News & Updates

High Cost of Child Care - Strategies for Businesses

Child care costs continue to burden families across the nation, often presenting a significant barrier for parents returning to work or pursuing career advancement. As businesses strive to support their employees and foster a productive workforce, addressing the issue of child care affordability becomes paramount. In this article, we explore several strategies that businesses can adopt to alleviate the financial strain of child care for their employees.

1. Tax or Child Care Credits

One promising avenue to mitigate the high cost of child care involves leveraging tax credits. Currently, there are proposals for new state tax credit programs (HB 1488, SB 742) aimed at incentivizing businesses, organizations, and individuals to contribute to child care providers. These credits offer opportunities for businesses to receive tax benefits while directly supporting child care initiatives.

Moreover, the federal Employer-Provided Child Care Tax Credit offer incentives for companies to invest in child care facilities or partner with licensed child care programs. By taking advantage of these credits, businesses can alleviate some of the financial burden associated with providing child care services to their employees.

2. Subsidies or Scholarships

Employers can further assist employees with child care expenses by offering subsidies or scholarship programs. By subsidizing a portion of child care costs, employers not only alleviate financial strain on their employees but also reap benefits such as reduced absenteeism and turnover costs. Employees may receive up to $5,000 of employer-provided child care subsidies without it being added to their taxable income, providing both parties with tax advantages. Employers may also consider re-allocating existing benefit packages, such as higher education or fitness benefits, to support child care costs or offer scholarships.

3. Flexible Spending Accounts (FSAs)

Flexible Spending Accounts (FSAs) present another avenue for employees to manage child care expenses effectively. Through an FSA, employees can allocate pre-tax funds, up to $5,000 annually, towards eligible dependent care services, including child care and preschool. Offering FSAs as part of a benefits package not only reduces employees' tax burden but also contributes to increased retention and recruitment, as well as decreased administrative workload for employers.

4. Partnerships with Child Care Providers

Businesses can explore partnerships with child care centers or in-home providers to address the child care needs of their employees. This can involve reserving or purchasing spots in existing centers or forming co-ops with other businesses to share the costs and benefits of establishing new child care facilities. By partnering with child care providers, businesses can ensure access to quality care for their employees while sharing the financial responsibility with other stakeholders.

In conclusion, the high cost of child care presents a significant challenge for many working families, impacting workforce participation and productivity. However, businesses have the opportunity to play a proactive role in addressing this issue by implementing strategies such as tax credits, subsidies, FSAs, and partnerships with child care providers. By investing in child care support programs, businesses not only alleviate financial strain on their employees but also foster a positive work environment conducive to employee retention and productivity.

As legislative proposals evolve and new initiatives emerge, businesses are encouraged to stay informed and explore innovative solutions to support their employees' child care needs. By prioritizing child care affordability and accessibility, businesses can contribute to the well-being of their employees and the overall success of their organizations. Together, we can work towards a future where all families have access to high-quality, affordable child care.

There are several options available right now to support your employees and their child care needs. Some options are ready to implement immediately, and others will take a continued investment. Child Care Aware® of Missouri can help you align what option works for your business to make the child care issue a workplace priority. Contact us to find out how cckmw@mochildcareaware.org.