Could employer subsidies aid the childcare crisis?

Childcare providers are under pressure as US lawmakers push to renew federal stabilization grants that have expired.

Bright Horizons (BFAM) CEO Stephen Kramer joins Yahoo Finance Live to weigh in on the childcare crisis and why more childcare providers should consider employer subsidies.

Kramer says employer subsidies are “the secret sauce” for the company and have played a role in keeping it in business. Kramer notes a “sunsetting” of American Rescue Plan Act (ARPA) funding and suggests that alternative funding should be explored.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

AKIKO FUJITA: Senator's including Tina Smith from Minnesota and Elizabeth Warren from Massachusetts are urging congressional leaders for a new funding package after the Child Care Stabilization grant, which was passed in 2021, expired at the end of September. Aside from climbing expenses, the child care industry is also facing an influx of closures over lack of funding, shedding jobs from the economy and leaving parents without access to care arrangements.

For more on the state of child care, we're joined by Stephen Kramer, Bright Horizons CEO. And Stephen, will start by saying that this is something Rachelle and I are very familiar with with, having to look for child care. Let's start with the implications of that funding expiring in September. We heard a lot of the doom and gloom scenarios. How has that affected Bright Horizons?

STEPHEN KRAMER: So we always had known that this-- ARPA funding was going to sunset, and so we really managed our business with that understanding, and I think the secret sauce behind Bright Horizons has always been the support that we garner from our employer clients. And so unlike community-based providers who are responsible for having parents pay the entire freight of child care in their tuition's, we've always had this third party support through employers, and so again, it's been a critical support over 35 years and in the face of the ARPA funding sun setting, this continues to be an important source of support and subsidy for working families.

RACHELLE AKUFFO: And Stephen, since that sun setting, have more employers been approaching you to try and offset some of these costs for their employees, or are they still trying to-- trying to figure it out when they think of other sorts of labor costs and other sort of perks that they have to pay?

STEPHEN KRAMER: Yeah, I mean, we're certainly seeing a renaissance in interest around child care and specifically employer supported child care. I think that employers recognize, and they're hearing it directly from their employees, that they are struggling with access, with affordability, and the quality of child care in the general community, and so employers are really trying to figure out ways that they can invest and obviously, Bright Horizons is in the middle of those conversations given the long history we have in supporting employers as they support employees in this important area.