Google and General Mills have a collective market capitalization of more than $2 trillion. The companies share something else in common: In January, they both announced they are closing their on-site childcare centers. The situations are not identical: In Google’s case, the closures were part of a broader set of cost-cutting measures; while General Mills’ stated rationale had more to do with low utilization—but they reveal a weakness in relying on employers for childcare benefits since employers can, and do, change their minds.
When reached for comment on the center closures, a Google spokesperson said the company is “providing expert support to help [parents] find alternative childcare, as well as additional subsidized days of backup childcare on top of our existing benefit.” And a General Mills spokesperson said: “Post-pandemic, we saw a notable drop in usage as families opted for childcare options closer to home. We’re now focusing on supporting our employees by making significant investments to broaden caregiving support.”
America has a legacy of treating childcare far more as a private-market good like a gym membership or pet care than a societal obligation like public school or parks. As I detail in a new report published by the Better Life Lab at the think tank, New America, the turn toward employers as a childcare solution started shortly after Richard Nixon vetoed the bipartisan 1971 Comprehensive Child Development Act.
That legislation would have begun creating a federally funded, locally run network of affordable childcare options. Instead, childcare needs spiked as mothers flocked to the labor force of a changing economy, and soon both parties were tapping employers for help to deal with a problem the government was proving unwilling to tackle. Today, there is renewed policymaker interest in incentivizing employer-sponsored childcare benefits, whether the Biden administration’s requirement that semiconductor manufacturers show a childcare plan in order to receive CHIPS Act funding or the bumper crop of tax benefits and grants being offered in both red and blue states.
There are many reasons employers should not be playing a starring role in childcare. For one, it cements childcare as a mere work enabler, as opposed to a crucial support for family thriving and self-determination. But the insecure nature of these benefits is one of the more obvious flaws.
Simply put, employers have a different calculus when it comes to maintaining childcare offerings than community-based providers. The childcare sector writ large is struggling amid staffing shortages and a brutal lack of public funding. But independent childcare programs are closing because they have to: They can no longer make payroll or maintain operations. It is a literal last resort. Wealthy companies are closing their on-site programs—or yanking away childcare stipends, as in the case of Elon Musk’s X, formerly Twitter—because they choose to. (This unpredictability can extend to the price of on-site care, as well: In 2008, Google hiked parent fees by 75%, leading to meetings in which parents “openly wept.”)
Companies’ reasoning is not a secret. For instance, when Hackensack Meridian Health Systems (New Jersey’s largest healthcare provider) announced in 2022 it was planning on closing its on-site center, the hospital leadership stated in a letter:
“The current childcare landscape is rapidly changing, putting a great deal of financial and staffing pressures on organizations that offer childcare services. In addition, there is a heavy capital commitment needed to maintain the childcare facilities. . . . After deliberate and careful consideration of all options, we have determined that it is in the best interest of our patients and communities to focus our efforts on our core mission of patient care.”
While Hackensack Meridian eventually reversed this decision under heavy pressure from staff, other hospital systems have followed its example. Announcements just in the past four months include the Carle Foundation Hospital in Urbana, Illinois, which shuttered its program to “make necessary decisions to continue to meet the needs of our patients and maintain the level of care our communities deserve”; the Lutheran Hospital in Fort Wayne, Indiana; the Winchester Hospital in Winchester, Massachusetts; and the Mary Washington Hospital in Fredericksburg, Virginia, which decided to repurpose the building (which it owns) that houses the center.
These examples are not necessarily an indictment of the corporations involved. General Mills regularly ranks high on lists of the best places to work, and Google offers paid parental leave and other family benefits that far outstrip those of many companies. It is, however, an indictment of asking employers to carry the childcare water. These decisions frequently occur with little notice and, given the extreme scarcity of childcare in most communities, leave few alternatives for parents. One nurse at the Carle Foundation Hospital told a local news station, “It’s kind of an insurmountable stress. It’s somewhat unbelievable. You become family with the teachers at daycare. Your children learn them, you learn them. You become a family.”
Continuing to incentivize employer-sponsored childcare benefits is likely to only increase the volatility and risk for parents already navigating a chaotic era. The alternative is not to do away with things like on-site childcare centers: For places like hospitals where staff work odd hours, they can be enormously helpful. The alternative is wrapping on-site childcare centers into a publicly funded system as one option among many, so that parents can choose from an on-site program alongside community centers, faith-based centers, family childcare programs, relative caregivers, and providing care themselves.
The best role for employers, then, is to forcefully advocate and flex their political muscle in order to advance such policies. A good example can be found in Vermont’s business community, which actively helped fight for a small payroll-tax increase that has funded major childcare improvements as the state moves toward a near-universal model.
Employers absolutely need to step up in helping to ensure that their employees and their communities have the childcare needed to flourish. The recent rash of closures shows, however, that policymakers should not focus childcare solutions on incentivizing businesses to offer childcare benefits. Childcare should not be a private perk to be run through the employer-employee relationship, but a dependable, universal, essential service.
Reporting for this article was supported by the Better Life Lab at New America.
