FRANKFORT, Ky. — Kentucky employers face challenges when hiring and retaining quality staff. The state’s workforce participation rate is the seventh lowest in the nation. As of February 2023, Kentucky had 135,000 job openings vs. 79,000 unemployed Kentuckians actively seeking work.
Roughly 69,000 Kentuckians quit their jobs in February, the vast majority of which likely left to pursue new opportunities in a labor market heavily tilted toward job-seekers. While the severity of Kentucky’s workforce challenges will ebb and flow with a changing economy, the aging population’s demographics suggest that tightness in today’s labor market might be a new normal.
Key Highlights:
- One in three parents with young children report leaving the workforce altogether at some point because of childcare
- The costs of quality child care can often equal or surpass average housing costs
- 85 percent of working parents with young children would find it helpful if their employer offered a benefit to help them pay for childcare
- A new resource is available to Kentucky employers to help employees with the cost of childcare
Addressing our state’s workforce challenges requires multifaceted solutions, including public policies to attract more people to Kentucky and optimize our available workforce by removing barriers to work. However, there are steps employers can take right now to help retain workers and even draw some adults back into the labor market. One such step is to help working Kentucky families find and afford quality child care.
The dilemma of how access to child care affects workforce participation or the ability of a parent to keep a job or show up to work regularly is simple to explain. If you can’t find or afford a safe place for your child while you’re at work, then you probably can’t work. Survey data illustrates this reality. Throughout 2022, Census Bureau data showed that an average of 71,000 Kentucky adults cited “caring for children” as their primary reason for not working in any given month. A national survey of working parents and employers by the Bipartisan Policy Center in December 2022 found that almost four in ten working parents with young children have quit a job due to childcare responsibilities. One in three reports leaving the workforce at some point because of child care. Fifty-six percent say child care has factored into a decision on whether to accept a job.
Childcare challenges are complex. Quality care can be difficult to find. Many areas face long waitlists. It’s also very expensive, often surpassing average housing costs. For instance, quality care for a toddler in Crittenden County averages $6,930 per year vs. $7,032 per year for an average mortgage based on data from Kentucky’s 2020 Child Care Market Rate Report and the National Association of Realtors. In Pike County, quality care for an infant averages $6,552 per year vs. $6,252 per year for an average mortgage. These high costs lead many parents to the conclusion that it’s more cost-effective to leave their job rather than devote substantial chunks of their paychecks to child care.
This is exactly what a young woman from St. Louis named Kaylee told The Wall Street Journal she did upon finding out she was pregnant with twins. “I would rather be at home than pay someone to watch them if it’s net zero,” she told the Journal for a March 2023 article titled, “Pricey Child Care is Keeping Many Parents out of the Workforce.”
Not surprisingly, surveys of working parents with young children show that many of these workers would find value in their employers providing childcare benefits. The Bipartisan Policy Center survey from last December showed that 85 percent of working parents would find it helpful if their employer offered a benefit to help them pay for child care. Of this group, 63 percent said it would be “very helpful.” 79 percent said on-site child care would be helpful. 80 percent said assistance finding childcare would be helpful.
Beyond finding child care benefits “helpful,” close to 60 percent of surveyed parents felt that businesses should be responsible for ensuring child care is accessible and affordable.
Results from the Bipartisan Policy Center’s survey of employers suggest that many business owners and executives might not realize how important childcare benefits are to their workers or how childcare challenges might contribute to workforce challenges. Nearly 70 percent of employers reported that childcare access and affordability do not impact employee retention or hiring. Only 18 percent of employers offered some form of benefit to help employees with children pay for child care, though 38 percent said they would likely offer such a benefit “in the next year.”
Employer-provided childcare benefits might be a significant missed opportunity for many employers when it comes to attracting and retaining staff and supporting workforce participation.
The Kentucky Chamber has developed a resource guide to assist employers with navigating ways to help their employees with childcare challenges – including a survey template to gauge childcare needs among their workers. One of the unique resources is Kentucky’s new Employee Child Care Assistance Partnership. Through this program, the state can partner with an employer to help a working parent afford quality child care. For example, if an employer offers an employee $100 per month in direct aid to assist with their childcare costs, the state can match that contribution, giving the employee up to $200 per month in assistance. The program is a unique opportunity for an employer to double the size of an employee benefit while the employee can reduce their out-of-pocket costs.
For an employer, participation in the Employee Child Care Assistance Partnership could produce a strong return on investment in employee retention. It could distinguish between keeping a high-value staff member or losing them due to childcare challenges. A survey of workers whose employers participated in a similar program in Michigan found that 82 percent agreed that the program made them more likely to stay in their current job.
While offering a new employee benefit can be daunting for some employers, third-party administrators can help streamline processes and reduce administrative burdens.
Helping working Kentucky families access and afford quality child care is one of many solutions that public and private stakeholders must pursue to address Kentucky’s workforce challenges. Survey data illustrates how employer-provided childcare benefits can serve as a key solution. Programs like the Employee Child Care Assistance Partnership offer unique opportunities for Kentucky employers to assist their employees and improve employee retention.
