Why Workplace Daycare is Growing in Popularity

February 27, 2019
Why Workplace Daycare is Growing in Popularity

Traditional childcare costs can be quite shocking to first-time parents. Here are some nationwide stats, for example:

  • Average weekly costs for infant care: Daycare $211, family care $195, nanny $580
  • 71 percent of families spend 10 percent or more of their total annual income on childcare
  • A nanny caring for one child can cost an average of $34,592 in some states

Fortunately, there’s a growing trend among offices to consider work-life balance and offer benefits beyond the usual health insurance, including workplace daycare. Update for April 2020: Recent school and child support program closures have strained the resources of many families in the wake of the coronavirus scare. Families already spend an average of $10,000 per year per child’s care, and making it through the pandemic with both finances and sanity intact is something that’s within every parent’s grasp, with the right preparation. put together this guide with those challenges in mind

What is workplace daycare

Workplace daycare is typically an on-site facility that provides child-care for employees’ children. The facility is limited by age. The services are usually available at a fee that is subsidized by the employer, or some companies may offer this benefit for free. As with off-site care providers, these programs must be licensed, insured, staffed with trained teachers and assistants, and provide a safe environment for groups of children. A few well-known companies that offer this perk include Campbell’s Soup, Patagonia, Walgreens Boots Alliance, Boeing, Home Depot, Procter & Gamble, Clif Bar, Johnson & Johnson, Prudential Financial, Disney, Cisco Systems, Nike, and Time Warner. A few government agencies in places such as Arizona and Vermont are even allowing parents to bring babies up to six months old into the workplace.

Benefits of workplace daycare

These companies cite many benefits of offering on-site care.

  • Access to a Larger Talent Pool: The median income per capita in the US is $31,786. It’s no surprise that many families decide to have one parent stay home to care for the children rather than go to work and spend an entire check on care. By providing on-site care, companies will be able to recruit from a larger talent pool.
  • More Women in Management: Related to the above point, offering on-site childcare that helps mothers return to work could result in having more women in management roles.
  • Tax Credits: Some companies may be able to claim a tax credit for offering on-site care. Given the continuously evolving tax landscape, it’s always best to check with an accountant on the latest available tax credits.
  • Lower Absenteeism: According to a study in the Journal of Managerial Psychology, on-site daycares lowered the rates of absenteeism. It makes sense, if there is an on-site daycare, then parents won’t have to miss work because their offsite daycare is closed or their nanny gets sick.
  • Better Employee Performance: The same survey that indicated lower rates of absenteeism also showed that employees performed better when they could use workplace daycare.
  • Longer Tenure, Less Turnover: Companies report that on-site centers have helped boost retention rates. Patagonia, for example, reported that the turnover rate for parents who use the on-site center is 25 percent lower than other employees.

Drawbacks of onsite childcare

The main drawback of workplace daycare is the cost. Building the facility, staffing it, and licensing and ensuring it is costly. Some employees may be worried that having kids nearby could create distractions or disruptions, however, there is not much evidence that these concerns have come to fruition in companies that have implemented this perk. If workplace daycare is done well, the benefits can vastly outweigh the costs.

This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.

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