Addressing Staff Turnover with Child Care: A Growing Trend Among US Companies

Key Takeaway

• Red Rooster Coffee's subsidized child care significantly boosts employee retention, reflecting a broader trend of 32% of companies offering backup child care since 2019.
• The labor-force participation rate remains below pre-pandemic levels at 62.7%, with businesses like UPS seeing reduced absenteeism through child care benefits.
• U.S. government underfunds child care compared to peers, with Biden urging semiconductor firms for affordable plans; parents spend a quarter of income on such services.

Addressing Staff Turnover with Child Care

In an innovative approach to combat high staff turnover, companies across various industries are increasingly turning to child care solutions. Red Rooster Coffee, a business based in rural Virginia, has notably implemented subsidized on-site child care, significantly influencing employees' decisions to stay. Zach Wiley, an employee who benefited from this initiative, highlighted the immense value of having affordable child care adjacent to the workplace, emphasizing the positive impact on his family's life and work satisfaction. This trend is not isolated, as a survey by the Society for Human Resource Management in 2023 revealed that 32% of companies now offer backup child care, up from 26% in 2019. The move towards providing child care solutions reflects a broader recognition of the challenges American workers face in balancing employment with family responsibilities, a dilemma that has intensified since the Covid-19 pandemic.

Economic and Social Implications

The labor-force participation rate in March was reported at 62.7%, still below the pre-pandemic level of February 2020, indicating a slow recovery in workforce engagement. Businesses have responded by raising wages, particularly for blue-collar workers, yet challenges in attracting and retaining staff persist. Subsidized child care, as demonstrated by companies like Red Rooster Coffee and UPS, has emerged as a strategic response to these challenges. UPS, for instance, reported reduced absenteeism and lower employee turnover rates after introducing backup care benefits. However, the cost and regulatory hurdles associated with providing on-site child care present significant challenges for businesses, especially those with a geographically dispersed workforce.

The Role of Government and Economic Trends

The United States, unlike many developed economies, offers limited subsidies for child care, placing the burden largely on employees and businesses. In 2019, the U.S. contributed $900 per toddler towards care, starkly lower than the subsidies provided in countries like France and Sweden. The Biden administration has signaled a shift towards addressing this issue, urging semiconductor businesses under the Chips Act to include affordable child care in their plans and advocating for increased federal funding for preschool access. This governmental push aligns with the economic analysis suggesting that the high cost of child care contributes to workers staying out of the workforce. A survey by Care.com indicated that parents of children aged 14 or younger allocate roughly a quarter of their income to child care, with a third resorting to savings to cover these costs.

Management Quotes

• Zach Wiley:

  "The child care is just huge. I don’t know what we would do without it... Our son loves it, and I never worry about him. He’s right through the next door."

• Danelle McCusker, President of UPS’s human-resources group:

  "We were having absences from parents who were kind of embarrassed because of the stigma."

• Haden Polseno-Hensley, Owner of Red Rooster Coffee:

  "More of our employees started getting pregnant or having spouses about to have a baby... It’s basically an investment in our staff by the coffee-roasting company."

Street Views

• Kathryn Anne Edwards, Economist and Independent Policy Consultant specializing in child care:

  "The federal government is making this your problem by failing to make the investment it should be making."