Child Care: A Strategic Business Move
Child care is not just a family issue—it’s a business issue.
It shapes how we work, when we work, and, for many, why we work. The lack of affordable, accessible, and high-quality child care forces many parents—particularly women—to reduce their work hours or leave the workforce altogether, ultimately limiting economic productivity. Employers that offer robust child care benefits not only set themselves apart from the competition but also create a “sticky” benefit that enhances employee retention and productivity.
With most working parents now back in the office full-time or on a hybrid schedule, many are struggling to adapt to return-to-office (RTO) mandates. A recent survey found that nearly two-thirds of parents report in-person work has impacted their child care needs. As a result, the majority believe employers should provide greater support for families as RTO policies take effect.
76% of parents believe employers should help offset child care costs.
59% of parents would prefer child care subsidies over a raise.
54% of parents worry their company will cut child care benefits in the future to reduce costs.
In this article, we share key insights into how child care impacts businesses, employees, and the broader economy. We explore the tangible benefits of employer-supported child care, highlight innovative solutions companies are adopting, and offer actionable strategies for organizations looking to invest in this critical support system.
Investing in Child Care
Investing in child care solutions for employees delivers significant value by eliminating barriers to economic growth. A report from MOMS FIRST highlighted these key insights:
Increased income for families to spend on essentials such as food, education, and savings.
Better futures for children through access to quality early education.
More productive employees who can focus on their work without child care concerns.
A reliable workforce that supports business continuity and economic expansion.
A stronger national economy, with up to $840 billion in potential economic output at stake if women’s workforce participation remains muted.
Federal & State Incentives for Businesses
Federal and state incentives provide financial relief to businesses that invest in child care benefits, but how can businesses maximize these opportunities? Employers can design solutions tailored to their workforce, such as:
Child care subsidies to help employees cover costs.
On-site child care centers for greater convenience and reliability.
Back-up care options to ensure employees have emergency coverage when primary care falls through.
Flexible work arrangements to accommodate parents’ caregiving responsibilities.
At the federal level, businesses offering child care benefits can take advantage of the Employer-Provided Child Care Tax Credit (45F), which typically covers 25% of child care expenses and 10% of resource and referral expenses, with an annual cap of $150,000. This provision may expand this year, offering additional financial incentives for businesses to invest in child care solutions and explore collaborative partnerships to enhance child care access.
While federal credits are beneficial, many states are stepping up with their own tax incentives to encourage businesses to offer child care benefits. These state-level programs help companies offset costs while boosting economic growth.
Map of State Child Care Tax Credits for Employers and Parents from the Committee for Economic Development
Minnesota: No State Child Care Tax Credit for Businesses
Minnesota currently provides funding to support businesses through key child care investments administered by the Department of Employment and Economic Development (DEED). These initiatives aim to expand child care access, enabling caregivers to work, pursue education, and contribute to thriving local economies. However, the state does not require employers to offer child care benefits, nor does it provide a state-level tax credit.
In February 2023, a bill was introduced proposing a new employer child care tax credit aligned with the federal credit. If similar legislation were reintroduced and passed, it could offer significant financial incentives for Minnesota businesses investing in child care solutions.
Given the economic and social benefits of employer-supported child care, businesses and advocates should urge Minnesota policymakers to reconsider a matching state tax credit. Aligning state incentives with federal programs would help reduce costs for businesses, improve workforce stability, and make Minnesota a more competitive and family-friendly state.
Businesses Must Act Now
As businesses await federal and state legislation on child care, they cannot afford to stand still. Child care is now a critical workforce issue, and companies play a vital role in supporting working parents. By implementing strategic solutions, businesses can enhance employee retention, productivity, and satisfaction. Here are five key areas to consider:
1. Assessing and Addressing Workforce Needs
A one-size-fits-all approach doesn’t work—employers must evaluate their workforce’s child care needs to ensure equitable access, particularly for hourly and lower-wage employees. Strategies include:
Conducting a child care census to gauge employee demand.
Collaborating with other businesses or working with your local chamber of commerce to design shared child care solutions.
Expanding child care benefits to part-time and hourly workers.
2. Enhancing Affordability and Accessibility
For 33 years, Patagonia has provided on-site child care.
It’s true, there are financial costs to offering on-site child care, but the benefits—financial and otherwise—pay for themselves every year. Patagonia estimates recovering 91% of the calculable costs of on-site child care annually. This quantifiable picture leaves out the intangible benefits of on-site child care, which include greater employee loyalty, stronger workplace culture, and more women in management.
Financial barriers and limited availability often hinder working parents. Employers can improve affordability and access by:
Offering subsidies to offset child care expenses. Bank of America provides up to $275 per month per child for employees earning under $100,000 per year.
Providing dependent-care flexible spending accounts (FSAs) for pre-tax savings.
Establishing on-site child care facilities.
Securing slots with local child care providers ensures availability for employees. For example, Digi-Key in Thief River Falls, MN, has successfully implemented this approach for its workforce. Similarly, the Itasca County YMCA in Grand Rapids, MN, supports local employers by offering a classroom sponsorship program through its WeeFolks Child Care Program, helping to provide accessible child care for working families.
Leasing business-owned spaces to family child care providers. Companies or business coalitions can invest in real estate designated for child care use, leasing spaces to family child care providers. Models such as child care houses or child care house villages (multiple child care houses in one location) developed by the Business of Child Care facilitate access while offering tax incentives or rental revenue.
3. Promoting Flexibility and Convenience
A family-friendly workplace fosters employee well-being and productivity. Businesses can support working parents by:
Aligning flexible work hours with child care schedules.
Offering telework options where feasible.
Implementing “bring baby to work” programs for new parents.
4. Ensuring Reliability
Predictable, dependable child care solutions help employees stay engaged at work. Companies can enhance reliability by:
Providing emergency back-up care for unexpected disruptions. Synchrony offers 60 days of back-up care.
Implementing predictable scheduling to reduce last-minute changes.
Offering paid emergency care days for sudden child care needs.
Employers can also leverage platforms like TOOTRiS, which provides seamless access to over 200,000 quality child care options, from full-time care to temporary drop-ins. These tools eliminate administrative hurdles, making it easier for companies to support their employees and strengthen their workforce.
5. Driving Policy Change
Beyond direct benefits, businesses have the power to influence broader child care accessibility. By advocating for policy changes, companies can amplify the impact of employer-led initiatives. Key actions include:
Supporting child care tax credits and funding legislation.
Engaging with policymakers to highlight the economic benefits of child care support.
Partnering with industry groups to push for family-friendly policies.
Contacting legislators to share how a tax credit would benefit businesses, employees, and communities.
For more on effective advocacy, check out: “Make Your Voice Count: 7 Key Moves to Advocate for Child Care Funding in Minnesota.”
Ready to Get Started?
Contact us today to learn how to implement child care solutions while maximizing available benefits. By prioritizing child care solutions, businesses can create a more equitable, sustainable, and productive workplace for all. Our team is here to provide guidance as you navigate all of these opportunities and more.
Citation: Anderson, Charity & Gilpin, Staci. (2025). Child Care: A Strategic Business Move. Rural Pathways News.