Supporting Working Parents: The Value of Child Care Benefits for Employees

It is often overwhelming to become a parent, with all the new decisions and challenges. Working parents not only struggle with finding good child care for their child but also the expense that comes along with it. Working parents often get caught between whether to spend more time at work in order to earn more to pay for child care or spend time at home to take care of their child. As a result, overall productivity and well-being are affected.

This can result in a split of career outcomes between male and female working parents. Three years after the birth of their first child, only a few men leave the labor force to care for children. For women, the figures are about two in five. According to the 2024 cost of care survey, 24% of the household income of working parents is spent on child care. So it is important to address their issues as it can negatively affect their health and productivity.

Child Care Benefits for Employees reduce the burden of full-time child care from the working parents. Because, on average, more women leave employment after having a child, childcare benefits can also reduce the gender gap in employment. In this blog, we will explore child care benefits for employees in detail.

What Are Child Care Benefits for Employees?

Childcare benefits support working parents by covering child care costs during work hours. After the pandemic, this benefit has become extremely common because 56% of employers offer some type of child care benefit in 2022, compared to 36% in 2019.

The U.S. Chamber of Commerce Foundation reports that nearly 60% of working parents quit their jobs during the pandemic due to a lack of child care, and 26% quit because they could not afford it. With women representing the majority of caregivers, about 2 million left the workforce in 2020.

Since 52% of core U.S. workers are women, most companies reacted to that by offering access to reasonably priced child care. Today, many more women re-enter the workforce because more and more companies focus on supporting children of employees. More than 46% focus on benefits for children now, according to The Washington Post.

Concerns of Working Parents:

According to the Forbes report in 2022, working parents, especially women, do not have a good future. Based on the survey, below we have listed the key points, working parents, especially mothers are most concerned about:

They are concerned about their child’s emotional, physical, and mental development.
Uncertain school timetables, daycare, and the quality of child care needed.
Increased rates, financial stress caused by economic concerns, and the high cost of housing concerns make many parents leave their jobs because of childcare issues.

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Several Daycare Benefits For Employees

Childcare Subsidies

One of the key daycare benefits for employees is that states offer child care subsidies, which are funded by the federal government, for eligible working parents or school-going parents. The federal government funds the child care subsidies, and the amount differs from one state to another according to its needs. Some employers also offer daycare tuition reimbursement as an additional child care subsidy for employees.

The IRS offered businesses an annual tax credit up to $150,000, since 2001, for providing support towards childcare. The Employer-Provided Child Care Credit applies the 25% discount towards child care facility expenses which can be eligible, and 10% towards resource and referral expenses.
On-site Day Care

Although on-site daycare may also save time spent commuting as well as child care expenses for working parents, according to the 2022 SHRM survey, only about 6% of employers report offering this benefit.
Family Stipends

Another daycare benefit for employees is a family stipend, or allowance, which refers to extra money provided to an employee to cover other expenses, such as child care. Latest statistics show that a study conducted by the company in 2024 indicated that family stipends are the top three most frequently utilized benefits that a company offers. Compt is one of the compliant IRS platforms that can support companies providing flexible and tailored benefits, such as family stipends.

Paid Family Leave

In contrast, the U.S. stands as the only industrialized nation that doesn’t guarantee paid family leave as a legal right. Instead, they offer the Family and Medical Leave Act (FMLA), which gives employees the right to take up to 12 weeks of unpaid, job-protected leave per year for family and medical reasons in companies with 50 or more employees. Currently, only 13 states and Washington, D.C., have determined legislation requiring paid family leave, including states such as California, New York, and Oregon.

While research supports the involvement of both parents in early childcare, paid family leave has declined since the pandemic. For example, paid maternity leave decreased from 53% in 2020 to 35% in 2022, while paid paternity leave declined from 44% to 27%, based on a SHRM survey. Even if only a few employers offer child care benefits for employees, still job seekers highly value and appreciate it, especially those who are planning for families. Generally, paid leave pays employees about two-thirds of their regular salary.
Flexible Work Schedules

Flexible work schedule is a daycare benefit for employees which doesn't cost a penny to the company. Offering a flexible work schedule to employees creates a positive work environment in the organization. Flexible work schedules in hybrid and remote work help employees plan their schedules based on their convenience.