Subsidized / Reimbursed Child Care or Referral
Employers who reimburse or subsidize employees’ child care pay all or part of approved arrangements and/ or reserve slots at particular facilities for employees’ children. Through child care referral, employers offer resources to parents to help them find child care in the area.
Research or Recommendations from National Organizations
Employers can contribute up to $5,000 to the cost of each employee’s child care without the subsidy being added to the employee’s taxable income.
Employers considering child care benefits should explore the tax benefits. Employers can deduct the amount of total subsidy provided to employees during the tax year.Footnote # 4
When determining the amount to reimburse, employers should research total cost of child care in their community. The average yearly cost for infant care in North Carolina is $9,255 per child, and the average yearly cost of care for a four-year-old is $7,592 per child. Currently in North Carolina, the cost of child care exceeds the cost of tuition for an in-state public college.Footnote # 5
Child care can be subsidized in a number of ways. Examples include:
- Subsidizing the cost of care at an on-site center.
- Paying membership fees for an online emergency or back-up care service.
- Contributing to employees’ dependent care reimbursement accounts.
- Establishing relationships with child care providers and offering a discount to employees who use providers from the network.
Employers who need extra support getting started may want to enlist a child care resource and referral agency. To find an agency near you, search the North Carolina Child Care Resource and Referral Council’s online directory.
Agencies can help by offering:
- On-site classes for employees who are parents.
- A review of employers’ organizational work- life culture and guidance on developing family-friendly policies and procedures.
- Guidance on employer-sponsored subsidies to help employees afford the cost of child care.
- Assistance setting up and implementing on-site child care.
- Assistance developing an emergency plan for on-site child care in the case of inclement weather, natural disasters, or other emergencies.
- Help with child care referrals for parents.
The North Carolina Partnership for Children’s Smart Start network organizations also offer helpful resources for employers who wish to put together a child care referral list for parents. Find your local Partnership for Children.
Here’s an example child care referral guide from the Buncombe County Partnership for Children.
Range of Practices in the United States
- Ten percent of workers had access to any workplace child care benefit in 2017.Footnote # 6
- Three percent of more than 3,000 US employers surveyed by the Society of Human Resources Management offered subsidized child care in 2018.Footnote # 7
- Low-wage workers, who often have the greatest difficulty finding and paying for high quality child care, are less likely to receive child care benefits at work. Only two percent of workers whose wages were in the bottom 10 percent had access to any child care benefit in 2017.Footnote # 8
- More than eight in 10 working parents say they wish their employer offered some sort of child care benefit.Footnote # 9
- Child care is unaffordable for seven in 10 families in the US, according to the US Department of Health and Human Services’ definition of affordable care.Footnote # 10
Location: Wilmington • Year Founded: 1914 • Number of Employees: 75
For anyone who thinks having child care at work would be a tempting distraction, Katie Tate, chief program officer for the YWCA Lower Cape Fear, disagrees. “I usually try not to interrupt her school day,” Tate says of her daughter. “However, if they’re having a class party or it’s her birthday, of course I’ll be there and it’s easy.”
The onsite child care offered by the YWCA is a huge benefit in and of itself. Tate has been with the organization for nine years and has had two children during that time. “We are very fortunate to work for an organization that provides child care. Having my children go to the same place that I go every day is one less thing I have to worry about; it is one less stop in the morning and one less stop in the evening. Knowing that they’re in the building with me is comforting.”
But what really makes the difference is that for employees of the YWCA Lower Cape Fear, the cost of child care is subsidized. For a working parent with two children in child care, this can amount to more than $7,000 in savings annually.
The YWCA advances their mission to eliminate racism, empower women, and promote peace, justice, freedom, and dignity for all through a remarkable array of programs, outreach, and events. For families in the community, the YWCA can be a life saver—a go-to for affordable, quality child care from infancy through adolescence—offering full day care, half day, after-school, and summer care—and parenting support for teens through grandparents.
The decision to subsidize their child care programs came about after Charrise Hart, chief executive officer, read the Status of Women in North Carolina report from the NC Department of Administration’s Council for Women & Youth. The report emphasized that what women really need to excel is pay equity.
“In the nonprofit sector, you may not be compensated as highly when compared to the corporate sector,” says Hart. “So, we asked ourselves, ‘How are we implementing our mission?’ With our mission to empower women, it starts with us. It starts right here at home.”
