Businesses gain from stable child care, but what are they doing about it?
By Nancy Derringer
Ric DeVore works at the C-suite level of PNC Bank – his title is regional president – but even at his rank he’s familiar with the look that comes over colleagues’ faces when a monkey wrench is thrown into their childcare plans.
“You can see it in their eyes,” he said. “They’re preoccupied. They’re not focused on their jobs.”
And so PNC offers reimbursement for emergency child care to workers at its Michigan locations. (In the bank’s customer-service offices in Pittsburgh, Pa., there is a childcare center on-site.)
Employees are still expected to arrange, and pay for, their own routine child care. But sometimes complications make it unavailable for a time, and when it does, the cost is covered as part of their employee benefits.
PNC doesn’t have hard data on the return on investment for reimbursing emergency childcare, DeVore said, “But when you look at absenteeism, down time, not having to hire temps, etc., I’m highly confident it more than pays for itself.”
To DeVore, it’s his company’s recognition that child care, once a job left to the parent who stayed at home, is part of an employer’s responsibility, or at least something employers have to consider in its human-resources management. And what’s more, it’s worth the investment.
Parents with stable, quality child-care arrangements are better workers, more likely to be punctual, with good attendance and focused attention on their jobs. More long term, children who get quality care in their earliest years start school better-prepared to keep up academically. All of this translates into an issue that concerns employers like PNC.
“Do you want people showing up to work at your branch who still don’t know how to read?” said DeVore. “Looking out 10 or 20 years, how do you want your workforce to be? How do you want your community to be?”
A steadier workforce
Child care and transportation are far and away the top two impediments to employment for people struggling to join the workforce, said Lou Glazer, president of Michigan Future, an economic analysis and advisory nonprofit based in Ann Arbor. As the economy slowly recovers, adding jobs in the low-wage sector, caring for those children presents a binary choice.
“There are only two solutions” for low-income parents seeking work, said Glazer. “For jobs to pay better, or you have to have some form of (childcare) subsidy.”
The federal child-care subsidy program is 20 years old this year. The Child Care and Development Fund, sends money to individual states to reimburse low-income parents for child-care costs.
In Michigan, it’s known as the Child Development and Care program, and it’s considered one of the nation’s hardest to financially qualify for and one of the lowest in reimbursement to caregivers, as Bridge reported last month. Only the poorest of impoverished workers qualify; for a family of three, family income can’t exceed 121 percent of the federal poverty threshold, amounting to $24,393. And the amount Michigan pays a child-care provider through the program amounts to what a parent might offer the cheapest of babysitters, if they can find one who accepts less than $5 an hour.
Still, there appears to be little business pressure on Lansing to expand the childcare subsidy program for low-income workers, even as employers report that reliable, quality child care is important to the stability of their workforce.
Rich Studley, president of the Michigan Chamber of Commerce, said the organization’s members are interested in attracting and keeping good employees, and know that being family-friendly is part of what employers must do. But he added that it’s “less about government programs and more about addressing (employee) needs” through workplace policies. These include flextime, job-sharing and a focus on customized benefits that allow workers to choose the ones most important to them at each stage of their lives.
Nationwide, providing on-site or subsidized care for young children remains rare, according to a recent benefits survey taken by the Society for Human Resource Management, a professional society for human resource professionals. While about a quarter of employers allow employees to bring children to work in a child-care emergency, and 16 percent make a referral service for care available to employees, the number who subsidize child care stands at 4 percent, and hasn’t moved in the last four years. On-site care is even rarer; just 2 percent offer a subsidized care center and 3 percent a non-subsidized one.
Low-income workers in Michigan have seen the state’s child-care subsidy program’s numbers dwindle for a decade, with the number of families receiving the CDC benefit falling from more than 60,000 in 2004 to under 20,000 in 2014, according to the Michigan League for Public Policy, an advocacy group for lower-income state residents.
The reasons for the drop are unclear, but some factors include: A 2008 audit of the program showed financial irregularities and possible fraud, which led to increased oversight and some procedural reforms, which tracked with falling numbers, said Pat Sorenson, who analyzes the issue for the Michigan League for Public Policy, an advocacy group for lower-income Michiganders.
But it wasn’t the only reason, she added. The state was in recession, and the financial crisis of late 2008-09 hit Michigan hard. Unemployment was already on the rise, from 8.2 percent in July 2008 (when the audit was released) and peaked at 14.9 percent a year later. Jobless residents would have
Nationwide, the program is underutilized as well, said Hannah Matthews, director of child care and early education for the Center for Law and Social Policy, a Washington D.C.-based advocacy group concentrating on antipoverty policy for children and families.
