For Small Businesses, a Lack of Affordable Child Care Stifles Growth
Hiring is challenging for any business -- but particularly for small businesses that lack the resources to offer child care benefits, according to 10,000 Small Businesses Voices, a new survey by investment banking company Goldman Sachs.
The April 2024 survey, which polled more than 1,200 small business owners across nearly every state, reported that most small and medium-sized businesses can't provide subsidized child care the way many larger businesses can, and it's affecting their ability to recruit and retain talent.
In the survey, 38 percent of small business owners said a lack of child care in the country has had a negative impact on their ability to operate or grow their businesses. And over one-third of owners said their employees have had to shorten their hours or take off work entirely because of child care challenges.
Dawn Kelly, owner of New York-based health food store The Nourish Spot, says she employs several young parents who regularly have to take off work or readjust their schedules in order to take care of their children.
"You can't stop people from running out when it's the most valuable thing to them -- their child," Kelly says. "I just don't want to lose the people I have. I want to keep them, and I want to be able to help them, if I can."
A survey conducted by online caretaker matching service Care.com found that nearly one-third of job switchers cited a lack of child care benefits as their primary motivation for leaving their job.
"When child care is hard to find or impossible to afford, it doesn't just affect working families," said Sarah Rittling, executive director of early childhood development advocacy group First Five Years Fund, who was cited in the report. "Child care challenges are business challenges."
Despite high costs, childcare providers operate on thin margins, according to the U.S. Department of Labor. "Low pay in the childcare sector means that employers cannot attract sufficient workers, and many areas are considered childcare deserts, leaving families with limited options," according to the DOL.
At the same time, families can't afford to pay more for childcare. Faced with this double bind, small businesses owners are looking for policy solutions.
The government currently offers businesses a tax credit they can use to cover 25 percent of their spending on childcare facilities and 10 percent of their spending on childcare resource and referral services, up to $150,000. Seventy percent of the small business owners surveyed said they would support legislation to increase that tax credit to $500,000. The hope is that a larger tax break would incentivize more employers to provide subsidized childcare for their employees.
Still, many startups and very small businesses do not benefit from the tax credit as they don't have the capacity to locate or provide childcare for their employees.
"I wish small businesses could band together and buy childcare for our staff together," Kelly says.
Because of this gap, another important part of the equation is providing tax credits directly to parents to offset the cost of care, according to Rittling.
"It's so important to have the marriage of those tax credits," she says. "It [has to be] a partnership across a lot of different public and private sources if we're going to make a dent in this."
At the moment, however, more than half of small business owners think political candidates haven't sufficiently addressed the issue of accessible child care.
"Access to capital is not the only thing. Healthcare for our staff, childcare for our staff, all of those things" are challenges for small business owners, Rittling says.
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This article was written by Ava Mandoli from Inc. and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.
