What is a childcare stipend?

In today's fast-paced world, many employees with children are struggling to juggle the demands of their careers and their responsibilities as parents. Finding quality childcare can be expensive and time-consuming, often leading to added stress and decreased productivity at work. For many others, a lack of access to childcare can hold back their careers.

Recognizing this issue, some companies now offer childcare stipends to support their employees and promote a better work-life balance.

In this article, we'll go over how a childcare stipend works and how you can offer one to your employees.

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How does a childcare stipend work?

A childcare stipend is a financial benefit employers provide to help employees cover childcare costs. Employers can offer a childcare stipend as a regularly occurring allowance. Employees can use their stipend on expenses related to day care, after-school programs, or even in-home care.

How much does childcare cost?

According to Care.com's Cost of Care Report¹, childcare costs have increased over the last decade. Childcare costs amount to more than $9,600 per child in 2023.

Based on data collected in the report, these are the five most expensive states for day care.

State/Territory	Average weekly day care rate
District of Columbia	$417
Massachusetts	$326
Washington	$310
California	$288
Connecticut	$260

The weekly rate is based on the cost of infant care at day care facilities.

How does a childcare stipend benefit your employees?

Childcare can be a significant expense for families, often rivaling the cost of rent or mortgage payments. This is especially true for working parents who rely on childcare services to ensure their children are well-cared for while they're at work.

Employer-provided childcare benefits are one way to show your employees that you value their well-being and recognize the challenges they face in balancing work and family responsibilities.

How does a childcare stipend benefit your organization?

The labor market is competitive. Companies are constantly seeking ways to stand out and create a desirable work environment that attracts job seekers. Our 2022 Employee Benefits Survey Report found that 82% of employees say that the benefits package an employer offers is an important factor in whether or not they accept a job.

Childcare benefits can bring in and retain top talent, especially among working parents who prioritize family-friendly benefits when considering job opportunities. Many potential job candidates may have put their careers on hold to care for their children. By offering childcare benefits, you can help parents return to the workforce.

By providing financial assistance for childcare expenses, employers help alleviate the stress and financial strain parents often experience when searching for reliable and affordable childcare options. This, in turn, can improve employee morale, productivity, and mental health.

It can also enhance the company's reputation and brand image. Showcasing a commitment to work-life balance can also boost employee loyalty while helping you become an employer of choice.

What childcare benefits do other companies offer?

According to a 2022 survey by the Society for Human Resource Management² (SHRM), fewer than 6% of employers offer childcare services at or near their workplaces. The report also found that 59% of employers offer a dependent care flexible spending account. A dependent care FSA allows employees to save pre-tax funds for expenses related to caregiving.

Childcare benefits aren't one-size-fits-all. Companies can choose to offer the childcare or family benefits that best support the needs of their workforce.

Below are some companies³ that offer a variety of childcare benefits:

Best Buy offers employees ten days of subsidized care per year through its childcare networks. It's available for various situations, such as school or day care closures, caregiver unavailability, or gaps in childcare arrangements.
Fidelity provides various benefits for employees, including a concierge service that helps parents and caregivers find quality childcare providers. The company also offers a backup childcare benefit and pre-tax savings through a flexible spending account.
Citi offers backup care at a discount to employees. The company also offers preferred childcare enrollment access, tuition discounts, and help with finding and paying for nanny care.
PwC⁴ offers its employees backup care benefits. The company's program is designed to help manage these needs so employees don't have to miss time from work. Employees are reimbursed up to $2,000 for backup care services per year when their typical childcare or senior care falls through.

How can you offer childcare benefits at your organization?

A childcare stipend can take different forms depending on the company's policies and the needs of its employees. It can be a fixed amount of money employers provide monthly, quarterly, or annually, or it can be distributed on a reimbursement model to employees who incur childcare expenses.

You have the option to administer a childcare stipend yourself. But depending on your number of employees or the amount of other responsibilities you have, it may be too time-consuming to administer. Depending on how you structure your childcare stipend, it may be a tax-free or taxable benefit. A tax-free dependent care benefit requires an accountable plan, so discussing your options with a tax professional is best.

Stipend administration software can make your life easier by saving you valuable time and money.

What other employee benefits support working parents?

If you want to better support parents with children, consider offering flexible or remote work arrangements. Our 2022 Employee Benefits Survey Report found that flexible work schedules are one of the most popular perks. With an alternative work schedule, employees can work hours that better match the availability in their personal lives.

Additionally, ample paid time off (PTO) can help your employees better manage their work-life balance. Vacation time, sick leave, and personal days are important for happy employees and preventing burnout. PTO allows employees to rest, recharge, and spend additional time with their children.

If you have workers who want to build their families, you can offer fertility benefits. Offering this type of financial assistance to employees at your organization can make a profound difference to those who are struggling to have children. A report by Carrot Fertility and Resolve⁵ found that 88% of employees said they would switch jobs to get fertility coverage, and 77% would stay at their company longer if they offered fertility benefits.

Conclusion

A childcare stipend is a financial benefit employers provide to assist employees with the cost of childcare. It's a valuable form of support that can alleviate the financial burden faced by working parents and promote work-life balance. Employer-provided childcare benefits can help attract and retain top talent while enhancing a company's reputation as a family-friendly workplace.

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Holly Bengfort

Holly Bengfort is a content marketing specialist at PeopleKeep, with two years of experience in HRAs and health benefits. Having experienced the QSEHRA firsthand as an employee, Holly provides invaluable insights into how it can benefit small businesses and their workforce. Before joining the team in 2023, Holly worked in television news as a broadcast journalist. With her experience as a news anchor and reporter, Holly has an exceptional ability to break down intricate stories into clear, compelling narratives that resonate with diverse audiences. Her talent for simplifying tricky topics ensures that everyone can fully grasp important information. Outside of work, Holly enjoys spending time outdoors, staying active, and relaxing on the beach.