UPS launched a 3-month childcare pilot. Retention increased 39%, and absences plummeted

Over the past few years, more employers have started offering childcare benefits as working parents, particularly mothers, deal with an unrelenting caregiving crisis. 

Those childcare benefits don’t have to be as financially intensive as investing in an on-site facility either. In fact, a new report from Boston Consulting Group and nonprofit Moms First looks at a variety of care offerings from five different companies and the ensuing return on investment. 

“We wanted the study to break through the perception that there was only a one-size-fits-all way of solving this,” says Reshma Saujani, founder and CEO of Moms First.

Researchers examined UPS, Etsy, Uniqlo owner Fast Retailing, financial services company Synchrony, and Colorado-based ski resort Steamboat, using employee surveys, financial data, and worker interviews to analyze each program. Researchers intentionally selected companies that differ in industry, workforce size, mix of frontline and white-collar roles, and range of childcare benefits. 

The companies analyzed saw an ROI on childcare benefits—financial gains made from increased employee retention and productivity, compared to the net cost to administer the childcare benefit—ranging from 90% to 425%. Some companies needed as little as a 1% increase in eligible employee retention to make back the childcare investment cost, the report calculated. Additionally, childcare-related absences fell by four to 16 days.

UPS, which piloted a 3-month emergency on-site daycare program at a Northern California facility in late 2022, saw retention among eligible hourly employees at the facility jump from 69% to 96%, while worker absences dropped an average of three days over that period. At Etsy, which offers workers up to $4,000 annually for backup childcare and an additional $1,000 work-life stipend, 82% of eligible employees said childcare benefits were an important factor in their decision to work there. Seventy-nine percent of those surveyed said they were more likely to stay with Etsy because it covered those costs. 

Researchers also observed positive outcomes they hadn’t set out to measure, including new opportunities for career progression. Several workers shared that the childcare support allowed them to take on more assignments and opportunities that they wouldn’t have been able to pursue otherwise.

“We didn’t put a dollar value on that, but when you think about that happening over millions of people in the U.S., and millions of women in particular, I think it’s really powerful, and it adds up to something,” says Emily Kos, a managing director and partner at BCG.

To be sure, the report is a peek into the decisions of a few companies, not a broader population survey. And many organizations still view childcare as a costly investment that only big companies can provide. According to a 2023 survey from HR consulting firm Mercer, 54% of companies with 500 or more employees said they do not offer childcare benefits, while 40% of large companies with 5,000 or more reported the same.

Saujani says the latest report draws attention to the many different ways that employers can customize childcare benefits for their workforce. For small businesses, that might simply mean a more flexible work schedule in case childcare plans fall through.

Kos says the way surveyed companies studied tailored their benefits to employees shows that “there’s a solution out there that would be ROI positive for companies as long as they’re being thoughtful about how they match their benefits to their workforce.”

Paige McGlauflin
paige.mcglauflin@fortune.com
@paidion

Today’s edition was curated by Emma Burleigh.

Correction, March 26, 2024: A previous version of this article misstated the increase in employee retention needed to make back the costs on childcare benefits.

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