Strategies for supporting employee child care needs

A descriptive summary of:
Small business strategies for supporting employee child care needs
By Brittany Birken, Sarah Ann Savage
February 3, 2026 (From Fed Communities, a collaboration among the 12 Reserve Banks of the Federal Reserve System)

The article examines how small businesses in the United States support employees’ child care needs, a major factor influencing labor force participation, job retention, and business productivity. Although nearly 34 million small businesses employ almost half of private sector workers, they face financial and administrative barriers that make offering child care benefits more difficult than for large firms.

Why Child Care Matters for Small Businesses

Child care challenges affect not only working parents but also employers struggling with staffing. In 2024, 13% of civilian workers were parents of children under age six, and these workers are spread across businesses of all sizes. Yet smaller firms generally have fewer resources to offer benefits, including child care supports. Financial constraints are significant: 56% of small businesses reported difficulty covering operating expenses in 2024, limiting their ability to invest in additional benefits.

Types of Employer-Supported Child Care

Child care supports tend to fall into three categories:

1. Offsetting costs (e.g., stipends, reimbursements, Dependent Care FSAs)
2. Helping families find care (via informational tools or referrals)
3. Reducing reliance on paid care (flexible schedules, telework, infants-at-work programs)

Large firms offer these benefits more often. In 2024, 25% of workers at large firms had access to reimbursement for child care costs, compared with 10–12% at most small firms. More resource-intensive options, such as onsite or backup care, are rare among small employers.

Strategies Small Businesses Use

Through case studies nationwide, the article highlights four practical strategies used by smaller employers:

1. Information & Referrals
• Examples: Dr. Bronner’s (using a digital platform), Iowa’s statewide Childcare Connect tool, and YMCA child care navigators in San Diego.
• These solutions reduce administrative burden for employers and help families secure available care.
2. Flexibility
• Examples: Weiler’s alternative shift schedules and W.S. Badger’s “Babies at Work” policy.
• These low-cost options allow parents to better align work and child care.
3. Financial Stipends/Subsidies
• Examples: Dr. Bronner’s $7,500 annual stipend; Seamen’s Bank’s 65% childcare subsidy; and Farmers Bank & Trust covering half of employees’ tuition up to $5,000.
• These help make existing child care more affordable.
4. On- or Near-Site Child Care via Partnerships
• Examples: Maine Woods Company and partners creating a nonprofit center and Ashland, Ohio’s multi-employer, donor-supported child care facility.
• Collaboration allows small employers to pool resources and expand local supply.

Conclusion

While small businesses face structural limitations, they can still meaningfully support employees’ child care needs through creative, flexible, and collaborative approaches. These supports help strengthen worker retention, boost local economies, and reduce labor force barriers for parents.

You can read the full article here: https://fedcommunities.org/research/small-business-strategies-supporting-employee-child-care-needs/

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