By Christina Henderson
Across multiple sectors, many working parents start looking for daycare when they are three months pregnant, but still don’t have a spot for their baby when their parental leave ends. Some couples resort to paying to be on wait lists, or even coordinating their family planning to line up with available childcare slots. Parents who do find a daycare often have no second option if there are problems with a provider.
For the more than 25 executives who gathered for the Montana High Tech Business Alliance’s CEO Roundtable on July 17, 2019 at Zoot Enterprises in Bozeman, stories like these offer a sobering reminder of the impact of the childcare shortage facing Montana workers.
According to a 2018 report from the Montana Department of Labor and Industry presented by Rob Grunewald, economist with the Federal Reserve Bank of Minneapolis, licensed childcare facilities in Montana only have capacity to serve 40 percent of children under age five. Rural counties often have a much lower capacity.
Lack of childcare availability in Montana has a measurable impact on workforce availability. Grunewald cited a survey conducted by the Missoula Area Chamber of Commerce in which nearly half of respondents — 47 percent — indicated they had scaled back or abandoned their career or expect to do so in response to childcare issues.
Grunewald noted that Montana has about 30,000 women with children under the age of six and the labor force participation rate for these mothers is around 67 percent. By Grunewald’s estimates, if labor force participation for women with young children was the same as Minnesota, Montana would have about 5,000 more employees in a state that is already strapped for talent.
But the conversation also highlighted innovative examples of high-tech and manufacturing companies that are expanding the availability of safe, quality childcare for families and in the process improving company culture and employee retention. Leaders from Printing For Less (PFL), Zoot Enterprises, and MyVillage shared success stories of free enterprise solutions to help fill Montana’s childcare gap for workers.
PFL in Livingston Leads the Way in Establishing On-site Childcare, Improves Employee Retention
PFL in Livingston has been a trailblazer in providing company-sponsored daycare for employees. PFL executive Marne Reed started the Learning Center in 2003 when she started to have a family at the same time as several other employees. All were struggling with returning to work, especially since many of them lived in Bozeman and may have had to leave their children at daycares 30 to 40 minutes away from their jobs.
Reed and the other employees put together a charter to start a state-licensed childcare facility at PFL. The initial childcare center was a leased house near PFL’s downtown location. When the company moved to a new headquarters in 2006, the childcare center came on site. The current PFL program has a maximum of 30 available spots for children aged zero through five, though there is a significant demand for more.
“At this time we have a waiting list of about 30 participants, so our challenge does actually continue to exist,” Suzie Lalich, Director of Employee Success, said. “We have about 310 employees at our Livingston headquarters, and so we know it’s going to be an issue that we’re going to have to continually address and evolve with the company.”
The Learning Center is a significant investment for PFL. The company employs six licensed childcare providers and a director, and pays them a good wage – an average of $16.50 an hour.
“Ultimately, last year, we had a loss of about $200,000,” Lalich said. “We do receive a 25 percent [federal] tax reduction on that deficit, so in turn we lost roughly $150,000 last year. Employees pay $3.75 an hour per child, that’s probably a little more than half the cost [of alternate daycares] depending on the type of care you’re looking at.”
Despite the cost, Lalich sees clear benefits to the on-site program, including employee retention.
“Our average age at PFL is around 34.5 years old, so pretty prime childbearing age,” she said, adding that for those who use the Learning Center, “the average tenure goes up from about five-and-a-half years to between eight and nine years of employment with the organization.”
Lalich said that some employees who left PFL have come back to the organization and on-site childcare influenced their decision. Some workers who might otherwise wish to work remotely from home for other companies are more willing to join the team at PFL if their children can be onsite.
PFL is looking at adding childcare facility locations to expand the program while complying with state requirements.
Supporting Working Parents is a Passion Project for Zoot’s Leaders, Enhances Worker Productivity
When Chris Nelson started Zoot Enterprises 30 years ago as a single dad, he had experienced first-hand the challenges faced by working parents. He aimed for Zoot to be a family-friendly company.
When designing a new headquarters and Four Corners subdivision in Bozeman in 2000, Chris set aside a lot for a daycare center. Unfortunately, the nonprofit childcare center he helped establish didn’t use the location. Chris gave up on his vision for on-site childcare until four years ago when his wife Rebekah Nelson, Director of Employee Benefits and Outreach for Zoot, got excited about the idea.
Even without childcare experience, Rebekah led Zoot in successfully launching its learning center in May 2018. Although she’d never used childcare in raising her own kids, Rebekah saw another issue childcare could help address.
“The idea was with lots of women, when they start having children, they tend to take 10 to 15 years off to raise their children,” Rebekah said. “How do we get more women in executive positions?”
Zoot hired a childcare director in December 2017 to help facilitate the steps to getting a state license and opening the center. While the team explored building a new facility, state policies and an estimated $3 million price tag proved daunting. Ultimately, they decided to carve off a corner of the main floor of Zoot’s current headquarters for the kids.
