States Partnering with Employers to Boost Child Care Benefits
As efforts to expand the child tax credit and provide paid family leave have stalled at the federal level, states are increasingly incentivizing private employers to step in and fill one of the most painful gaps for working parents: child care.
In an attempt to address the child care crisis, 17 states are offering child care tax credits to employers that operate or contract out child care services for their employees. These states include Arkansas, Colorado, Connecticut, Georgia, Illinois, Iowa, Kansas, Maryland, Mississippi, Montana, New Mexico, New York, Oregon, Rhode Island, South Carolina, Virginia, and West Virginia. According to Eric Syverson, a senior policy specialist in the National Conference of State Legislatures’ fiscal affairs program, the conversation about a child tax credit at the federal level is driving a bipartisan consensus around finding ways in the tax code to help parents and families in need of child care services.
Despite the growing popularity of state tax credits, a relatively small percentage of companies take advantage of them. Syverson attributes this to the high costs of establishing a child care facility and a general lack of awareness among larger businesses about the tax credit. According to the Bureau of Labor Statistics, only 12 percent of all workers had access to child care benefits through their employer in 2023.
One company making strides in the child care benefit space is Upwards, a child care marketplace that connects families to child care providers, assists child care providers with business needs, and helps businesses and government entities create child care benefits programs for their employees. Jessica Chang, the co-founder and CEO of Upwards, emphasized the importance of employers and government working together to normalize child care as an economic issue rather than just a social one.
By partnering with Upwards, companies like Dollywood Parks and Resorts have been able to help their employees find trusted child care providers who can accommodate varying work schedules. Additionally, these companies provide a monthly stipend to employees whose children are cared for by an Upwards provider. This collaborative effort between employers, government, families, and child care providers is crucial in addressing the child care crisis.
While federal action on child care and other family policies has been slow to advance, there have been efforts to encourage companies to aid employees with child care. The CHIPS and Science Act, passed in 2022, allocated $50 billion to companies expanding semiconductor manufacturing and research and offering child care to their employees. Both Democrats and Republicans have shown support for initiatives that promote employer-sponsored child care programs.
However, some experts argue that employer-sponsored child care is only a temporary solution to the child care crisis and poses equity concerns. Elliot Haspel, a senior fellow at the family policy think tank Capita, believes that a system of choice funded by a permanent stream of public dollars is the real solution to America’s child care needs. Haspel suggests looking at state and local precedents for fair ways to fund more affordable, accessible, high-quality child care.
Casey Peeks, the senior director of early childhood policy at the Center for American Progress (CAP), believes that employers should be more active as child care funding advocates, highlighting the $122 billion cost to the United States every year due to the child care crisis. Peeks sees child care as both an economic and social issue that requires public and private sector collaboration.
The issue of supply in the child care sector is also a significant challenge. A report from the Federal Reserve Bank of Chicago found that child care workers earn an average of $14.60 per hour, contributing to a decrease in supply as child care employment remains below pre-pandemic levels. Anna Lovejoy, director of early childhood policy at CAP, raises concerns about tying child care to employment, as it may disadvantage families who lose their jobs or choose to step away from the workforce.
In conclusion, while states are partnering with employers to boost child care benefits, there is a need for a more comprehensive and sustainable solution to address the child care crisis. Collaboration between government, businesses, families, and child care providers is essential to ensure access to affordable, high-quality child care for all families. By prioritizing child care as an economic and social issue, stakeholders can work together to create a more equitable and accessible child care system for the future.
