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HR ManagersFor EmployersFuture of Work
Wed May 27 2020 00:00:00 GMT+0000 (Coordinated Universal Time)

As an HR professional, you’re likely thinking about how to get your workforce back into the office or trying to navigate the future of work within your organization. But imagine going back to work and discovering that 20% of your working parents have dropped out of the workforce. Now imagine the majority of those who left are women. And many of them are women of color. As the economy re-opens, employers may soon have to grapple with this scenario becoming reality. And one culprit is playing a key role: the lack of childcare. We know that the economy can only function if people keep going to work — but for nearly one-third of the workforce in the U.S. who are working parents, this can only happen successfully if they have affordable, accessible, reliable, high-quality — and now, healthy and safe — childcare.

Working parents need our support now more than ever

School, summer camp, and daycare closures continue to challenge parents who are currently working from home while homeschooling and caring for their children full time — with little to no downtime. And with states gradually re-opening, fears and frustrations are creating more questions than answers. How will parents go back to work if childcare options are not available? If they are available, how can they ensure they are safe? It’s no wonder that a startling 1 in 5 working parents are considering quitting the workforce to care for their children, according to a recent study conducted by Cleo. The cost to families? More than 50% of families will lose money or income by having a parent or family member stay at home with children during this crisis. And the cost to employers? It costs employers 33% of a worker's annual salary to hire a replacement if that worker leaves, according to Employee Benefit News.

In fact, our recent study of working parents of newborns to children up to 5 years old reveals that:

  • More than 50% don’t have childcare
  • 20% are considering leaving the workforce to care for their children
  • 37% are considering having family move in with them
  • 16% are considering packing up and moving closer to family

As an employer, you might find some comfort knowing that the majority of working parents are able to return to work despite childcare challenges. Unfortunately, the secondary effects of childcare issues could play a dramatic role in employee turnover, absenteeism, productivity, satisfaction, loyalty, and — profits. In fact, 41% of working parents report that lack of childcare is a major barrier to productivity, according to Cleo members. For example:

  • 52% felt that their level of productivity was 75% or less than usual
  • 1 in 4 felt their productivity was less than 50% of baseline

This is costly to employers. 45% of parents report being absent from work due to childcare breakdowns. According to a article, U.S. businesses forgo more than $33.6 billion annually due to lost productivity caused by care giving-related absenteeism. Some estimates put presenteeism as the chief culprit, with 10x more lost than absenteeism.

Working mothers, particularly mothers of young children, are disproportionately impacted

While working parents as a whole are dramatically impacted by COVID-19 and childcare challenges, working mothers — in particular — are seemingly hit the hardest. In a Pew Research study, half of working mothers said being a working parent is an obstacle to their career advancement, while only 39% of working fathers said the same. About one-third of highly educated, “high-potential” American women drop out of the workforce every year, according to economist Sylvia Ann Hewlett, and 74% say the lack of decent childcare is the primary reason why. Full-time working mothers in two parent households are on average doing 22 hours of childcare a week during COVID-19, in addition to maintaining their jobs. They’re spending more combined time working, caring for children, and doing household labor than their partners — even though they are less likely to have access to affordable childcare and workplace policies such as paid family and medical leave, paid sick days, and equal pay, according to an IWPR report.

Working mothers and the work they perform are important economic drivers in the U.S., but mothers — especially mothers of young children — are often only able to participate in the labor force when they have access to work-family support, including childcare. So it seems untenable that women are more likely than men to take on unpaid childcare responsibilities — even when they are also employed.

Working mothers of color are at high risk

COVID-19 is creating a financial crisis for women — especially women of color. A recent Lean In survey showed that concerns about job loss, reduced hours and/or pay, or finding a new job were common across all groups, but highest among women of color. In particular, Black women are substantially more likely than white men to be concerned about getting laid off (35% vs. 23%), getting their hours cut back at work (27% vs. 17%), or trying to find a new job (31% vs. 13%). Childcare challenges are exacerbating the situation. In fact, research conducted by the Center for American Progress found that close to 2 million parents with children under age 6 had to turn down a job offer, quit their job, or make significant changes to their job due to childcare-related conflicts.

So what are working parents to do? And how can employers support them?

Investing in employer-supported childcare is good for business

A growing number of employers around the world are playing an important role in meeting the childcare needs of their employees, according to an IFC report, and they’ve revealed that investments in childcare and family-friendly policies have helped companies:

  • Reduce employee turnover and absenteeism
  • Increase employee productivity, well-being, satisfaction, and loyalty
  • Improve employer’s ability to attract top talent, investors, and buyers
  • Enhance corporate reputation as a family-friendly company and employer of choice, and
  • Boost profits and productivity

But the benefits don’t end with the employee and the employer — they’re much more far-reaching. According to the Urban Child Institute, in addition to gaining immediate benefits by helping their employees, employers who invest in childcare solutions contribute to the entire business community in the long term — and also deliver benefits to individuals and society as a whole.

Summary of Benefits of Employer-Supported Childcare (source: IFC org report)

summary of benefits to family

Employers are offering dependent care FSAs

Caring for a child or dependent is a large expense for working parents. Employers are offering dependent care Flexible Spending Account (DCFSA) to reduce the financial burden on employees. A dependent care FSA is a pre-tax benefit account used to pay for dependent care services.

