Helpful Job Resource Blog

As the cost of child care in the U.S. continues to rise, many working parents find themselves in a tough spot, where staying in the workforce might no longer be financially viable. According to recent data from American Progress, families with infants pay an average of $1,300 per month—or roughly $16,000 per year—for child care. This cost represents about 21% of the median household income for a family of three in the United States. (https://www.americanprogress.org/article/true-cost-high-quality-child-care-across-united-states)  The reality is that child care has become a financial burden that can rival housing costs, making it increasingly difficult for parents, especially those with multiple children, to balance work with the expenses of care.

Offering child care assistance as a fringe benefit can be a game-changer for businesses looking to retain valuable employees. Here’s how this benefit could work and the potential impact it could have.

1. Offering Child Care Assistance: A Strategic Financial Move with Tax Benefits

For companies considering offering child care assistance, programs such as the Dependent Care Assistance Program (DCAP) allow employers to provide tax-advantaged benefits. This could cover a portion of employees' child care costs and qualify as a deductible business expense. By doing this, businesses can simultaneously reduce their tax liabilities while making it easier for employees to manage their child care expenses, providing relief at a time when it is desperately needed.

2. The Impact on Retention Rates

When companies offer robust child care assistance, retention rates are likely to improve. According to research, many families cannot afford to stay in the workforce due to the high cost of child care, which can amount to $15,000 per year for an infant and $21,000 per year for a toddler. (https://www.americanprogress.org/article/true-cost-high-quality-child-care-across-united-states/) Given that this is an overwhelming financial burden for many, companies that provide child care assistance can ease this pressure, preventing parents from leaving their jobs.

Studies suggest that improved access to affordable child care could contribute to higher workforce participation, particularly for mothers. When it comes to the restoration industry, it’s imperative that we stay at the forefront of benefits to help retain talent from exploring other industries. By doing this we can create a more stable and committed workforce, particularly in an industry where employee turnover is costly.

3. The Potential for Widespread Use

Child care benefits are not a niche offering—they would likely see widespread use in any company that introduces them. The majority of working parents face some level of financial strain due to child care costs. In some regions, particularly urban areas, the cost of child care can exceed $20,000 annually for infants and toddlers. Given these numbers, it's reasonable to expect that a child care assistance program would be highly utilized by employees across the board, but how likely is this benefit to come into the restoration industry where contractors are feeling a squeeze more than ever financially?

4. Could Child Care Assistance Become a Standard Benefit?

As child care costs rise and labor shortages persist, offering child care assistance could evolve from a fringe benefit to a standard offering, much like health insurance or retirement plans. With nearly 250,000 licensed child care providers across the U.S. and child care expenses continuing to escalate, businesses may need to adapt to this growing challenge in order to remain competitive. In fact, businesses that fail to offer such support may find it harder to retain employees, especially those with young children.

Conclusion

The rising cost of child care presents a critical challenge for both families and businesses. Offering child care assistance as a fringe benefit can provide a solution that benefits all parties involved. For families, it reduces the financial strain of working while raising children. For businesses, it boosts retention rates, attracts top talent, and can be done in a tax-advantaged way. As child care expenses continue to rise, this benefit has the potential to become a key component of a competitive benefits package, ensuring a more stable and committed workforce.