Supporting Employees with Childcare Issues

“It takes a village to raise a child” is an African proverb expressing the concept that, no matter how strong a single family unit is, children get support from a variety of sources — churches and synagogues, schools, neighbors, coaches, pediatricians, and the occasional helpful stranger. 

Even you, as a business owner, play a role in this village by the way you treat your employees and, by extension, their children.

If you are trying to level up a business you recently purchased — or trying to grow a start-up enterprise — one of the things foremost on your mind is how to recruit and retain top talent. Supporting employees with childcare issues is one of the main ways you can not only be competitive when making new hires but also retain your best workers for the long haul.

Why is Childcare Such an Important Issue? 

1. The need for childcare is prevalent. Over 50% of children in the United States have both parents working outside the home, so it’s likely that one or more of your employees is juggling family and work responsibilities right now. Stress over finding childcare or having inadequate childcare affects job performance in a variety of ways, including losing top workers, increased sick days, and a lack of on-the job focus.
2. Childcare is expensive. In fact, an analysis of data between 2013 - 2018 showed the cost of childcare is “typically untenable for families.” And that was before Covid-era inflation! Childcare costs in 2025 ranged between $400 and a whopping $1500 a month. In many cases, the cost of childcare accounts for more than 20% of the total family income — which, when you think about it, is crazy. 
3. Single parents are hit especially hard. While you can make the argument that one parent in a married couple could stay home with the kids or pursue a part-time job that gives them more flexibility, that’s simply not an option for the approximately 23 million single-parent families living in the United States. Single mothers, in particular, find it more difficult to afford childcare, even though it is essential for them to earn enough money to support their children.
4. Your employees will be more productive. One reason for not providing support with childcare is the perception that it will be too costly for the company. The reality, says Boston Consulting Group (BCG), is that supporting employees with childcare issues has financial benefits, improving a company’s ROI by as much as 425% — not to mention more intangible benefits like employee satisfaction and morale. One of the main reasons is the high cost of recruiting and training new employees; companies that provide desirable benefits have a much higher retention rate overall.

Now that you know supporting employees with childcare issues can be good for your company’s long-term stability and growth, here are a few suggestions for how to make it happen. 

Help Educate Your Employees About their Options

The Child Tax Credit, which can be used to offset federal taxes for individuals earning under $200,000 a year ($400,000 for filers of joint federal tax returns), has complex eligibility requirements that can be difficult for the layperson to understand. 

Moreover, 16 states  — Arizona, California, Colorado, Connecticut, Idaho, Illinois, Maine, Maryland, Minnesota, New Jersey, New Mexico, New York, Oklahoma, Oregon, Utah, and Vermont — offer (or did offer) some form of state-level child tax credit. Three more states — Alabama, Louisiana, and North Carolina — are currently considering legislation.

Offering to pay for your employees to consult a tax professional to see what child tax credits they are eligible for can help reduce the confusion and allow them to plan ahead. It won’t cost your company much to host seminars that feature this information, but it will build good will and foster the sense of a company that cares about its employees’ welfare.

Allow Flexible and Hybrid Work Arrangements

Covid set the standard for work-from-home and hybrid work arrangements. According to McKinsey & Company, “office attendance remains roughly 30% lower than it was before the pandemic,” and the option to work from home at least part of the time remains popular. In fact, most employees feel that it is one of the top benefits a company can offer.

A concern for employers is whether their workers will be able to get as much done when they are working from home and only reporting to the office to attend meetings or connect with their teams. But the same McKinsey & Company article claims that levels of productivity can remain high, if not higher, when employees work from home — provided that companies make sure their employees operate on the same hybrid schedule, maximizing the amount of time spent in the office together.

In other words, you have to have a good operational plan in place for a hybrid work schedule to be effective. 

Unlike work-from-home or hybrid models, flexible work arrangements allow employees to deviate from the normal 9-5. Options include coming in later, working on weekends, having a four-day week — any flexible arrangement is possible if the employer and employee agree to the terms and the new schedule does not disrupt workflow or team meetings. 

Although these models are not possible for every business to implement, flexible and hybrid work options benefit families in a variety of ways, parents can: save money on childcare, engage in important school activities without taking time off from work, and have more quality time with their children during the child’s waking hours. These work options are especially useful for single-parent families, who often have no one to pick up the slack if there is a conflict between work and childcare responsibilities. 

Have an On-Site Childcare Facility

As a divorced parent who raised a child mostly on my own, I know there are many advantages to having an on-site childcare facility. In fact, the community college where I taught was in the process of building a second childcare facility when I left. 

The benefits of having on-site childcare at a public institution like this are obvious: 

• Students, staff, and faculty can all make use of the facility, exposing kids to diversity and expert care.
• Students with children can take classes without bringing their children. 
• The facility can provide jobs for students in the education program, helping them to afford tuition.
• Proximity to one’s children allows parents to respond more quickly to minor crises, reducing the amount of sick leave employees take.  

Many of these benefits transfer to private companies. Adobe, Best Buy, and Aflac are examples of large corporations that have pioneered the on-site childcare model. 

As of today, the federal government will subsidize 25% of the cost of developing a childcare facility up to $150,000 a year, so employers do not need to bear the entire financial burden.

In addition to assistance from the federal government, 17 states — Arkansas, Colorado, Connecticut, Georgia, Illinois, Iowa, Kansas, Maryland, Mississippi, Montana, New Mexico, New York, Oregon, Rhode Island, South Carolina, Virginia, and West Virginia — offer child tax credits to to subsidize on-site and contracted childcare services.

Unsurprisingly, companies have sprung up to help provide contracted childcare services for employers who cannot provide on-site facilities. UrbanSitter, for instance, provides last-minute childcare (as well as elder and pet care). You can think of it as outsourcing a childcare facility when your employees need it the most.

Provide Employer Childcare Benefits

Employers can offer Dependent Care Flexible Spending Accounts, which allow employees to pay for childcare expenses with pre-tax dollars. Employers can also contribute to those accounts on behalf of employees subject to the IRS-allowed maximum. 

Employers can also offer direct reimbursements or bonuses to help their employees with childcare costs. These childcare “subsidies” not only translate to higher employee productivity and retention but may also provide you (the employer) a tax credit of 10% of your costs, up to $150,000 annually. 

In addition, the Family and Medical Leave Act affords employees up to 12 weeks of unpaid time off in a given 12-month period under certain circumstances, including the birth of a child. There is no law saying an employer can’t pay their workers for this time off.

The Bottom Line

Happy employees perform better and are more loyal to the company they work for. That translates into a higher ROI for your business. 

While it’s okay to run your company with a top-down corporate structure and the goal of maximizing profit, it’s also important to think carefully about the needs of your employees when it comes to attracting top talent. Childcare takes one of the biggest bites out of the family budget and is, therefore, a primary need. 

Companies that are willing to make themselves a part of the village will be rewarded two-fold — with their own success and with the prosperity of the next generation.