The federal government’s eligibility limit is far more generous than Michigan’s cap. Instead of being tied to the poverty rate, the feds tie eligibility to states’ median incomes, and would allow families to participate if they earn 85 percent of each state’s median income (which in Michigan, would qualify workers earning up to $41,723, as opposed to the current threshold of about $24,393, soon to rise to $25,000). And yet, despite the federal government’s higher eligibility limits, “nationally, over half (who received the benefit) are at or close to the federal poverty level,” said Matthews. Her organization estimates that only one in six children eligible under these guidelines is enrolled in a state subsidy program.
As Michigan shows, states are free to impose their own, more restrictive eligibility limits. Michigan’s was recently reset at 125 percent of federal poverty, which is about 38 percent of state median income, according to Bob Schneider of the Citizens Research Council of Michigan. But budget challenges, not only through the last decade but in the most recent session, virtually guarantee that state funding for the program won’t expand further anytime soon.
And that’s a pity, said Matthews, because subsidized, quality child care is that rare government benefit that works for two generations, as well as the employers that parents work for.
“Child care assistance allows (parents) to work longer, be more stably employed and make more money,” she said. “When parents can access stable care, they’re more likely to get to work on time, not have absences, etc. It has a long-term economic income in two categories. Parents doing better is good for kids. When (parents are) stable, less stressed, they can pay more attention to their children. And low-income children in particular have the most to gain from quality environments. So it has multiple impacts on both parents and the child.”
Advocates and policy analysts claim quality child care has a clear benefit to the economy as a whole. One analysis put the cost of absenteeism linked to child-care breakdowns at $3 billion a year. Studies have shown a business argument for subsidized child care whether that benefit is provided by state incentives or businesses themselves.
The scarceness of employer-paid child-care benefits suggests that not every employer agrees with DeVore that at least some attention paid to the workforce’s children is good for business as well. Working Mother magazine annually publishes a list of 100 companies it considers the best for supporting parents, and a glance at its Michigan representatives suggests others do see child care and related family support as important. Dow Chemical Co., in Midland, offers six weeks of fully paid leave to new mothers, four weeks of adoption leave (plus cash support), up to 12 weeks of flexible part-time work when mothers return to the office, lactation support and at least five days of paid time off for tending to sick children.
Wendy Jackson is interim co-managing director for the Detroit Program, a Kresge Foundation program to improve to early childhood learning in the city. Encouraging excellent child care is “a critical factor in the future of the city,” Jackson said. “It ties directly to issues related to economic development. The future depends on it.”
Like others, Jackson notes that it frees up parents to work, but also to “invest now so that kids get the best start possible, to be on a path of greater success. You need consistency across the board. If you have a high-quality early childhood program, (it imparts gains that) can be sustained into the early elementary years.”
Those who work with low-income employees say the need can be seen every day. Dartanyan T. Jamerson is director of workforce development for Mott Community College in Flint; as part of his job, he works with job-seeking students and recent graduates, and he often sees students who cannot take jobs because they cannot find a stable child-care arrangement, or a provider who will cover odd-hour shifts. It’s unfortunate, because as Matthews said, the children of these students, often first-generation college students themselves, benefit from quality attention early on.
“Young people who aren’t exposed to early development, Head Start, or even a minimal breakfast affects all of their development,” Jamerson said. “ You can trace fallout (in their later lives) back to how they got their start.”
In his interaction with employers, Jamerson said he often hears good intentions and a recognition of the difficulty employees have in finding and paying for quality care. (With or without a subsidy, child care is expensive for families with young ones — on average, $1,109 a month for two children under age 5 in Michigan, according to MLPP estimates.)
“Employers recognize it’s part of the issue in managing a workforce,” Jamerson said. “Some really understand the dynamic, usually those who have younger children or grandchildren. They get it. Life happens.” But others, he added, don’t.
“Life happens” is what DeVore says when discussing the flexible benefits that PNC and other companies are trying, to help workers at different stages of their lives.
“The days of one spouse working and one set of benefits for all makes no sense today,” DeVore said. As domestic-partner benefits took their place alongside the traditional spousal package, so too may time-off and flextime policies benefit both parents of young children and older employees looking after elderly parents.
“Years ago, we mainly had one-income families,” said DeVore. “Not anymore.”