But there is one type of cost that, if handled correctly, can provide companies with a fourfold return on investment, a new study says Boston Consulting Group Report. This investment? Supporting employees with childcare.
“Failure to make this type of investment is corporate negligence,” says Reshma Saujani, CEO of Moms First Assets.
But only 11% of large employers offer this help in some form, be it a stipend, backup childcare services or a full daycare center, the benefits consultancy says Mercer. In the US, it’s more of a niche asset that isn’t considered an investment and is often the first to fall on the chopping block when companies tighten their belts.
However, it turns out that offering childcare can bring significant benefits for employees and employers. A report prepared by Boston Consulting Group on behalf of Moms First undertakes an early analysis of the return on investment of child care provision. They found that for every dollar they spend on performance, companies get between $1.90 and $5.25 back in the form of higher employee productivity, fewer absenteeism days and higher employee retention.
“This is the easiest decision to invest in talent you will ever make,” he said report reads.
BCG surveyed hundreds of employees and dozens of working parents across a range of benefits programs; Five case studies of companies that have introduced childcare benefits and their impact on employees were also presented. These include Fast Retailing (parent company of Uniqlo, Theory and Helmut Lang), which offers its employees a $1,000 monthly childcare stipend; UPS, which piloted an emergency child care facility at a warehouse location; and Steamboat Ski Resort in Colorado, which opened its own ski area two years ago day care center for its employees and residents.
Through these incentives, companies benefit from lower fluctuation. At UPS, for example, retention of hourly warehouse workers increased from 69% to 96%. They also have better attendance, with workers avoiding between 11 and 16 absences per year with childcare options, according to BCG case studies.
“That’s more than many Americans get on vacation in a year,” Kos said. “For an hourly wage worker, this is a sensible wage that he can still earn for his family.”
It’s a bit of a twist to think of childcare as an investment, since companies typically view it as a cost. Kos told Assets that even parent-friendly employers couldn’t tell BCG how much they benefited from child care programs. “Companies could tell us how much it cost to administer benefits, but they didn’t have really reliable ways to measure return on investment,” she said.
Because of the high cost of replacing good workers and the productivity benefits, a company could recoup a child care benefit by retaining just 1% of workers who would otherwise have left, according to BCG.
Certainly more independent research needs to be done – and it’s unlikely that companies can fill this gap on their own, meaning the government will likely have to step in – by subsidizing care for poor families New Mexico has recently done to provide incentives to private organizations, or even increase taxes and direct care. But it’s telling that the care crisis has received increased attention since the pandemic, from traditionally pro-business institutions like the Chamber of Commerce trade advocate a solution.
Saujani hopes that reframing this social need as an investment will inspire more employers to step up and close the gap.
“Culturally, we always frame child care as a personal problem that families need to solve,” she said. “It is still seen as a social problem, not an economic one.” But in its importance to workers – and its potential as a recruiting tool for employers – it is on a par with healthcare.
“You wouldn’t work for a company that wouldn’t cover your health care costs,” she said. The same may be true when it comes to family support, she added: “Many people pay more for child care than they do for their mortgage.”