A Brief History of Employer-Sponsored Child Care Benefits

The history of employer-sponsored child care benefits, like many stories of the American child care sector, begins with the events of 1971. After President Nixon vetoed the bipartisan Comprehensive Child Development Act, hopes for a publicly funded child care solution quickly faded. An ascendant neoliberal agenda—which promoted, in short, the idea that government was the problem and free markets the answer—combined with an economic downturn to make major governmental investments unpalatable. Nixon’s assertion in his veto message that the federal government had no place in supporting child-rearing won the day.¹

However, the need for child care continued to escalate as the economy rapidly transitioned away from one in which a single-earner family was sustainable. By 1978, 45 percent of mothers of children between ages three and six were in the workforce, as well as nearly 40 percent of mothers of infants and toddlers.² By the mid-1980s, both groups were above 50 percent. No longer were only poor or widowed mothers working. For the first time, middle-class (and white) mothers were entering the labor market in droves—and they required child care.

As sociologist Erin L. Kelly has written:

Faced with a decrease in government funding and an increased demand for child care, child care advocates and policymakers turned to employers in the hopes that businesses and other organizations would begin to support child care. One of the central recommendations at the 1980 White House Conference on Families was the expansion of “family-oriented personnel policies” including employer-sponsored dependent care programs. Reflecting their interest in privatization, the Reagan administration’s White House Office of Private Sector Initiatives hosted forums for employers, supported research on employer-sponsored child care, and otherwise provided “publicity, a sense of activity, encouragement to act.”³

These were not minor efforts. In 1984, during the Reagan administration, the Department of Health and Human Services’ Administration for Children and Families funded a nearly 350-page book entitled, Employer-Supported Child Care: Investing in Human Resources. The book forcefully laid out the reasons employers should offer child care benefits and gave a practical guide for how to do so, calling employer-sponsored child care “an idea whose time has come.”⁴

Government policy encouraged employer-sponsored child care benefits through more than just words. Kelly notes that a major 1981 tax law included the first tax incentives for businesses around child care. The legislation, which “eventually led to the establishment of dependent care expense accounts, actually was intended by its congressional advocates to encourage employers to create new child care centers.” Today, employer-sponsored child care benefits enjoy a basket of tax credits and government grant opportunities.⁵

It is worth emphasizing that the instinct to tap employers to solve a problem the government was unwilling to solve came from multiple interested parties. The White House Conference on Families referenced by Kelly occurred under the Carter administration. As the Reagan administration pushed the idea further, many child care advocacy organizations threw up their hands and followed suit. Historian Anna Danziger Halperin recounts that:

One [National Organization for Women] Child Care Task Force Coordinator even termed employer child care a “very hot item.”…The Organization for Women Office Workers, which changed its name in 1983 to 9 to 5: National Association of Women Office Workers, lobbied individual employers to provide vouchers to their workers and referral networks to assist employees’ search for care arrangements. The organization argued that employers should be doing much more to assist their workers in the absence of more universal approaches to care.⁶

This trend continued through the 1990s and early parts of the new millennium. For instance, in 1998 President Clinton held a Rose Garden event marking the release of a new Treasury Department report on employers and child care.⁷ The report was the product of a Treasury working group that included the CEOs of important corporations like the pharmaceutical giant Eli Lilly and leading insurance company Travelers Group, as well as the head of the AFL-CIO labor union, all of whom attended the launch event.⁸ As then-U.S. Treasury Secretary Robert Rubin wrote in the report’s introductory letter, “The report carries an important lesson: Investments in child care can pay off in real dividends for employers and employees.” (Notably, the report was silent on the idea of publicly funded child care or any steps businesses could take in that direction.)

What we are seeing in 2023, then, is not new. The pandemic shattered the child care sector’s fragile equilibrium, and the reality of America’s broken child care system has received arguably its most sustained and widespread media attention. Yet in response to the gaping need, policymakers and advocates are again casting their eyes on employers. Notably, this strategy did not result in the creation of an effective child care system over the past 50 years, nor did anything to arrest the slide into a patchwork system of high fees, low supply, poor educator pay, and questionable quality. It is unclear why one would imagine doubling down on the strategy will have a different outcome over the next 50 years.