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A second child care crisis is coming, employers will need to address it

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Americans knew child care was important before the outbreak of COVID-19, but there's nothing like a sticky-fingered child tapping on your keyboard during a Zoom to prove just how important it is. This crisis has demonstrated how incompatible the American workday is with raising children.

Productivity is at a low for nearly all parents, and employers will be eager to resume engines in full-force once social distancing comes to an end. One thing to anticipate, however, is that employers' child care troubles are far from over. A second child care crisis is coming, and employers will need to address it.

Shelter at home mandates have made it difficult for many daycares to operate normally, and fewer spots in daycare means fewer parents can return to work. The stats are grim:

  • Over 70% of home-based daycares only had a week of financial runway.
  • Even the hardier, large child care brands in Kinside’s membership lament that some of the doors they’ve closed won’t be reopening.
  • We expect a 20% decline in total available spots

Employers are eager to minimize further productivity losses. Target and CVS have both rolled out enormous child care packages, offering up to 25 days of fully paid care for their employees. Brokers and employers have been approaching Kinside for weeks, as they prepare to help their clients get up and running following the crisis.

Employer action minimizes losses post-lockdown
Providing childcare is not only out of the goodness of their hearts, but for the obvious impact it has on the bottom line. Before COVID-19, companies were losing 43% of their female employees when they had their first child. Parents who do return miss an average of 24 full and partial work days due to breakdowns in child care.

Those losses will skyrocket post-COVID-19 for three reasons:

  • First, the depleted care supply means some parents simply will not find a spot for their child.
  • Second, social distancing will likely require that employees stagger the days they return to the office, requiring parents to find a spot that fits their new and unique schedules.
  • Lastly, between pay cuts and furloughs, many parents will need more affordable care.

Stay Competitive: Prepare for re-entry

Employers who are ahead of the game will have a clear advantage. Below are some best practices for navigating the next child care crisis.

1) Make sure your employees know about their dependent care FSA
Virtually every employer offers a tax-free daycare benefit, but very few people know about it. Send out emails and communication reminders. Employees can elect mid-year so long as there is a significant life event . We work with administrators like Navia who are prepared to handle a wave of life event changes due to the new COVID-19 reality.

2) Fund it
Employers can fund the DCFSA with up to $5,000 tax-free. Companies like Reddit top it up. This is an investment in your company’s reboot. You need people working and you want to make sure the expense of childcare doesn’t get in the way of that.

3) Revamp your benefits portfolio
The child care supply was limited before COVID-19, and it’s going to be worse. Employees will be hard pressed to find a spot that matches their needs and budget. Get an early start. Talk with your broker about benefits available to help connect employees to primary, long-term childcare. Your goal should be to reduce delays in return from work and employee turnover at the end of the COVID-19 crisis.

4) Communicate clearly.
This is so simple but such a neglected piece of the puzzle. Put together a one-pager or prepare an intranet site spelling out parent resources in your company (like paid leave, stipends, child-care benefit programs, etc.). Send a company-wide email. Talk to the heads of your Parent ERGs.

What we’re seeing now during lockdown is fallout from a single fact: we as a society have not developed resilient and responsive systems around child care. The change that needs to happen is bigger than anything Kinside or any other employer can offer. The solution is a multifaceted system reboot that takes into account all the ways we work and exist. But in the meantime, HR can take this time to assess and make benefits changes for childcare to adequately respond to the needs of working parents reintegrating into the work world. Doing so will put them way ahead of the game.

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