Little child looking through window of children's house made of big box

Elon Musk, the billionaire chief executive of Tesla, SpaceX and NeuraLink, has made a lot of headlines lately, but a noteworthy announcement may have been overshadowed by other news. In a tweet on July 8, Musk shared his plan to significantly increase child care benefits at his companies with details to be unveiled next month. Of note, Tesla already offers generous family benefits, including five days of backup child care, 16 weeks of paid family leave, and $40,000 coverage for fertility services. Musk is now adding to the family benefit package offered to his employees. He also said other companies should do the same.

Meanwhile, JCPenney announced today that it is extending child care benefits to all of its 50,000 employees, including store and supply chain associates. It will leverage WeeCare’s national network of in-home daycares and nannies, to provide families with quality, dependable, and affordable child care options. For JCPenney’s employees, the new benefit should result in cost savings, greater proximity to child care, and easier access to quality and flexible care options.

Musk’s message and call to action, as well as JCPenney’s announcement are telling when it comes to the role child care is increasingly playing in the workforce. Musk and JCPenney are not alone in increasing this type of enticement, either. Fifty-six percent of employers now offer some child care benefits in 2022, according to Care.com’s “The future of benefits” report surveying 500 companies every year. By comparison, only 36% of companies offered child care benefits in 2019.

But, child care as an enabler to work may only be part of the news. In actuality, the pandemic has meaningfully transformed both work and family, and child care benefits are following suit. Organizations are having to adapt to a future where more employees work from home or in hybrid capacity – dividing time between being remote and in the office. Companies are also increasingly accommodating a changing family dynamic that is moving away from the nuclear model. We are seeing rising cohabitation and family structure diversity. To account for these changes, child care is evolving toward being flexible, relationship-centered, and focused on 21st century competencies, such as creativity, collaboration, and empathy. It also increasingly transcends the boundaries between home and work, as many families aspire to be closer to care for their little ones.

Employers are stepping up in the midst of a trifecta of a dire child care supply crisis, a tight labor market, and Congress failing to pass legislation supporting child care affordability and quality. Child care has become a top HR trend in 2022.

In the last two years during the pandemic, more than 10% of the child care supply has been shuttered, impacted by the COVID-19 disruptions and, more recently, child care staffing issues driven by low wages. A 2021 survey by the Pew Center noted that more than 50% of working parents struggle with child care. Many women have resigned for their jobs, putting careers on hold or not returning to the workforce due to lack of child care. There are now one million fewer women in the workforce than before the pandemic. According to the U.S. Chamber of Commerce, nearly 60% of parents cite lack of child care as their reason for leaving the workforce.

Rising child care costs (above food or gas price inflation) are another major driver. Twenty-six percent of parents said they left the workforce because they were unable to afford child care. There is a strong business case to be made for supporting employees with child care. Doing so can lower absenteeism by 30%, reduce turnover by 60%, increase recruitment, and boost employee productivity, according to the Early Care and Learning Council.

Employers driving innovation toward a more flexible future of care.

Employers have long played an innovator role in child care, especially during crises. Going back to World War II, historian Sonya Mitchell reports that while there were 19 million women in the labor force in 1944, only 130,000 child care spots were available then until one employer stepped in. At two of its shipyard facilities in Richmond, California and Portland Oregon, Kaiser partnered with key child development experts and leveraged government subsidies to set up ideal child care facilities for workers to continue building ships. The facilities were running 24 hours a day, offered meals for children, and a well-designed curriculum. This model will play a big role in shaping our nation’s future child care system. Researcher James Hymes, who set up the Portland facility, would serve on the National Planning Committee for Head Start in the 1960s.

Similarly, during the COVID-19 pandemic, employers have also catalyzed child care innovations, especially as work-home-care boundaries became more elusive, and many employees work remotely.

Pre-pandemic, employers were offering two primary modalities of child care benefits: onsite child care or backup child care. Those benefits were either serving a tiny fraction of employees, or offering a small number of care hours per employee, generally during a set schedule. Moreover, those benefits were mostly provided by large employers – think Google, Goldman Sachs, Adobe, or Ernst & Young. But this is changing.

With increasing remote work and more widely distributed workforces, employers are now innovating to provide greater flexibility to employees via a new modality called “child care as a benefit.” The employee receives a child care stipend and access to vetted quality child care places near work or home. In turn, the employer benefits from tax credits. Employers are partnering with child care innovators to do so. WeeCare for instance recently raised funding precisely to scale child care benefits for the evolving future of work. WeeCare has partnered with more than 90 large enterprises in the U.S. across many sectors, such as retail (JCPenney), hospitality (Dollywood), or healthcare (Eliot). WeeCare also provides child care benefits to small business employees through partnerships with municipalities. Their CARE and Back2Work programs in Cathedral City, California, provides free child care placement assistance to small business employees and backup care to job seekers.

The other trend is the move toward on-demand child care utilization. Wonderschool is partnering with employers like Montage Health to offer personalized support to employees, tapping into flexible family child care close to employees and the hospital. Similarly, Kinside has partnered with 3,000 employers, while centralizing local child care openings and offering a concierge service for parents to find convenient care. Meanwhile, TOOTRis partners with employers looking for solutions for hourly employees and 24-hour coverage. An employee of soap manufacturer Dr. Bronner’s, an employer partner of TOOTRis, had 50% of her child care cost subsidized by her employer. Similarly, Arvorie is supporting employers in maximizing tax efficiency, and making child care more affordable.

Of note, while employers used to primarily focus on high wage employees, this is also evolving. McDonalds started offering back-up child care benefits during the pandemic to all its restaurant-owned employees and testing it through its franchisee network. Meanwhile, child care provider Bright Horizons signed a large contract in 2021 with a telecom company that pays a child care benefit that grows with employees’ needs. The lower the wage is, the higher the child care benefit payout is.

Ultimate flexibility: reunification of work and family.

Ultimately, flexibility empowers families to also care for their little ones during the work week. The future of child care increasingly transcends the boundaries of work and home.

This starts with family leave, providing families with the essential time to bond with their children. This also supports parents with “returnships to work” and normalizing leaves of absence. LinkedIn now provides an option for “career breaks” on an individual’s LinkedIn profile.

The future of child care also sees employers providing more family-friendly environments. Vivvi, for instance, supports employers in converting office space into child care centers. Vivvi is not only focused on flexibility, but on quality, fostering the joy of learning through play and themes inspired by children’s curiosity. A large tech company is now testing an offering with Tinkergarten that would provide parent employees with the option to attend outdoor play-based classes with their little ones.

This is not to say that employer-sponsored child care is a panacea. For one, child care benefits may not be here to stay in an economic downturn. Moreover, employer-sponsored child care benefits may grow existing inequities by excluding part-time workers, independent contractors and freelancers, parents who do not work, or workers of smaller organizations. Also, continuity of care for young children may be impacted if a parent changes jobs. On this point, Care.com is advocating for a child care wallet portable solution across employers, similar to a 401(k) account.

But, employers have a role to play in our existing child care crisis, especially as the prospects of a transformational child care policy are waning in Congress. Employer-driven innovation supports an evolution of child care toward greater flexibility, access, affordability, and even quality. Maybe it is time to embrace child care and family supports as a centerpiece of our future of work.