The YWCA decided to develop a policy that encourages employees to take advantage of the programming they have in place for the community, and any employee was eligible to sign up. Full-time employees receive a 50 percent discount off of youth programs and child care services, and part-time employees receive a 20 percent discount. Today, almost 40 percent of employees take advantage of this benefit.
“We want to make work-life balance easier for our employees,” says Hart. “You could have a three-year-old at the early learning program and a seven-year-old that’s picked up from school and transported to the YWCA for after-school care. You can take your children home at the end of the day at an affordable price. Nothing can beat what we offer, and I’m proud of that.”
Pamella Spencer, program coordinator, has three children, two of whom are involved with the YWCA’s child care programs. Her 5-year- old daughter attends and her older son, who attended when he was younger, chose to return to the YWCA to fulfill his volunteer requirements as a freshman at Isaac Bear Early College. For Spencer, the program is ideal: payment for child care comes out of her paycheck as a deduction each month, and her daughter is cared for by her coworkers.
“The YWCA is a women’s organization and the majority of our staff are women,” says Spencer. “We have a strong network of support here. I’m glad that my children are surrounded by all of these strong women. We love the YWCA. That’s why we’re here.”
Tate and Spencer both agree that they have much stronger relationships with their colleagues as a result of having their children in child care at their workplace.
They also understand that having child care on-site is not feasible for all employers. However, what they do suggest is that employers could partner with a child care provider and offer subsidies for tuition, registration or activity fees.
“Child care is the biggest expense for families,” says Tate. “There are always ways employers can help out if they can be creative.”
Sample Benefits at YWCA Lower Cape Fear
- The YWCA has the oldest retirement plan for women in the United States. Full-time and part-time employees in the United States are eligible for retirement.
- Health insurance
- Life insurance
- Paid time off, including sick, vacation, and holidays
- On-site child care available
- Child care and aquatics discount for full-time and part-time employees
- North Carolina Early Childhood Foundation. “The Research Basis for Family-Friendly Workplaces.” June 14, 2018. https://files.familyforwardnc.com/wp-content/uploads/2018/04/NCECF_FFNCpolicyfactsheet-061418.pdf Return to footnote #1 referrer
- North Carolina Early Childhood Foundation. “The Research Basis for Family-Friendly Workplaces.” June 14, 2018. https://files.familyforwardnc.com/wp-content/uploads/2018/04/NCECF_FFNC-policyfactsheet-061418.pdf Return to footnote #2 referrer
- North Carolina Early Childhood Foundation. “The Research Basis for Family-Friendly Workplaces.” June 14, 2018. https://files.familyforwardnc.com/wp-content/uploads/2018/04/NCECF_FFNC-policyfactsheet-061418.pdf Return to footnote #3 referrer
- Marz, Michael. “Can a Business Write Off Childcare For Employees?” Houston Chronicle. Retrieved from: https://work.chron.com/can-business-write-off-childcare-employees-16377.html Return to footnote #4 referrer
- Economic Policy Institute. The Cost of Child Care in North Carolina. Retrieved from: https://www.epi.org/child-care-costs-in-the-united-states/#/NC Return to footnote #5 referrer
- Acosta, R. Alexander and William J. Wiatrowski. “National Compensation Survey: Employee Benefits in the United States, March 2017.” U.S. Department of Labor Bureau of Labor Statistics. March 2017. https://www.bls.gov/ncs/ebs/benefits/2017/ebbl0061.pdf Return to footnote #6 referrer
- Society for Human Resource Management. “2018 Employee Benefits: The Evolution of Benefits.” April 2018. https://www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/Documents/2018%20Employee%20Benefits%20Report.pdf Return to footnote #7 referrer
- Acosta, R. Alexander and William J. Wiatrowski. “National Compensation Survey: Employee Benefits in the United States, March 2017.” U.S. Department of Labor Bureau of Labor Statistics. March 2017. https://www.bls.gov/ncs/ebs/benefits/2017/ebbl0061.pdf Return to footnote #8 referrer
- Care.com. “This is how much child care costs in 2018.” July 27, 2018. https://www.care.com/c/stories/2423/how-much-does-child-care-cost/ Return to footnote #9 referrer
- Care.com. “This is how much child care costs in 2018.” July 27, 2018. https://www.care.com/c/stories/2423/how-much-does-child-care-cost/ Return to footnote #10 referrer