Although it is becoming somewhat cliché to say the pre-pandemic world was a very different one to the current reality, it is, in fact, the truth when considering workplace childcare benefits. Whereas previously, time off and flexibility were sought after, a subtle preference is now being shown by parents towards childcare assistance, especially tutoring type benefits. Contributing to this growing demand by parents is the escalating costs of childcare and parents’ concerns for their children’s educational well-being after not attending school for over six months. The primary barrier is going to be affordability from both employers and employees’ perspective, and the unfortunate reality is currently it is the employees of large companies and those with higher levels of education earning higher incomes that are getting the better rub of the green. Past experience relating to the uptake of tuition benefits point to an upfront payment requirement as a barrier to employees taking up the opportunity. Tutoring or educational programs present similar issues. With the business model selected likely to contribute heavily to a companies’ success, this could be an area worthy of further exploration. Wherever available, examples have been provided to illustrate how companies are approaching this challenge.
Current Childcare Benefits
- A 2019 report from the Council for a Strong America found that in an average year, $13 billion in potential revenue, productivity, and earnings is lost by companies in the US due to inadequate childcare.
- Although 30% of companies provide backup childcare, only 6% of companies offer regular childcare, according to a survey in January 2020. This is against a background that sees both parents working in 63% of families with children. However, only 13% of women and 10% of men were dissatisfied with their workplace’s childcare. Notably, 31% of the participants in this survey represented small businesses, who have found it challenging to match the benefits offered by larger companies due to their smaller workforce and limited budgets.
- Despite a number of companies working hard to provide appropriate childcare benefits to employee parents, especially in light of the impact COVID-19 has had on schools and education of those companies where employees have returned to the office, only 42% have a dedicated plan to help parents balance the responsibility of childcare. Of the organizations planning a return to the office, only 32% have outlined childcare plans.
- The following graph provides an outline of the childcare benefits that employees are currently offering parents. Flexible hours is the most popular benefit, with 59% of companies offering this benefit. A further 11% of companies are planning on introducing flexible working hours for parents.
Companies Offering Innovative Benefits
- COVID-19 has had an interesting impact on the workplace benefits market. Many employers have realized that previous benefits, such as onsite meals and dry cleaning, are of little use when the employee is working in a remote environment. Some companies have looked to innovative new benefits to replace those that have lost value due to the pandemic. One of the areas employers are exploring is educational opportunities for children.
- The following companies have developed innovative childcare packages for employees as a result of the pandemic:
- Accenture has entered a partnership with Bright Horizons to provide new school day supervision for employees children. This program provides supervision for children as they work through online learning curriculum in small groups. Supplementary activities are also available between classes if required. The company picks up 75% of the program’s cost, with the cost to employees $5 per hour.
- Bank of America ended its backup childcare benefit in August 2020, opting to provide a childcare reimbursement of $75 or $100 per day (depending on salary). Bank of America has also entered into a partnership with Bright Horizons to provide workers children with access to learning hubs, childcare, and educational resources.
- Carta has announced a $10,000 annual stipend per employee with children under 13 for 2020 and 2021. This can be used for childcare.
- Citigroup has also partnered with Bright Horizons to provide caregivers trained in education to supervise online learning and find tutors or small learning groups for the children. Recently, they have added a nanny placement service to their workplace benefits. Citibank offers a 10% discount on these services to employees.
- Dell has provided employees access to tutoring services, virtual learning pods, and assistance in finding childcare. Discounts and credits are provided to employees to partake in these programs. The extent of the discounts and credits were not disclosed.
- KPMG has expanded its existing benefits as a result of the pandemic offering discounts of between 10-30% on “one-on-one or small group tutoring, academic support, test prep, and homework assistance.” Learning pods have also been created throughout KPMG that enable parents to team up and create both virtual and in-person learning environments for their children.
- Shipstation is providing a virtual wellness back to school program whereby nutritionists have been provided to advise on lunches and healthy snacks. There are also stress management webinars available for parents.
- Sitterstream is providing 30-90 minute virtual babysitting and tutoring to employees of Amazon, Alnylam, Sarepta, and Unum.
- Synchrony has introduced virtual summer camps, which had 3,700 attendees this summer. They have also introduced an after school homework help and extracurricular activities program.
- Kroger has made $15 million available to employee parents to assist with childcare as a result of the pandemic.
- Kines has hired a teacher that is available to oversee online teaching for employees children.
