Managing the cost of care is a problem millions of working parents face every year. And when working families struggle to afford the care, it can be a problem for their employers, too.
The cost of care influences the career decisions of nearly two-thirds of employees, according to Care.com’s 2019 Cost of Care survey. They’re changing jobs for higher pay or switching from full- to part-time work to be able to afford the cost of care. They’re coming in late, using sick days, or bringing their child to work because child care plans fell through. Women, especially, are feeling the impact; more than half of moms scaled back their work hours to save on child care costs, and a quarter of them left the workforce entirely. Every year, these child-care related decisions cost companies billions in lost productivity and turnover.
It’s in a company’s best interest to help its employees manage these costs and to understand that employees’ lives outside of work impact on-the-job performance. Yet, alarmingly, most fail to notice it. "Helping employees address their personal caregiving obligations is an approach employers almost entirely overlook as a mechanism for maximizing employee productivity and minimizing turnover,” write Joseph B. Fuller and Manjari Raman, authors of The Caring Company, a 2019 report by Harvard Business School. "The vast majority of those working outside the home actually have two work lives: one as an employee and the other as a care provider."
Today, child care is one of the biggest line items on the family budget. More than 70% of American families are spending more than 10% of their income on child care; and, 40% are spending more than 15% on these costs. For senior care, one in five family caregivers has dipped into his or her own personal savings to pay for their loved ones’ caregiving expenses, and another 10% have drawn from their own retirement savings to pay for a senior’s care.
Employers are finally realizing that helping employees lower and manage the massive cost of care is an investment in protecting their own bottom line. Here are five employee benefits that help employees cope and companies thrive.
- Dependent Care Flexible Spending Accounts (FSAs)
Separate from health care FSAs, dependent care FSAs, also known as Dependent Care Assistance Programs (DCAPs), allow employees to set aside pre-tax dollars from their paychecks to pay for care expenses for children under the age of 13. This includes services like nannies, babysitters, before- and after-school care programs, preschool, and summer day camp. Dependent care FSAs also cover costs to care for an adult dependent who is incapable of self-care, like a disabled spouse or elderly parent. Employees can set aside up to $5,000 annually into their dependent care FSA if they are single or married and filing taxes jointly (married couples filing separately are limited to $2,500 per parent). Employers have to work with a third party to administrate dependent care FSAs, so there is a small processing fee. But it’s a relatively small investment for employers to pass on a meaningful savings to working parents – they can reduce annual out-of-pocket care costs by up to 30% or more, depending on their tax bracket.
RELATED: Dependent Care Accounts: The best way to save on child and senior care costs
- Senior Care Support
As highlighted in the The Caring Company report, nearly 1/3 of workers have quit their jobs for caregiving responsibilities, of which nearly one in three left to care for an older adult. As the demands and costs of caregiving intensify, and most caregivers are likely raising kids and caring for an aging parent while working a full-time job, employers are identifying the need to support their employees with senior care. Care@Work offers Senior Care Solutions, giving employees access to Masters-level social workers who work one-on-one with employees and their families to provide ongoing and personalized support.
RELATED: 8 Common and Stressful Situations Senior Care Planners Can Help Employees Navigate
- Flexible Schedules
Allowing some flexibility in their schedules can be a low-cost or no-cost way to help limit care costs for families. Take parents of school-aged children, for example. These working moms and dads often have to find caregivers for a few hours in the morning before school and in the afternoons during the week. This adds up – parents pay an average of $244 for weekly after-school care, according to the 2019 Cost of Care survey. But if these parents were able to shift their schedules to make their work fit around life, rather than life fitting around work, it could save thousands over the course of a year.
RELATED: The Flexibility Without Shame Conversation
- Child Care Subsidies
In the current landscape of work-life benefits, employers are more than four times more likely to offer scholarships or tuition assistance than they are to offer child care subsidies, according to the Families and Work Institute's 2016 National Study of Employers. But when child care is more expensive than college tuition in most states, those subsidies – when they are offered – can really take the sting out of the largest household expense for many families. Ditto for discount plans for employees utilizing company-partnered child care facilities, where those are available. Care@Work offers tuition discounts at select child care centers.
- Back Up Child Care Assistance
Finding back up childcare when school is closed or an employee’s child – or their nanny – is sick can certainly be difficult on a working parent … not to mention expensive. More and more companies are realizing that helping employees fill these short-term care gaps can reduce absenteeism, presenteeism, and other productivity-draining distractions. And, of course, from the employee’s perspective, having employer-subsidized backup care is more convenient and affordable.
RELATED: Can Companies Afford Not to Offer Backup Care?