all sizes. As an added bonus, the Federal government subsidizes about 55% of every dollar an employer spends on childcare for its employees, so it has never been more urgent or accessible to provide this kind of solution and truly unlock the potential of the organization.
The corporate war for talent today is going to have a massive impact on the winners and losers of tomorrow. The mandate from employees is loud and clear: Invest in your people today, or risk falling behind forever tomorrow.
Charles Bonello is the CEO and cofounder of Vivvi.