Expenses that can be covered by the dependent care FSA include:

  • Care of dependent children under age 13 by a babysitter
  • Daycare center expenses
  • Expenses in before or after school programs
  • Daycare expenses of a parent or grandparent needing care while you work
  • Care of a child over 13 who is incapable of self care
  • A spouse that is unable to work or care for themselves

Offering a DCFSA can allow employers and their employees to take advantage of tax benefits. The expenses are reimbursed pre-tax, reducing the amount of income tax employees have to pay. The cost savings realized by working families can help reduce financial burdens and anxiety, and in return, help improve employee engagement and retention. And employers save money, too. Employers avoid payroll tax on the amounts employees contribute to an FSA.

Childcare in time of crisis needs to evolve

While employers recognize the benefits of and need for employer-supported childcare, the question is, what’s the right solution during these uncertain times?

The childcare demands of today look a bit different than just a few months ago. COVID-19 is normalizing the culture of remote work and redefining what childcare should look like in the process. Big tech giants like Facebook and Google are extending remote work policies for the remainder of 2020 — even as states have begun to allow business to re-open. In response to the current situation, we've seen an increase in popularity for a more localized, neighborhood-based childcare in the form of nannies, at-home daycares, and sharecares with other families or family members. In fact, in a recent New York Times article, Dr. David Cennimo, M.D., a pediatrician and infectious disease expert at Rutgers University, recommends thinking in terms of acceptable and relative risk, while recognizing that “zero risk” is not going to be possible — and adds that hiring one person to come every day could reduce the chances that they are working for multiple families and multiplying exposure. “This is obviously a lot of privilege talking,” he was quoted as saying in the article. “But probably bringing one stable person into your house for care duties is less of a risk than putting 20 kids from different households together in a daycare.”

As flexible work trends towards becoming the rule rather than the exception, as schools, summer camps and daycare availability remain unpredictable, and as risk of spread is still pervasive and top of mind for working parents, the need for novel childcare solutions that are affordable, reliable, high-quality — and now, healthy and safe — is magnified.

In order for this new childcare model to emerge, trust is mandatory. Parents need to know that their care provider or co-sharing family is healthy, and care giving providers also need to know that the families are healthy.

A childcare solution that gets parents back to work

After experimenting and dogfooding (or in Cleo’s case, “child-fooding”) everything from virtual care to scheduling shifts to looking for new caregivers ourselves, it became clear that we needed a new solution to a longstanding problem. Cleo, the support system for working families, and UrbanSitter, an online and mobile service that enables parents and caregivers to connect through people they know, realized the only solution that would work for families would require a new model of childcare designed for the unique issues COVID-19 has created.

What Cleo learned

  1. Virtual childcare doesn’t work. Virtual childcare sounds amazing, but it doesn’t work for little ones — especially children under 5.
  2. Fear and anxiety exist across families and providers. Fear is high on both sides — for care providers and for parents — around health and safety. Parents are nervous about bringing someone into their homes and care providers want to make sure that they’re supporting healthy families.
  3. Parents don’t have the time or resources to find a solution. Working parents are so busy juggling family and work life just to stay afloat that they don’t have time to look, vet, and manage the childcare search.
  4. Accessibility and affordability play a crucial role. The economy is putting even more pressure on families and they all need accessible, affordable childcare.
  5. Children’s developmental milestones are a top priority. Parents are worried about their kids’ development and want to give their children the care and attention that they need to learn and thrive.
  6. Daycare options are no longer reliable. Daycare's that are re-opening are doing so slowly and in small groups, meaning what was once a reliable source of childcare is now an unreliable waiting game.

From these learnings and from understanding thousands of members’ needs these past two months, Cleo recently announced a partnership with UrbanSitter to launch a solution designed to address the lack of support and childcare available to working families as businesses transition to the next stage of COVID-19’s impact and prioritize getting working parents back to work.

Designed to support families looking for affordable and safe solutions to fill the void made by closures of schools, summer camps, and daycares in the next three months, as well as employers looking to support their working parents, Cleo Care presents a novel and localized solution.

Introducing Cleo Care, powered by UrbanSitter

Available to launch to employers this month, Cleo Care powered by UrbanSitter combines a unique program of family “Co-Op” matching alongside concierge care provider vetting and selection to create affordable and safe childcare options for parents. Member families will also receive weekly programs and 1:1 coaching from Cleo’s expert network of child development specialists, including milestone-focused programs that will help parents, care providers, and their children stay on track with enriching activities and tips.

Cleo Care powered by UrbanSitter will be available to U.S. employers to serve their working parent populations this month, and includes:

  • Concierge Support for Vetted, Personalized Caregiver Matching: Member parents will receive support from Cleo in finding safe, vetted care providers from UrbanSitter’s network, helping families save the days (and weeks) associated with finding and vetting care that matches their family’s unique requirements.
  • Co-Op Matching: Families interested in partnering with a like-minded, local family will be supported in finding a match in the Cleo member network that can partner and support one another with or without an additional care provider.
  • Weekly Programs and 1:1 Coaching: All parents and care providers will have access to Cleo’s expert, one-on-one parent coaching, as well as age appropriate developmental-based programs delivered weekly to keep children busy and on track with their developmental milestones.

Employers are taking notice of the importance of supporting working families and are urgently taking action to ensure they do everything they can to address the demands of their acutely impacted working parent population as they prepare for the next several weeks to months of uncertainty.