Companies that offer childcare benefits have higher employee retention, new study finds.

Working parents struggle with childcare cost and access, lowering their productivity.A new study suggests that companies with childcare benefits could see a significant return on investment.Childcare benefits increase retention rates and employee satisfaction, and reduces work absences.

Many American parents can’t afford the staggering costs of childcare— and it’s also costing companies.

About 70% of parents’ work days are impacted when their childcare falls through — a productivity loss that costs US employers $13 billion every year, according to a new study that surveyed hundreds of parents at five companies in fall 2023 by the nonprofit Moms First. The organization advocates for company and government policy that supports working parents.

Moms First looked at the costs and outcomes of company-sponsored childcare at Etsy, UPS, Fast Retailing, Synchrony, and Steamboat. All companies offered some form of childcare benefits — stipends, on-site care, or backup care.

And, for each company, its annual net return for childcare benefits far outweighed the cost.

Companies that offer childcare benefits see a significant return on investment

The companies involved in the study saw positive returns on investments up to 425% through offering childcare. In fact, the study found that the benefits paid for themselves.

It costs most companies about $12 an hour per employee to offer legally required benefits, and benefits like paid leave, retirement, and insurance, according to a 2023 Care.com report. Employer childcare benefit costs vary based on what specific care options a firm offers, but it would add to that $12 an hour total for each eligible employee.

Still, for companies, recruiting and training new employees is expensive. Replacing an employee can cost a company as much as double that employee’s annual salary, the Moms First study found.

But, when a company offers childcare benefits, retaining just 1% of eligible working parents could cover the price a company pays for those benefits, the study said.

According to the Moms First study, nine in 10 employers say childcare benefits have boosted recruitment and retention as much as paid time off and health insurance benefits.

With reliable and affordable childcare, 86% of working parents were more likely to stay at their company, and 78% said childcare support is having a positive impact on their careers.

Employees with childcare support were also more productive and reduced their work absences by an average of 16 days a year. Most reported feeling happier at work, more satisfied with their jobs, and more involved in company culture.

Childcare benefits boost employees’ career prospects and earning potential

Not only do childcare benefits support a company’s bottom line, but the study shows it improves the earning potential and career growth of individual employees.

Business Insider found that parents could spend $26,000 to raise one child in 2024, and a lot of that money goes to childcare. If a couple has two children, Bank of America reported that they are likely to spend 30% of their combined wages just on childcare expenses.

For working mothers especially, unaffordable childcare means millions of women are exiting the labor force.

Company benefits offer a solution to the high costs and limited availability of childcare — allowing many parents to stay in their jobs.

A monthly childcare stipend of $1,000, for example, helps offset how much a working parent has to pay out-of-pocket. Still, Moms First said parents might not have reliable day care sites near their homes or employers, or a place to take their child if their planned day care cancels at the last minute.

UPS recently piloted a 3-month program offering on-site childcare at a warehouse facility. It was available to hourly employees and also offered emergency childcare when parents needed it.

A single mom of three employed by UPS told Moms First that, prior to the pilot program, she was struggling to find reliable childcare and was missing so many days of work that she almost lost her job.

With the childcare benefit, the mother said she was able to reduce her work absences and be more productive. Within a month of being enrolled in the program, she was promoted to a supervisor role.

“Because of this benefit, I not only got to keep my job, but now I get to be a supervisor and can start a career here,” she told Moms First.

Are you a working parent struggling to afford childcare? Are you open to sharing your childcare experience and costs? Reach out to this reporter at allisonkelly@insider.com.

Read the original article on Business Insider

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