The following brief is authored by Dr. Charles Aull, Executive Director, Kentucky Chamber Center for Policy and Research
- One in three parents with young children report leaving the workforce altogether at some point because of child care
- The costs of quality child care can often equal or surpass average housing costs
- 85 percent of working parents with young children would find it helpful if their employer offered a benefit to help them pay for child care
- A new resource is available to Kentucky employers to help employees with the cost of child care
Kentucky employers continue to face challenges when it comes to hiring and retaining quality staff. The state’s workforce participation rate is the seventh lowest in the nation. As of February 2023, Kentucky had 135,000 job openings vs. 79,000 unemployed Kentuckians actively looking for work. Roughly 69,000 Kentuckians quit their jobs in February, the vast majority of which likely left to pursue new opportunities in a labor market heavily tilted toward job-seekers. While the severity of Kentucky’s workforce challenges will ebb and flow with a changing economy, the demographics of an aging population suggests that today’s labor market tightness might be a new normal.
Addressing our state’s workforce challenges requires a multifaceted set of solutions, including public policies to attract more people to Kentucky and optimize our available workforce by removing barriers to work. However, there are steps that employers can take right now to help retain workers and even draw some adults back into the labor market. One such step is to help working Kentucky families find and afford quality child care.
The dilemma of how access to child care affects workforce participation or the ability of a parent to keep a job or show up to work regularly is simple to explain: if you can’t find or afford a safe place for your child while you’re at work, then you probably can’t work. Survey data illustrates this reality. Throughout 2022, Census Bureau data showed that an average of 71,000 Kentucky adults cited “caring for children” as their primary reason for not working in any given month. A national survey of working parents and employers by the Bipartisan Policy Center in December 2022 found that almost four in ten working parents with young children have quit a job due to child care responsibilities. One in three reports leaving the workforce altogether at some point because of child care. Fifty-six percent say child care has factored into a decision on whether to accept a job.
Child care challenges are complex. Quality care can be difficult to find. Many areas face long waitlists. It’s also very expensive, often surpassing average housing costs. For instance, quality care for a toddler in Crittenden County averages $6,930 per year vs. $7,032 per year for an average mortgage based on data from Kentucky’s 2020 Child Care Market Rate Report and the National Association of Realtors. In Pike County, quality care for an infant averages $6,552 per year vs. $6,252 per year for an average mortgage. These high costs lead many parents to the conclusion that it’s more cost-effective to just leave their job rather than devote substantial chunks of their paychecks to child care.
This is exactly what a young woman from St. Louis named Kaylee told The Wall Street Journal she did upon finding out she was pregnant with twins. “I would rather be at home than pay someone to watch them if it’s net zero,” she told the Journal for a March 2023 article titled, “Pricey Child Care is Keeping Many Parents out of the Workforce.”
Not surprisingly, surveys of working parents with young children show that many of these workers would find value in their employers providing child care benefits. The Bipartisan Policy Center survey from last December showed that 85 percent of working parents would find it helpful if their employer offered a benefit to help them pay for child care. Of this group, 63 percent said it would be “very helpful.” 79 percent said on-site child care would be helpful. 80 percent said assistance finding child care would be helpful.
Beyond finding child care benefits “helpful,” close to 60 percent of surveyed parents felt that businesses should be responsible for ensuring child care is accessible and affordable.
Results from Bipartisan Policy Center’s survey of employers suggest that many business owners and executives might not realize how important child care benefits are to their workers or how child care challenges might be contributing to workforce challenges. Nearly 70 percent of employers reported that child care access and affordability does not impact employee retention or hiring at their firm. Only 18 percent of employers offered some form of benefit to help employees with children pay for child care, though 38 percent said they were likely to offer such a benefit “in the next year.”
Employer-provided child care benefits might therefore be a significant missed opportunity for many employers when it comes to attracting and retaining staff and supporting workforce participation.
The Kentucky Chamber has developed a resource guide to assist employers with navigating ways to help their employees with child care challenges – including a survey template to gauge child care needs among their workers. One of the most unique resources is Kentucky’s new Employee Child Care Assistance Partnership. Through this program, the state can partner with an employer to help a working parent afford quality child care. For example, if an employer offers an employee $100 per month in direct aid to assist with their child care costs, the state can match that contribution, giving the employee up to $200 per month in assistance. The program is a unique opportunity for an employer to double the size of an employee benefit, while the employee can reduce their out-of-pocket costs.
For an employer, participation in the Employee Child Care Assistance Partnership could produce a strong return on investment in employee retention. It could make the difference between keeping a high-value staff member or losing them due to child care challenges. A survey of workers whose employers participated in a similar program in Michigan found that 82 percent agreed that the program made them more likely to stay in their current job. Interested employers can learn more about Kentucky’s new Employee Child Care Assistance Partnership here and find an application to participate here.
While offering a new employee benefit can be daunting for some employers, third-party administrators can help streamline processes and reduce administrative burdens.
Helping working Kentucky families access and afford quality child care is one of a multitude of solutions that public and private stakeholders will need to pursue in order to address Kentucky’s workforce challenges. Survey data illustrates how employer-provided child care benefits can serve as a key solution. Programs like the Employee Child Care Assistance Partnership offer unique opportunities for Kentucky employers to begin providing assistance to their employees and start improving employee retention.