The US$70 billion wake-up call: why employer-backed child care is now a business imperative and why Australia should pay attention

Child care has often been framed as a social policy issue. New data from the United States suggests it is equally a workforce and productivity issue, costing employers up to US$70 billion each year through absenteeism, reduced productivity and staff turnover.

The figure, reported in a recent Forbes article by Holly Corbett, draws on a national survey of 1,700 parents conducted by Moms First’s National Business Coalition for Child Care in partnership with McKinsey & Company.

For employers navigating labour shortages, rising costs and retention pressures, the message is clear: child care is no longer a discretionary benefit. It is economic infrastructure.

While the research focuses on the United States, the underlying pressures are highly relevant in Australia.

Child care disruptions come at a business cost

According to the report, nine in 10 parents said child care disruptions affect their ability to work, yet only 15 per cent of employers currently offer any form of child care support.

The consequences are significant. When care arrangements break down, absenteeism rises, productivity declines and turnover increases.

Women continue to experience the greatest impact, reflecting the unequal distribution of unpaid care responsibilities. The report found women recorded 11 per cent more days at work while not fully productive, and 21 per cent more time absent than men due to child care disruptions.

The impact is particularly sharp for foundational workers, including nurses, teachers, retail employees and hospitality staff. These roles often allow little flexibility, meaning last-minute disruptions can quickly create missed shifts and staffing gaps.

The return on investment is difficult to ignore

The report found several employer-backed supports generated a positive return on investment.

Flexible scheduling delivered the strongest returns, estimated at 280 to 300 per cent, particularly where operationally feasible.

Care navigation support, helping families locate reliable care, returned an estimated 120 to 140 per cent by reducing stress and presenteeism.

Child care reimbursements or subsidies produced returns of 70 to 90 per cent, with the strongest benefits often seen among lower-paid workers.

Onsite or near-site child care also showed strong potential, particularly for shift-based industries, although these models require greater upfront investment.

For foundational workers, the report estimated stable child care access could generate savings of US$35 billion to US$45 billion annually.

Why this matters in Australia

Although Australia has a more structured early childhood education and care system, many of the same workforce pressures remain.

Access to affordable and reliable care continues to shape labour force participation, particularly for women and families with young children.

Research from the Productivity Commission has repeatedly linked child care availability and affordability with workforce participation. Analysis from the Grattan Institute has also highlighted the economic gains available when barriers to work are reduced for parents.

In practical terms, many Australian families continue to face:

• long waitlists, particularly for infants and toddlers
• workforce shortages that limit available places
• reduced access in regional and remote communities
• high out-of-pocket costs, even with subsidies
• limited flexibility for shift workers and emergency staff.

These challenges can directly affect employers through delayed returns from parental leave, reduced hours, unplanned absences and talent attrition.

The foundational worker challenge exists here too

Australia’s economy also depends heavily on frontline and essential workers in sectors such as:

• health care
• aged care
• disability support
• retail
• hospitality
• transport
• early childhood education and care.

These are roles where remote work is often not possible and roster gaps have immediate operational consequences.

When child care arrangements fail, the impact is not theoretical. It can mean cancelled shifts, overtime costs, agency staffing and reduced service capacity.

A strategic opportunity for Australian employers

As competition for labour continues, some Australian employers may increasingly consider child care as part of workforce strategy rather than a human resources add-on.

Potential approaches include:

• flexible rostering and predictable scheduling
• backup care partnerships
• employer-supported places with local providers
• child care subsidies or contribution models
• onsite or near-site centres for large workforces
• return-to-work support for parents after leave.

These models may be particularly valuable for hospitals, universities, industrial employers, airports and large multi-site operators.

What this means for the ECEC sector

There is also a clear opportunity for approved providers.

Employer partnerships could create new demand through reserved places, extended-hours models, emergency care solutions and centre developments aligned to workforce hubs.

For a sector managing occupancy pressures in some markets and shortages in others, deeper engagement with employers may unlock new growth pathways.

Child care is economic infrastructure

The US$70 billion figure may be American, but the lesson is global.

When families cannot access dependable early learning and care, businesses lose hours, productivity and skilled employees. Economies lose participation. Communities lose capacity.

Australia has already recognised the importance of child care through subsidy reform and broader participation policy settings. The next step may be recognising that child care is not only social infrastructure, but workforce infrastructure.

Employers that move early are likely to be better placed to attract, retain and support the people they need to grow.

Read the full article here.