If you’re an employer of working parents in 2021, chances are pretty good that employer childcare benefit offerings have jumped pretty high on your radar over the last year. Family obligations have been among the top reasons for turnover lately. According to the U.S. Chamber of Commerce Foundation, half of the employers that lost workers due to the pandemic lost them because of childcare concerns. This has made childcare benefits one of the top strategies for employee retention and talent attraction. For those who haven’t implemented these types of benefits yet, there are a few handy things to know that might help you get started.
Tax Benefits Exist
Funding to support childcare is definitely a highly sought benefit among working parents. Fortunately, there are some financial gains here for employers as well.
Many companies are opting to provide childcare subsidies because it’s a simple and flexible way to enable employees to choose the care option they prefer. There’s also a solid tax opportunity for companies that offer these subsidies.
As explained by the Society of Human Resources (SHRM), “Employers can take advantage of an annual tax credit of up to $150,000 if they use it for qualified child care facilities and services. According to the IRS, ‘the credit is 25 percent of the qualified child-care facility expenditures, plus 10 percent of the qualified child-care resource and referral expenditures paid or incurred during the tax year.’ To receive the tax credit, employers must complete Form 8882.”
Additionally, the society mentioned that flexible spending accounts (FSAs) are an attractive way for employers to provide childcare subsidies because the pre-tax dollars contributed to these accounts reduces a company’s payroll taxes.
There are a lot of indirect positives for subsidies too. Parents get to choose where to send their child, which alleviates some legwork for companies. Plus, a lot of stress gets taken off of working parents when they have adequate childcare. This can have a big impact on productivity and engagement in the workplace.
Flexibility is Cheap
A valued component of any childcare benefit package is a flexible schedule offering. It gives working parents greater control over their work-life balance and more options for successfully managing their responsibilities.
This has been considered one of the top-ranking benefits for several years now, desired by all types of workers, parent or not. Among younger workers, flexibility is often more in demand than health insurance as an employment benefit.
Lack of flexibility is the most common reason that millennial employees leave their jobs, according to 2018 survey data from Deloitte. That’s likely become even more true over the last year, which makes it a critical part of any kind of recruitment or retention effort.
For employers that want to add a flexible workplace policy, there are a few important things to note. First, it probably won’t cost anything – which is great. And second, there isn’t really a model that needs to be followed. Most companies tailor-make their own unique flexible schedule arrangements.
Reportedly, most companies ease into this new structure gradually. They start by adding degrees of freedom to their existing schedules on an as-needed basis. As the process develops, each company will be able to assess its unique staffing needs and form a policy that works best for them. Fundamentally, this is a cheap and easy way to keep working parents happy with their jobs.
Fairness Through Balancing
As a final tip, it’s important to note that fairness can be achieved when adding childcare benefits by rebalancing your other offerings. Not all employees are parents. So, companies will typically add value to one of more of their other benefit offerings to compensate for the allotments made to their working parents. This helps prevent any animosity or negative morale effects among non-parent employees.
Common examples of ways to boost fairness include adding features like elder care, modifying healthcare deductibles, providing tuition reimbursement, or increasing things like 401(k) contributions, health savings account contributions, or life insurance. Companies have a lot of options.
Catch the Competition
Given the importance of childcare as a benefit these days and the fact that most working parents are seeking it, it’s advisable to establish at least a baseline program to meet these needs. This is not an especially expensive or complicated benefit to add, so it’s safe to assume competitors in your industry are already working on it. Keep your company in the running by attracting and keeping the best people, in part through strengthening your childcare offerings for working parents.
