Offering child care benefits to employees. Employers can address work-life balance and aid recruitment and retention efforts with child care benefits for employees.

Both parents are employed in more than 60 percent of American families, yet only 6 percent of companies offer child care benefits, according to research by Clutch.

Another study, by New America’s Better Life Lab and, found that the average annual cost of full-time center-based child care ($9,589) is more expensive than in-state college tuition ($9,410). (And, both costs are rising smartly above the rate of inflation.)

Employers are expanding family-friendly employee benefits to improve work-life balance as well as bolster retention and recruitment efforts and employer-paid child care benefits are a trend to watch in 2020.

The Rising Cost of Child Care

Research by Freddie Mac found the price of child care, adjusted for inflation, has increased by more than 45 percent over the last 25 years and it impacts a family’s ability to afford a home. 

“One of the major challenges, when it comes to affording a home, is the high cost of child care. Our analysis finds that those families paying for child care generally are left with less money for housing. Specifically, we find they, on average, pay about half of the median mortgage payment and nearly eighty percent of the median rent,” said Sam Khater, Freddie Mac’s Chief Economist.

The average family spent more than 10 percent of their annual income on child care in 2011. In lower-income families, the cost burden of child care is much higher. Families making less than $1,500 a month with children under the age of 15 spent 40 percent of their income on child care, on average. 

Offering Child Care Benefits to Employees

New parent benefits have seen significant growth over the past five years, but child care benefits have failed to keep pace. According to research by the Society for Human Resource Management (SHRM):

  • 25 percent of employers let employees bring children to work in an emergency
  • 11 percent of employers have a child care referral service
  • 4 percent of employers offer subsidized or nonsubsidized child care centers or programs

As an emerging trend, there isn’t a wealth of data on the ROI of child care benefits, but initial research published in the Journal of Management found companies that introduced child care benefits had lower collective turnover rates for female employees in subsequent years. 

In the next few years, we expect to see the number of companies offering child care benefits rise as employers battle for top talent with better benefits. 

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