Social Determinants: Childcare


June 30, 2020

Addressing social determinants of health - the circumstances in which people are born and live - is a business and moral imperative.

Early childhood care plays a critical role in the health and development of children, and it enables parents to work. Children with high-quality childcare can benefit from improved nutrition, increased access to health screenings and better mental health later in life.1 Today, access, affordability and schedule conflicts pose substantial barriers for many, especially low-income families. In 2019, family support services, including childcare, were the most common social services sought by health care consumers.2

In the U.S., three in four working parents say their job has been affected by issues with childcare, and within the last year, one in three missed work due to childcare issues.3,4 At the same time, the cost of childcare for two children exceeds mortgage costs for homeowners in 35 states and the District of Columbia, as well as the annual median rent payments in every state.5

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Outside of the U.S., statistics are alarming. For example, a couple with two young children living in New Zealand spends about 37% of their salary on childcare.6 Numbers are similar in the U.K. and Australia, where parents devote 36% and 31% of their salaries to childcare, respectively.6 (See the Counties with Most Expensive Childcare table).

In 26 out of 189 economies, employers are legally required to provide or support childcare. Sri Lanka was an early adopter in 1939. And more recently, in the 21st century, there's been a wave of legislation passed to ensure childcare for employees. In most economies, the number of female employees triggers the requirement, which is problematic, as some employers are then disincentivized to hire women. In others, providing childcare support is required based on the overall number of employees (genderneutral). In Iran, the requirement is based on the number of children of employees.7

Nordic countries are known to have some of the most progressive policies to help offset the cost of childcare and support working families. For example, in Sweden, parents receive a monthly child allowance of about $113 USD per child and can use it to offset the cost of preschool, which is only $20 USD more per month. Additionally, if parents need to take time off to care for their sick child, they can receive 80% of their pay, while doing so.8

Countries with the Most Expensive Childcare6
Country Percentage of Pay for Childcare
New Zealand 37.3
United Kingdom 35.7
United States 33.2
Australia 31.1
Ireland 27.8
Switzerland 27.7
Japan 26.8
Slovak Republic 26.9
Canada 22.9
Finland 21.5

Nonetheless, it is clear that childcare is unaffordable for most families worldwide. Beyond costs, employees struggle to find formal childcare that aligns with their work hours, especially those with schedules outside the 9-to-5/Monday-Friday routine. This challenge is even greater for parents with children younger than 3 years old.9

Ideas for Action

Because different family and work situations will require different solutions, it is imperative that employers offer choice and understand (and communicate to employees) how employer-sponsored benefits impact eligibility for government programs and assistance, as well as potential implications for employees related to taxes. Providing a financial assessment and consultation tailored to working parents could help employees navigate the complexities of paying for care, along with saving for education after high school and establishing a solid financial foundation for their family. 

Additional benefits and practices to consider include: 

  • Offering a childcare subsidy or reimbursement;
  • Providing on- or near-site childcare center/crèche;
  • Tiering the cost of childcare benefits based on family income;
  • Providing predictable work hours and predictable pay;
  • Creating flexible work arrangements (e.g., flexible schedules, reduced hours, telework) and a culture that reinforces the policy;
  • Reserving spaces for employees’ child(ren) in local childcare centers;
  • Reserving a certain number of spots for employees who are lower income;
  • Offering a Dependent Care FSA;
  • Offering backup care; and
  • Providing consultations, referrals and resources to help employees choose the right childcare.

Leading employers are extending support to working parents along the parenthood journey. To learn more about the variety of benefits, services and programs employers can offer parents, visit the Business Group’s Parent Package and Telework & Well-being Integration.

The Motherhood Penalty

A clear connection among access to affordable, high-quality childcare, maternal employment and the gender pay gap exists. Mothers in the U.S. are 40% more likely than fathers to report they had personally felt the negative impact of childcare issues on their careers. Moreover, U.S. women lose 4% of their hourly earnings on average for every child they have, while U.S. men earn 6% more.10,11 In Denmark, childbearing creates a 20% gender wage gap between men and women.12 According to the International Finance Corporation, women across the globe are often underrepresented in positions of corporate leadership.13 Childcare benefits can promote career advancement and signal to working mothers that they do not have to choose between their kids and their career.

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