Imagine an investment for employers that promised a return of anywhere from 90% to 425%. According to recent research, that is the ROI employers would earn on child care benefits. Even so, many companies still view child care benefits as an excessive cost.
Most working parents in the United States face a complex reality when it comes to finding affordable care: 51% of Americans live in an area with little or no access to licensed caregivers, about 40% of families looking for child care experience long wait lists that average six months before a child can attend, and the average parent reports that child care soaks up 20% or more of their total income.
“Without universal child care or child care of any kind that is accessible, available, and affordable, parents--usually mothers--are forced to make difficult employment decisions,” said Colleen Stuart, co-director of the Gender and Work Initiative at the Johns Hopkins Carey Business School. “These decisions create several workplace inequities.”
Employers are losing out on talent
In a lot of cases, caregiving responsibilities require one parent to forego employment, greatly reducing workforce participation in America and costing employers. For working parents, most often mothers, this leads to employment gaps that damage long-term earning potential, an inclination to accept lower-paying roles with predictable schedules rather than positions that match their actual skills, and even the need to decline promotions, travel, or high-visibility projects because a lack of flexibility or options in their child care arrangements.
“Notably, universal child care has little to no impact on fathers' labor force participation, as their participation rates are typically already high,” said David Smith, co-director of the Gender and Work Initiative. “This underscores how child care availability disproportionately affects mothers' career decisions and reveals that child care access remains a gendered workforce issue.”
U.S. companies without care benefits are estimated to lose $44 billion each year because they fail to attract, support, and retain employees with caregiving responsibilities. Lack of access to affordable child care for young children costs employers an additional $23 billion annually in lower productivity and revenue generation, as well as increased hiring costs.
“While some employers see child care benefits as a money pit, the reality is that employers offering child care benefits, or those operating in regions with universal child care, report better recruitment, higher retention, and higher productivity than those who do not,” said Smith. “The cost of inaction is staggering.”
Reliable child care translates to higher productivity
Universal child care affects not just whether parents work, but how they work, which directly impacts a company’s bottom line.
“With dependable and predictable child care, mothers specifically experience fewer schedule disruptions and unplanned absences, making them more reliable team members who can fully participate in projects and meetings,” said Stuart. “Importantly, mothers report lower stress, reduced mental load, and greater cognitive bandwidth to focus on work tasks when they're not constantly managing fragile child care arrangements or worrying about backup plans.”
To the benefit of employers, Stuart notes that, for working parents, this translates into stronger day-to-day performance and the ability to be fully present and engaged at work, as well as career advancement.
“Parents with secure child care are more willing to accept promotions that require longer hours, take on high-visibility projects with tight deadlines, pursue leadership roles with travel requirements, or relocate for career opportunities,” she said. “With universal child care, career decisions shift from ‘what can I manage given my child care constraints?’ to ‘what do I want to achieve professionally?’”
How employers can step up
Last month, New York Governor Kathy Hochul announced an investment to deliver universal child care for children in the state who are under five years of age. In November 2025, New Mexico became the first state in the nation to offer no-cost universal child care for families, with no income limits nor copays.
While New York and New Mexico could set a new precedent for other states to follow, the U.S. is a far way from the universal child care models seen in Canada and Europe. Because of this, Smith argues that employers should be treating caregiving as a business need, since the lack of child care impacts so many employees, and in turn, organizational success.
“There’s no doubt about it,” said Smith. “In the U.S. where most cities and states offer limited or no universal child care, supporting caregiving is a business imperative.”
It’s too soon to know how universal programs will impact local workforces and economies in the U.S., but prior research on Canadian and European programs suggests several benefits for employers and working parents.
Robust universal programs, for example, are associated with increasing labor force participation for mothers with children under age five by almost 10%, which translates to a substantial economic impact when scaled nationally.
Among the child care benefits that employers might consider are Dependent Care Flexible Spending Accounts so employees can set aside pre-tax dollars for child care expenses; access to third-party companies that can locate and facilitate child care matches, which takes the burden of research and coordination off overwhelmed parents; and back-up child care options as a benefit, which can be a lifesaver when regular arrangements fall through unexpectedly.
Flexibility for the win
“The key insight is this: offering a one-size-fits-all child care benefit in a workplace with varied work arrangements and various parents with different child care needs is doomed for failure,” said Stuart. “Instead, build flexibility and varied options into your care benefits.”
Even with the addition of child care benefits, Smith and Stuart emphasize that flexible work, when applicable, can be a saving grace for both parents and employers.
“Many working parents face an impossible choice: to pay for five full days of child care each week even if they don’t need it all or forego child care support entirely,” said Stuart. “This ‘all or nothing’ approach forces parents into full-time work arrangements even when flexibility might better serve both them and their employers.”
