Looming End To Billions In Childcare Funding To Strain RTO Push

Employers are drawing a hard line in the sand this fall on the return to the office, with the number of new policies rising and enforcement ramping up.  

But just as companies are rolling out a renewed effort to bring people back in person, a major source of federal funding is set to run out that could additionally stifle progress for a particular segment of the employee base: women.

A $24B federal funding program created by the American Rescue Plan Act to support childcare programs that were struggling during the pandemic is set to expire at the end of September.

The disappearance of this funding is estimated to put more than 70,000 childcare programs in danger of closing and 3.2 million children in jeopardy of losing their spots, according to a study from the Century Foundation first reported by The Wall Street Journal. 

"What’s really important about the funds that are expiring is that they were the most flexible, and they largely went to personnel costs — things like rent versatility, emergency equipment, personal protective equipment, things like food for the children," Center for American Progress early childhood policy analyst Maureen Coffey told Bisnow. 

"So that super flexible and accessible money is going away and doesn’t have a replacement right now," she added.

The new burden would only exacerbate the disconnect between supply and demand that the industry is facing. Childcare workers left the industry in waves earlier in the pandemic — employment numbers as of April were still below pre-pandemic levels — and the tight labor market has made it difficult to hire in the sector, in which workers make less than 98% of the nation’s other professions, according to a report from the Annie E. Casey Foundation. 

"Parents are really seeing that in the form of not finding slots or having to wait months and months to get in to a provider," Coffey said. "We’ve always seen high tuition costs for childcare, and that has continued. It’s very costly for families. It’s very difficult to find."

As more employees are asked to return to the office more days a week and as those guidelines are being increasingly enforced, workplace experts say a reckoning is on the horizon.

“If companies don't change their tune and start to provide that flexibility, I think they're going to start losing women,” Her Workplace founder and CEO Marilynn Joyner told Bisnow in an interview. 

Over the course of this year, nearly 3 million people are expected to be under new return-to-office requirements, according to JLL. Companies like Disney, Zoom and JPMorgan Chase unveiled new policies this year, and this summer the Biden administration asked agencies to “aggressively execute” plans to bring employees back into the office more days per week beginning this fall. 

At the same time, enforcement of those guidelines is ramping up. Last month, Amazon CEO Andy Jassy said it might not “work out” for employees who can’t adhere to its three-day-a-week in-person policy, and in June, Google began including in-office attendance in its performance reviews. 

A Resume Builder survey last month found that 90% of companies are planning on returning to the office by the end of 2024, and 28% say their company will threaten to fire employees who don’t comply with in-office mandates. 

Any fallout from such enforcement would likely disproportionately fall on women, Coffey said, as women primarily bear the weight of childcare in the U.S., according to the Bureau of Labor Statistics. 

“I think there are real gender impacts,” she said. 

Some companies are taking actions to aid the transition back to the office, from offering on-site care to reimbursements. 

Last summer, Walmart announced it would open a 73K SF childcare facility at its new headquarters under construction in Bentonville, Arkansas. Marriott International expanded its childcare facilities when it opened its new global headquarters in Bethesda, Maryland, and food-processing giant Hormel is kicking off construction of a $5M childcare center set to open in 2024 at its Austin, Minnesota, headquarters.

"It is not only given as a benefit to help create happier employees, of course, but it does create a competitive talent attraction tool for them as well," JLL Head of Americas Work Dynamics and Industries Research Amber Schiada told Bisnow.

Meanwhile, the Biden administration is requiring that semiconductor manufacturers that obtain funding under the CHIPS Act provide quality, affordable childcare for employees who build or operate a plant. 

But a lack of options is still a major stumbling block for employees looking to work full time. A July poll from the First Five Years Fund found that 59% of the part-time or nonworking parents it surveyed said they would go back to work full time if they had access to quality childcare at a reasonable cost.

As employers look to bring workers back to the office, experts say an adjustment needs to be made, or else companies without childcare benefits run the risk of losing out to those that do. 

“Organizations need to think more about flexibility and the benefits that they're offering. If they want a woman to come back into the office, say, three, four or five days a week, they're going to have to invest in benefits for childcare,” Joyner said. “And if they don't, then that woman is going to go elsewhere, to another organization that does.” 

And as companies continue to push for increases to in-person work, Schiada said it is important that they look closely at sticking points like childcare that are stalling the return.

“I do believe we are going to see an uptick in return to office this month, but where we see any lagging activity, I think it’s important for us to dig into why, what’s holding employees back,” Schiada said. 

Miriam Hall contributed reporting for this story.