Opportunities and Barriers to Uptake
- One potential difficultly with offering online classes for children as part of a workplace benefits package could be how the classes are funded. Employee uptake of tuition benefits and the reasons employees do not take up the opportunity provides insights into why employees may not take up tutoring or educational benefits, which should be considered when evaluating a payment model.
- Despite a number of companies offering adult tuition as a benefit, less than 10% of employees take up the offer. Those that do are often more affluent. This is because most companies require employees to make the payment upfront and then reimburse them when the proper paperwork is submitted. A number of less well-off employees cannot afford this initial investment. There is potential for this to be an issue concerning online classes for children.
- Another of the issues with adult tuition benefits is companies may only pay for selected schools. However, this could be advantageous in the current scenario if the provider company can establish strong relationships with the employers. In addition, this is a relatively new concept with the potential for a new player to establish itself as a preferred supplier. That said, Horizon Bright appears to have a slight jump on competitors in the tutoring and educational benefits market at the current time.
Disparities and Affordability
- Despite a number of companies having the best intentions in respect of childcare benefits, many employees are finding it impossible to offer and sustain these initiatives. The daily expense to employers of providing a childcare partner for employees ranges from $125 to $200 per child. This is dependent on the type of childcare partner chosen and the location of the company. As a result, many companies are looking to offer a concierge-type service where a coordinator is available to employees to assist them in finding appropriate and affordable childcare options for their children.
- There are considerable disparities between companies in terms of the types of childcare benefits offered to employees. A survey commissioned by the New York Times earlier this year found that highly educated, high-income employees are more likely to be offered time off, flexible schedules, subsidized childcare, or tutoring than those on lower incomes with lower education levels. 29% of those on high incomes with a post-graduate qualification have been offered paid time off compared to just 9% of those without a college degree. 21% of those with a high level of education receive payments towards childcare or tutoring compared to just 5% of those who are less educated.
- It is becoming increasingly apparent that the increased time off and flexibility of the last several months is not sustainable, and both employees and employers need to come up with some more sustainable options. As CEO of Bright Horizons Stephen Krammer has said, “As we’re staring down the barrel of many schools starting virtually, employers recognize that what employees have been doing for the last five months is absolutely not sustainable.”
- The cost of a tutor or classes outside of the school situation is often unaffordable to most parents ranging anywhere from $10 to over $100 an hour depending on location and experience level. A well-thought-out employee benefit will provide an opportunity many employees would not previously have been able to give their children.
Changing Needs and the Increasing Demand for Educational Benefits
- There have been many reports from parents that suggest childcare is to become an even bigger issue. A number of childcare centers have closed permanently due to the pandemic. Parents are reporting fees in new centers up to four times that of their child’s previous daycare, unfortunately, the laws of supply and demand in practice. Many parents have reported it is not worth them working with fees at this level. 75% of employees report that their employer has offered no additional childcare benefits despite the pandemic’s extra time and financial pressures.
- The Human Resources Manager at Accenture, one of the most progressive companies in this area, Ellyn Shook, has talked about Accenture’s decision to provide heavily subsidized tutoring to employees children. She said, “Employees had been through two and a half months of Zoom classrooms, and it was a nightmare, even for the most tech-savvy parents…. Parents said they needed educational support, not just babysitting.”
- Although only 10% of employers offer subsidized childcare or tutor, the New York Times commissioned survey suggests this is more valuable to most parents than a flexible work schedule, which 87% of employers offer. The changing demands regarding educational benefits are starting to be seen across the spectrum, with consultancy company Mercer receiving at least four times as many inquiries as March 2020 relating to childcare subsidies and educational benefits.
- Two of the providers of educational benefits, TutorMe and Varsity Tutors, have said interest in their products and services from employers was almost non-existent pre-pandemic; however, they are currently experiencing a period of rapid growth due to increased demand.
- The unprecedented scenario with children unable to attend school for several months adds to the changing preferences toward educational benefits as part of an employee package. A recent survey in California found that 70% of parents are worried about their child losing learning opportunities and falling behind as a result. There is increased concern for children from low-income backgrounds. Educational benefits present an opportunity to alleviate some of these concerns.
- The following table shows what the 12 largest companies by market capitalization have put in place for their employees relating to childcare benefits.
- Tech companies have been particularly progressive concerning childcare benefits. However, recent experiences for some Silicon Valley companies have illustrated the tightrope employers work with employee benefits. There have been several reports of employee disharmony as non-parent employees become resentful towards parent employees and the increased benefits they are receiving because they chose to have children. Companies like Facebook have tried to appease non-parents by offering them a larger stipend for office equipment.