The current business landscape has seen a surge in cost-cutting measures, with companies tightening their belts on various fronts, including employee benefits and compensation. However, recent analyses from Morgan Stanley and the Boston Consulting Group (BCG) shed light on a potential investment opportunity that promises significant returns: supporting employees with child care.
According to a recent report by BCG, aiding employees with child care expenses can yield a substantial return on investment for corporations, with potential returns ranging from $1.90 to $5.25 for every dollar spent. This return manifests in the form of heightened worker productivity, reduced absenteeism, and increased employee retention rates.
Reshma Saujani, CEO of Moms First, emphasizes the critical importance of this investment, stating that neglecting such support ventures into “corporate negligence territory.” Despite its potential benefits, only a small fraction of large employers, roughly 11%, currently offer some form of child care assistance, be it through stipends, backup care services, or fully-fledged child care centers, as reported by benefits consultancy Mercer.
The BCG report, conducted in collaboration with Moms First, presents compelling evidence of the positive impact of child care benefits on both employees and employers. By surveying hundreds of employees and dozens of working parents across various benefits programs, as well as analyzing case studies of companies that have implemented child care support, BCG illustrates the tangible advantages of such initiatives.
For instance, companies like Fast Retailing, UPS, and Steamboat Ski Resort have witnessed notable improvements in employee retention and attendance following the introduction of child care benefits. At UPS, for instance, the retention rate of hourly warehouse workers soared from 69% to an impressive 96% after implementing child care support. Moreover, BCG’s case studies reveal that workers with access to child care options experienced between 11 and 16 fewer absences per year, further underscoring the positive impact of such initiatives on workforce productivity and engagement.
In light of these findings, the BCG report advocates for a shift in perception, urging companies to recognize child care support not merely as an expense but as a strategic investment with the potential to yield substantial returns in terms of employee satisfaction, retention, and overall business performance.
The perspective shift towards considering child care as an investment rather than merely a cost represents a significant departure from traditional business practices. While companies often view child care programs as an expense, the potential benefits are substantial, as highlighted by insights from various sources.
Kos, referencing the meaningful impact of child care support on hourly workers’ family finances, emphasizes the significance of this investment. Despite the prevailing notion of child care as an expense, many employers lack robust methods for measuring the return on investment generated by such programs. According to BCG, even retaining just 1% of workers who might otherwise leave can offset the costs of implementing child care benefits, underscoring the potential financial gains for businesses.
Recognizing the high costs associated with employee turnover and the productivity benefits of retaining skilled workers, there is a compelling argument for companies to invest in child care support. However, addressing the child care crisis will likely require collaborative efforts between businesses and government entities. While private organizations can play a role in providing incentives and support, government intervention, such as subsidies for low-income families or direct provision of child care services, may also be necessary.
The increased attention to the child care crisis, particularly in the wake of the pandemic, has prompted a shift in perspective even among traditionally pro-business institutions. For instance, the Chamber of Commerce now endorses initiatives aimed at addressing this pressing issue.
Saujani advocates for reframing child care as an economic issue rather than solely a social one, emphasizing its importance to both workers and employers. Drawing parallels with health care benefits, she argues that employers should prioritize family support programs similarly to how they prioritize health care benefits. As many individuals allocate a significant portion of their income to child care expenses, recognizing the economic impact of child care support is crucial for fostering a more supportive and equitable work environment.