We’ve talked about how hard it is to hire lately. And in today’s competitive job market, if you want to hire and retain the very best workers for your small business, here’s one thing that can help: child care benefits.
Payroll with easy org charts built right in.
Big businesses like Starbucks and Best Buy have already begun adding child care to their list of employee perks, and small businesses should consider it too. Supporting the parents on your payroll can make it easier to recruit top talent—and help ensure they stay motivated.
But it’s not just about making employees happy. You, as an employer, get a pretty nice perk too. When you directly pay for your employees’ child care expenses, the Internal Revenue Service lets you claim 10 to 25 percent of the cost—or up to $150,000—each year.
And the benefits go beyond that. Helping working parents can mitigate the gender pay gap, which widens significantly as men and women progress in their careers.
At age 25, college-educated women are paid 90 percent as much as their male colleagues. But by age 45, they’re earning just 55 percent, according to the New York Times. The lack of on-the-job child care benefits is one of the many factors keeping us from building an equal workplace and erasing the gender pay gap.
Here are seven ways small businesses can offer child care to cultivate a supportive workplace for working parents.
1. Make child care cheaper with subsidies.
Child care costs are astronomical, says anybody who has ever paid for it. In fact, according to the Center for American Progress, the price tag is too expensive for most working families:
To help their employees, some companies shoulder part of that burden by subsidizing their employees’ child care bills or negotiating discounts with local child care providers.
WeeCare, a mobile platform for home daycare owners, is in the child care business, so it’s easy for them to connect with local providers. The startup helps daycares get licensed, manage bills, and communicate with parents.
But it does something any small business could do—subsidizes its employees’ child care bills. WeeCare covers part of the cost for employees to send their kids to daycares it supports (and also at preschools that Jessica Chang, the CEO, owns separately).
The out-of-pocket cost of the discounts is manageable because it works with in-home daycares, which are typically 30 to 40 percent cheaper than care at a larger center, Chang says. And it’s a permanent solution for her employees who, thanks to the benefit, have locked in affordable care for their kids from age six weeks to six years. That, says Chang, leads to happier employees who produce more on the job.
“I get a lot more out of it than what I put in,” she says.
2. Don’t forget your tax break.
If you’re cutting your employees’ child care costs, you’ve likely earned a tax break. You can deduct up to the amount that you subsidize for your employees, says Priyanka Prakash, a small business expert with online loan broker Fundera.
“That’s still really helpful in limiting costs,” Prakash says, “while providing a useful benefit for employees.”
Offering dependent care Flexible Spending Accounts is another way small business owners can help their employees cut costs, according to Prakash. When parents use the pre-tax accounts, they keep 30 percent more of their own money to pay for daycare, summer day camps, preschool, and other qualified expenses for kids under 13.
3. Embrace flexible work options.
Flexibility can mean everything to any employee, but especially a parent. So, at WeeCare, there are no set work hours. Employees just need to be sure to get their work done.
“When you have kids, it’s a balancing act,” Chang says. “Some days, your kids are going to get sick. Some days, they are going to be sent home early. We really understand that and try to support families, especially when kids are infants, so they can work on their time.”
This flexibility, along with other parent-friendly policies, have allowed Chang to attract a more experienced and loyal workforce. They’re benefits, she says, that more job seekers simply expect.
“As more millennials become parents, it’s not just about them anymore. It’s about their child and their [spouse],” says Chang, who recently gave birth to her second child. “We have found great talent because of our policies and because of our flexibility.”
4. Set predictable schedules.
For businesses that can’t easily provide a flexible schedule, make it predictable instead, says Rich Franklin, founder of the Bay Area-based KBC Staffing. Predictability is key for any employee, but especially those who must arrange reliable child care.
A consistent schedule for hourly workers will result in less turnover and fewer missed shifts, Franklin says, because workers can line up child care with plenty of notice and are less likely to skip out on work.
“Having the schedule change on them in the last minute is a big problem,” Franklin says.
Consistency is also critical for salaried workers, who are bound by the hours of their child’s daycare. Prakash says employers should avoid setting meeting times too early—like before 9 a.m.—or too late—like after 4 p.m.—to allow for easy daycare drop-off and pickup.
5. Be your employees’ backup.
A sick kid can upend all kinds of work plans for parents—and the costs to their employers add up in terms of productivity. One study found that working families in the United States miss out on $8.3 billion in lost wages because of a lack of affordable child care.
To offset those costs, more businesses are offering backup child care for their employees. This means they cover or subsidize the costs of emergency care when a child is sick or child care arrangements fall through for a set number of days each year.
Companies that work with businesses to provide backup care for their employees include:
Smaller babysitting businesses across the country can also help. Rachel Charlupski, founder of The Babysitting Company, which has 2,500 vetted sitters across the country, says she regularly works with companies of all sizes to support on-site employees and remote workers in a pinch.
“For businesses that have remote workers, if they have to come in for something, we have babysitters come in to assist with child care,” Charlupski says. “And if a child is sick or home from school for any reason, we have partnerships to provide discounts for their employees.”
6. Yes, you could even offer daycare at work.
Daycare centers aren’t just for major corporations anymore. Hear Franklin of KBC Staffing out on this.
Franklin once worked with a small bookkeeping agency where most employees were women in their 20s and 30s. Because of those demographics, the agency’s owner brought in a child care worker and turned space in the office into a daycare open to any employee with kids under age four.
Employees paid a small fee for their children to attend—much less than if they were sending their kids elsewhere. Eventually, the owner let the center’s manager bring in a few more children from neighboring businesses to help him cover some of the costs.
The effort paid off for the owner. Because they no longer had to worry about daycare drop-offs and pickups, employees came in earlier and stayed longer each day.
“He probably got another hour or hour and a half of work out of people every day,” Franklin says. “That’s a pretty big productivity gain.”
It’s an unusual situation, Franklin admits. Depending on how it’s set up, it could also be a costly one. And before you move forward, you’ll want to check with local and state regulators to determine what licenses or permits may be required to operate a daycare onsite at your business.
But remember, a business owner can deduct any expense involved in setting up and running the program, including equipment and supplies, up to $150,000.
7. Build it into your culture.
Incremental shifts and small gestures to support working parents can be just as important as the big changes like on-site daycare, says Lori Mihalich-Levin, founder of Mindful Return, which helps new parents navigate the transition back to work.
Steps employers can take include:
- Launching a workplace support group where parents can network—and commiserate about toddler tantrums. The Harvard Business Review provides tips for making a working parents group effective, including ensuring all events are on “working parents time” that won’t conflict with pickups or drop-offs.
- Setting up discounts with a breastmilk shipping company, which could be essential for businesses where employees take frequent business trips. Milk Stork, FedEx, and Milk Expressed are among the companies that provide the service.
- Establishing new management policies to ensure that working parents don’t get scornful glances when they leave early to care for their kid’s third ear infection. Those can include everything from regular check-ins with new moms to gender bias training.
Together, those big and small efforts build a workplace culture where parents feel supported and encouraged to grow and advance in their careers, Mihalich-Levin says. That can make all the difference.
“It’s a huge retention tool,” she says. “There’s the saying, ‘Culture eats strategy for breakfast.’ If you don’t have culture, you don’t have anything else.”
Supporting your employees with children doesn’t have to mean making wholesale business changes. Allowing for flexible schedules or providing a network for working parents can be smart steps forward.
Whatever you do, if competing for and retaining the very best employees is a top priority for your business, now is the time to make child care benefits part of your playbook.