How Child Care Can Help Small Businesses Grow

Access to child care not only affects working parents, but it also impacts small business owners in their ability to operate or grow the business. A majority of owners reported that there aren’t enough affordable child care programs in their communities, which has become a high barrier for recruiting talent. That’s according to the latest survey from Goldman Sachs 10,000 Small Businesses Voices published on June 20.

A whopping 80% of small business owners found it difficult to hire qualified candidates for their open positions, while 62% of small business owners noted that being able to offer child care benefits to their employees would have a positive impact on recruiting and retaining workers.

“Small business owners have made clear that the child care crisis is exacerbating the biggest challenge they’re facing right now – hiring and retaining qualified employees,” said Jill McCarthy, national director, Goldman Sachs 10,000 Small Businesses Voices.

The survey found more than a third of small business employees were forced to cut their hours or forego work completely due to lack of affordable child care, and the repercussions for employers are high. Absences and employee turnover could cost employers anywhere from $400 million to $3 billion a year, according to data from a US Chamber of Commerce Foundation study.

“When child care is hard to find or impossible to afford, it doesn’t just affect working families. Child care challenges are business challenges,” said Sarah Rittling, executive director of the First Five Years Fund, a collaborator of Goldman Sachs 10,000 Small Businesses Voices.

Rittling added that sustained federal support and updates to tax provisions could help businesses and families.

Small businesses support legislation on child care benefits

Goldman Sachs’ survey found small business owners are eager for policy solutions to address these issues: 62% of respondents believe that offering child care benefits will have a positive impact on their talent recruitment and retention.

Nearly four in five businesses are willing to support policymakers increasing federal funding programs that help families better access affordable child care.

Furthermore, 70% of survey respondents reported they would support legislation to increase the tax credit available to businesses who want to locate or provide child care for their workforce from $150,000 to $500,000.

It’s important to note that small businesses are the backbone of the US economy, making up 99.9% of all firms in the US economy and making up 43.5% of the GDP, according to the US Small Business Administration. Small businesses also employ 46% of all private-sector workers and have accounted for 62.7% of net new job creation since 1995.

By addressing issues of affordable and quality child care, it could add billions to economic growth and improve business sustainability, according to the US Chamber of Commerce Foundation.

How can businesses help working parents?

It’s important for business owners to recognize the value of helping working parents and commit to family-friendly policies and benefits. There are options employers can take that don’t have to be costly. Here are a few ideas to consider.

1. Flexible schedules and work from home options

Allowing for flexible schedules and work from home options can be an effective way to allow parents to make room for their child care needs, such as dropping off/ picking up the child from school or taking care of the child when they are sick.

Building a community support network between parents is also a low-cost solution, where parents can help each other find resources and information on their child care needs. This could be in the form of disseminating information to employees, partnering with local community groups and outreach, or starting an internal communication hub to allow employees to connect with each other.

2. Leverage state benefits and family leave

Some states may already offer family-friendly benefit programs such as paid family leave (PFL). Employers may consider leveraging these programs and then “topping off” or supplementing the employee’s salary.

For example, if the employee is eligible to receive 67% of their weekly wage from the state’s PFL program, an employer may consider offering to subsidize their salary to 80% or the full amount as a potential benefit to help retain talent.

If you’re a business owner, speak to a benefits expert for help in formulating a plan that makes sense for your business and employees.

3. Partner with family-focused vendors

There are many companies focused on helping businesses build infrastructure to support working parents. Some of these vendors offer insurance coverage for paid parental leave for both parents, while others assist in fertility and family planning.

There are also tech platforms that offer wellness programs that provide access to mental health support and other health services. Some platforms may also offer assistance to locate child care providers.

When it comes to providing affordable child care, there is no one-size-fits-all solution. But by taking the first step to assess what employees may need to do their jobs, employers can help foster a sustainable working environment and improve job satisfaction – both of which could help businesses with recruitment and retention.

Survey of 1,259 Goldman Sachs 10,000 Small Businesses participants was conducted by Babson College and David Binder Research from April 15-19, 2024. The survey included small business owners from 47 U.S. states, 2 U.S. territories, and the District of Columbia.

Results may not always add up to 100% due to rounding.