A new report looks at how Massachusetts employers can help workers find child care

Parents often struggle on their own to find adequate child care that will enable them to go to work. But there’s no need for parents to go it alone. As a new report from the Massachusetts Taxpayers Foundation points out, employers can invest in child care benefits for their workers. And the report shares strategies and insights that employers should know.

The need for more child care support is substantial, especially for moms.

“In 2022,” the report says, “the labor force participation rate for mothers was 72.9%; for fathers it was 92.9%. Supporting families, and especially mothers, by better meeting their child care needs is one way to help maximize Massachusetts’ workforce population and ensure that the state continues to be a place where people want to live and work. As Beacon Hill looks to reform the child care system, providing tools for employers and employees to reduce child care costs and expand access is critical.”

Employers who want to make this investment will find the pros and cons of different approaches in the report as well as strategies being implemented in other states. Some of these approaches include:

• The federal Employer-Provided Child Care Credit

Goal: give employers a tax credit for providing child care services.

Challenges: employers don’t know about the program; the credit limit is too low; and employers may feel they lack the expertise to offer or support child care.

Potential: the GAO has proposed several ways to reform the tax credit program, including improved outreach and raising the credit limit

• On-site child care

Goal: offering child care where parents work. Boston Children’s Hospital does this, currently serving 180 children from families who earn under $115,000.

Challenges: this is an expensive approach that requires space and adhering to local child care regulations

Potential: On-site child care can help employers recruit and retain workers

• Off-site child care

Goal: help parents find and pay for child care at a site that isn’t at work.

Challenges: requires administrative oversight

Potential: this approach can work for smaller companies like Seamen’s Bank, which has roughly 70 employees and subsidizes care for five children.

• Back-up child care

Goal: on days when parents’ primary child care solution falls through, companies can offer a back-up solution, often by partnering with large child care providers such as Bright Horizons and KinderCare

Challenges: this approach is more affordable for larger companies and organizations, but harder for smaller companies to afford.

Potential: these programs provide parents with a back-up plan that enables them to work

• Flexible Spending Account (FSA)

Goal: as they do with health spending accounts, employees contribute to their FSA through “a pre-tax payroll deduction which also reduces their overall tax burden. In addition to employee contributions, employers also have the option of contributing.” Parents draw on this fund to pay for child care.

Challenges: an FSA account is “a low-cost option for employers, but requires human resource and tax expertise, and potentially third-party administration.”

Potential: expanding this program could be especially useful for parents managing the high cost of infant and toddler care.

The report also looks at how states are getting involved in child care by forming public-private partnerships. Five states — Michigan, Kentucky, Iowa, Colorado, and Kansas — are “implementing programs to engage the employer community in child care policy. Some of the initiatives are new and innovative, offering Massachusetts a variety of opportunities to consider, while others are updates to existing initiatives, most notably tax credits, which provide Massachusetts with important lessons to learn.”

Michigan’s public-private partnership splits costs “between the state, the employer, and families (MI Tri-Share Program). The state budgeted $2.5 million for the program, which came from federal relief funds through the American Rescue Plan Act (ARPA).”

Cheryl Bergman, executive director of the Michigan Women’s Commission, which administers the program, explains the impact, telling the workplace website Charter, “As of the end of March 2023, the program includes 140 participating employers, 277 families, 292 children, and 239 child-care providers across 13 different regions, which cover 59 of Michigan’s 83 counties.”

In Iowa, families benefit from “a new Child Care Business Incentive Grant. The program includes two different grants: 1) a capital infrastructure grant to build or expand upon existing child care facilities and 2) a grant to allow employers to purchase child care slots for their employees at local child care providers.”

Both programs “operate as 50/50 cost-sharing models between the employer and the state. In order to be eligible, a business must have at least 75 employees to apply for these grants. However, smaller businesses can also form a consortium in order to meet the employee minimum. Businesses that apply are required to provide a project proposal and a sustainability plan.”

As the report concludes, “the options for employers are numerous, but should be thoughtfully considered in order to have the most effective outcome. There is no silver bullet, but different solutions for different employers depending on their resources, capabilities, and workforce needs.”

“As Massachusetts gets deeper into the current legislative session with child care as a top priority, policymakers should consider the most effective ways to engage the employer community —incentive programs like the ones highlighted above are a good start.”

To learn more, check out the report.