Zoot set its tuition for the learning center based on average costs for the Gallatin Valley. The company offers a Dependent Care Program that gives employees 25 percent of tuition as a scholarship in pre-tax dollars. Even though Zoot employees pay for care, this doesn’t cover all costs.
Like PFL, Zoot found running an in-house childcare center to be a significant investment – $250,000 per year – but the benefits of onsite childcare also outweigh the costs.
“Eventually, we understood the long-term benefit was the [25 percent annual] tax credit, getting women back into executive roles, providing the opportunity for women and men to make the choice to go back to work if they want to versus forcing their hand to stay home with their children because of their lack of childcare,” Rebekah said.
Zoot’s Learning Center serves its own 250 Bozeman workers, but the company also created a membership program for neighboring businesses like Mesa Labs, Wildfire Defense Systems, and Simms to hold priority spots for their employees. The learning center now has 33 kids, their maximum capacity in the current space, though Rebekah said parents call every day asking if there are spots available. Zoot has also added camps for school-age children in the summer and on PIR days when school is not in session.
Chris added that removing hurdles like childcare is an effective way to attract potential out-of-state employees at a time of low unemployment.
On-site childcare is also a boon for productivity as nursing mothers can take just 15 minutes to feed their child and bond instead of driving off-site or pumping. Additionally, new mothers using Zoot’s Learning Center are willing to come back to work sooner after having a child.
Rebekah said Zoot thinks of the childcare center as a benefit like medical or dental insurance that helps with employee retention. Chris sees an opportunity for communities to support families and businesses and help fill the gap in the ratio of available childcare by providing affordable space, reducing property taxes, and asking the legislature to create tax incentives for companies to create on-site childcare.
MyVillage Leverages Technology and Community to Make In-home Childcare Businesses Sustainable
Before coming to Montana, Erica Mackey was the co-founder and COO of a high-growth, venture-backed solar company in Africa. When she returned to the U.S. and had a baby, Mackey personally experienced the childcare shortage as she prepared to return to work. Looking at the problem as both a parent and an entrepreneur, Mackey sought to understand both sides of the market and why it wasn’t working.
“It was clear a lot of these challenges have ultimately resulted in a super fragmented system where we have 15 million kids under the age of five in paid care in the U.S. but not enough quality spots,” Mackey said.
Mackey found that many daycares operated in the homes of independent entrepreneurs who struggled to launch profitable, sustainable businesses. In most cases, these businesses closed in three to five years because of the lack of career trajectory and business skills, as well as a sense of isolation.
So, Mackey co-founded MyVillage to solve the pain points for both parents and childcare providers by creating a financially viable business model for delivering high-quality early education in family homes. In the first 1.5 years, MyVillage has raised about $6 million in venture capital and now has over 80 programs in Montana and Colorado, their pilot markets, and a staff of about 30 across both states. The company has partnered with the Harvard Center on the Developing Child to design its curriculum options and educator training.
In-home daycares can require up to $10,000 in startup capital, but MyVillage educators benefit from economies of scale for the necessities, such as fencing and egress windows, equipment, and consumables like food. MyVillage takes a 10 percent fee on tuition revenue, but childcare providers can earn 30 to 50 percent more working with MyVillage than they would going it alone.
MyVillage pays for providers’ insurance liability costs, marketing and backend business systems and plugs into subsidy programs so owners get free or heavily discounted meals. The company also provides experienced mentors and a community of professional support for its educators.
According to Mackey, MyVillage plans to open another 50 schools by the end of the year and is working in unique childcare situations like large hospitals to explore how to accommodate parents doing shift work. MyVillage is also looking to partner with smaller businesses that would like to offer a childcare benefit but whose employee headcounts can’t sustain an onsite daycare of 30+ kids.
Funders for Montana’s Children Offers Support for Business-led Childcare Solutions
Childcare is an increasingly important piece of the puzzle to serving Montana’s workforce and a challenge that many Alliance member companies are trying to overcome. Funders for Montana’s Children is one organization that is partnering with nonprofit foundations and institutions oriented to economic development like the Federal Reserve Bank of Minneapolis to explore business-led solutions. Deborah Neuman, a consultant with the organization, convenes a Business Leaders Group with companies like PFL and Zoot. The group looks to both create a road map based on best practices in company-sponsored childcare and influence public policy to support high-quality early education. Companies that are interested in joining can visit https://fundersformontanaschildren.org/ or contact Deborah at partners[at]fundersformontanaschildren.org
About the Author: Christina Quick Henderson is Executive Director of the Montana High Tech Business Alliance and adjunct professor of entrepreneurship, management and organizational behavior in the College of Business at the University of Montana.
About the Publisher: Launched in 2014, the Montana High Tech Business Alliance is an nonpartisan nonprofit association of more than 370 high tech and manufacturing companies and affiliates creating high-paying jobs in Montana. For more information, visit MTHighTech.org or subscribe to our biweekly newsletter.