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A Crisis Over Child Care Is Holding Back Companies and Blue-Collar Workers

Daycare at work, long a white-collar benefit, is proving tough to pull off with other employees

By Te-Ping Chen, WSJ

May 9, 2023 5:30 am ET

More companies that rely on hourly shift workers are trying to fix the child-care needs of their employees by providing it themselves. So far, few have cracked the code.

Working against these companies is a lack of care, especially in rural areas where many manufacturers and other blue-collar employers operate, some companies say. Affordability, even with employer subsidies, is often a hurdle. So is providing care for parents who work nights or frequently changing shifts.

Many of Huntsville Hospital’s 18,000 staff throughout northern Alabama and southern Tennessee are mothers who work long shifts. So it has provided daycare a block away from its main hospital for decades, spending $400,000 a year to charge below-market rates.

It has capacity for 120 children, and its waiting list is often 50 children long. It would be expensive, and difficult, to find room for more, says Jennifer Holly, the hospital’s vice president of human resources. “We’re landlocked,” she says of the hospital’s limited space.

The hospital recently scrapped its summer programs for employees with older children because of trouble recruiting staff. Even with subsidized rates, few of its lower-wage staff have children at the center, Ms. Holly says. Given the limited reach, the hospital is exploring ways to help families find more care options in their communities.

Many business leaders and policy makers say child care is key to luring younger workers, especially women, into manufacturing and other industries facing a lack of skilled hourly labor. A February report by ReadyNation, a coalition of business leaders, estimates that insufficient child care in the U.S. costs $122 billion a year in lost earnings, productivity and revenue. The Biden administration is also pushing the issue with the recently passed CHIPS Act, requiring recipients of the new $53 billion chip-making subsidy program to submit plans for ensuring accessible care.

Such workers typically have fewer child care options than white-collar employees, many of whom can work from home and earn more than hourly employees, child-care industry executives and researchers say.

Stephen Kramer, chief executive of Bright Horizons, one of the country’s largest child-care providers, says shift and hourly workforces account for about 5% of the employer-sponsored centers his company operates. That percentage is now on the rise.

“I don’t see a lot of fully baked strategies yet,” says April Arnzen, chief people officer at Micron Technology. The memory-chip maker is planning a mix of on-site child care at its New York and Idaho sites, in addition to subsidies for its entire U.S. workforce.

Plastic-film maker i2M recently considered on-site child care to boost recruitment and reduce absenteeism at its Mountain Top, Pa., factory. Too many absences can shut down production lines and cost the company thousands of dollars, i2M CEO Alex Grover says.

Ms. Grover was surprised that many production workers didn’t want on-site daycare. Like many manufacturers, her company recruits from a wide area—in i2M’s case, a radius of around 25 miles. Many of its more than 200 employees prefer care closer to home so that family or friends can pick their children up if needed.

Ms. Grover says she opted to work with a local child-care provider in late 2021 instead, charging a subsidized $25 daily fee. Five families use the offering, she says. One reason for the low number, she suspects, is that shifts often run into hours when the child care center is closed.

“In manufacturing, we have to really look at the true reasons why we’re having some of these issues,” she says.

Tony Dillon, former general manager of human resources and safety at Toyota’s Princeton, Ind. plant agrees.

“There’s glitter in being able to say, we’re building an on-site [center], here’s an artist depiction, it’s going to be so cool,” says Mr. Dillon, who retired this year after a 24-year career at Toyota, one of the earliest pioneers of on-site child care in manufacturing.

Yet on-site daycare can be cost-prohibitive for companies and inconvenient for workers, he says. The money, he argues, is often better spent on subsidizing families in need of care, which in turn supports local child-care providers.

Myriah Sweeney, group manager for people and property services at Toyota in the U.S., says on-site child care is expensive, costing approximately $15 million to build a center for around 140 children. Still, she says, it is a valuable recruiting tool at its Indiana and Kentucky plants. An estimated 2% to 3% of workers there use it at any given time, and 10% have at some point in the past five years.

“It’s not necessarily a good financial decision, but we know it’s the right thing to do,” she says. The company plans to expand on-site care at more locations and provides other options, including backup child care and discounts at off-site providers.

Executives at Mazda Toyota Manufacturing went another route at the joint venture’s new Greenbrier, Ala. plant after analyzing the costs. It opted to offer workers $3,000 in annual child-care subsidies through Tootris, a company with a network of 200,000 state-licensed providers.

Tootris also helps more informal, often home-based providers get licensed and matches them with workers in need. That is important since around 75% of the child care market is invisible and unadvertised, says Eric Cutler, Tootris’s senior director of child-care initiatives.

Mark Brazeal, MTM’s vice president of administration, says the company calculated it would make a return on its child-care investment—up to $1 million a year—if it cut attrition by 1%. Since the subsidies began, 60% of workers with dependents have signed up for the program, and 14% use the subsidies at any given time. Attrition, meanwhile, has dropped 11% for men and 20% for women. The company says a wage increase this past year may also be a factor.

Brittany Malone arrives at work Mazda Toyota Manufacturing in Greenbrier, Ala., after dropping off her children at daycare.

Brittany Malone, 33 years old, joined MTM’s production line last summer for the better hours and pay—$5 more an hour than what she earned as a hairstylist. Soon after, the father of her young children, who had cared for them during the day, died. She now uses the subsidy to pay for a care provider near her home, whom she encouraged to join Tootris’s network.

As a hairstylist, she was on food stamps. At MTM, she is saving money and able to afford long-overdue dental work.

“My life has changed dramatically,” says Ms. Malone, who recently purchased a trailer for her family. “We can do a lot of different things now.”