Childcare costs are still an issue for many parents across the United States. This crisis doesn’t seem to be going away anytime soon, and it is already impacting working parents’ return to the labor force. As an employer, it is your job to ensure employees have the support they need to have a successful work-life balance. This means providing them with employer-sponsored childcare.
Below, we’ll discuss the childcare cost crisis for working parents right now and what companies can do to address this crisis from now on.
Childcare Costs: Is There Still a Crisis?
Despite the economy rebounding, childcare costs are soaring. Many in this industry face challenges, including labor shortages and low wages. Working parents have struggled for years to access affordable, high-quality childcare. A lack of government funding and an inadequate supply of childcare programs continue to be two leading causes of this struggle.
The pandemic gave new energy to the childcare crisis debate. The last two years highlighted how broken the childcare system is. Many childcare providers shut down, and millions of mothers left the labor market to focus on childcare responsibilities. This scenario proved how vital childcare support is for many US employees’ financial security and well-being.
With a continued lack of access to childcare, it is no wonder that the cost of these services is rising again. Without intervention, the challenges faced by this industry will have severe consequences for many other sectors.
How Much Does Childcare Cost? Let’s Take a Look At the Math
Some employers believe that the childcare crisis is not their issue to solve. But, that is far from the truth. If your employees cannot afford or access childcare, this has a more significant impact on your business than you realize. To understand how this crisis affects your employees, let’s look at the reality of childcare costs.
The Demanding Change report found that families across the United States were paying approximately $10,174 for childcare in 2020. In terms of national median household income, this backs out to 10% for married couples and 35% for single parents. This means that many families are paying the equivalent of their mortgage payment or twice the cost of a car payment on childcare services. Yet, according to the federal government, childcare costs should never be more than 7% of a household income.
In New York state, childcare costs are slightly higher than the national average. NYC childcare costs range anywhere from $11,000 to $21,000 annually, depending on your child’s age. According to the Economic Policy Institute, childcare for infants in New York costs on average $1,283 per month.
This is what working parents in NYC are typically paying for childcare for each of their children based on age:
- Infant: $1,760 per month
- Toddler: $1,365 per month
- Preschooler: $968 per month
- School-age: $802 per month
If your employees are based in New York City, for these families to comfortably pay 7% – 8% of their median income on childcare costs, they would need to earn at least $112 per hour. These figures don’t even account for health costs, cost of living, rent, and mortgage payments.
The math is straightforward: working parents can’t navigate the childcare crisis alone.
Working Parents Aren’t The Only Ones Feeling the Pinch
The childcare crisis is already impacting the labor market, and employers are starting to feel the pinch. Right now, companies are facing one of the most challenging hiring markets as many working parents are can’t return to the workforce due to soaring childcare costs.
Consider this: there have been approximately 2 million fewer women in the labor market since the beginning of the pandemic. Despite a highly-competitive hiring market, labor force participation continues to fall. According to the Bureau of Labor Statistics, figures are still below what they were in February 2020. This is due to the rising costs of childcare.
Many companies are struggling to retain their current workforce, and the future of hiring doesn’t look too bright either. A smaller talent pool of experienced workers means employers will find it harder to attract and retain great talent – especially working mothers.
Unless employers commit to being part of the solution, the childcare crisis will have devastating impacts on the labor market for years to come.
How Companies Can Overcome Issues Caused by Rising Childcare Costs
Employers must act now to build parent-friendly workplaces. Through various resources and benefits for working parents, you can make an impactful change in the lives of working parents. While there are steps that the government will need to take, there are small ways companies can help parents overcome rising childcare costs.
Companies must be willing to accept that limited childcare options mean many working parents won’t have the availability to return to the office full-time. Implementing flexible work arrangements and schedules allow working parents to balance their job and caregiving responsibilities better. Many companies have already paved the way for flexibility during the pandemic. Keeping this work model will be more vital now than ever.
Provide Childcare Subsidies and Stipends
Childcare benefits are highly sought after by working parents. Companies that can show prospective employees they are committed to supporting their parenthood journey are coming out on top. Companies should consider offering childcare subsidies and stipends as part of benefits packages. The addition of these benefits for working parents can help to reduce the financial burden that comes with caring for children.
Offer Employer-Sponsored Childcare
Back-up and employer-sponsored childcare are imperative to solving the childcare cost crisis. This is the first line of defense that companies should be taking to prevent employee turnover. If working parents are provided access to high-quality childcare either on-site, in-office, or in-home, this could be the deciding factor to help them re-enter the workforce.
At Vivvi, we work with employers of all sizes to ensure their employees have access to affordable and high-quality childcare. Our team of educated childcare providers is committed to supporting you and your employees where they are. For more information about our employer-sponsored childcare solutions, visit our employer page today.