More SC companies offering child care benefits to attract workers

PENDLETON — Come fall 2024, a medical device manufacturer in the Upstate will offer on-site child care for its employees with kids not yet in school.

Arthrex, a global health care manufacturer that makes devices and implants for orthopedic surgery at its Pendleton plant, will have space for 66 children at the daycare. It’s among several South Carolina employers newly offering child care as a benefit amid low unemployment and steeper competition for workers. Meanwhile, lawmakers are looking for ways to increase child care access in the state.

“We’ve had really competitive marketplaces for employment right now, so we want to make sure that we’re offering the best possible benefits for our employees,” said Melanie McLane, the company’s human resources director.  

Arthrex employs 1,200 people in Anderson County and is still trying to fill several hundred job openings.

Executives at the company’s Florida headquarters had been considering offering childcare for some time. Annual employee benefit surveys showed consistent interest, McLane said. 

When the coronavirus pandemic struck, causing day care centers to shutter, it further motivated company leaders to start the program at its South Carolina and Florida facilities.

Offering childcare on site comes with the added benefit of matching the day-care schedule with employees’ work shifts, McLane said.

Work at Arthrex starts at 6 a.m. and ends at 4:30 p.m. Childcare facilities often don’t open that early, forcing employees to rely on family members or neighbors to drop off or pick up their children.

“This addition of childcare just makes sense,” McLane said.

A math problem

In October, Volvo Cars announced it would begin offering hourly employees at its Ridgeville assembly plant a $3,000 annual stipend for childcare, an amount that coincides with an existing-yet-underused tax break the state offers companies that provide childcare. The Swedish automaker wants to add 1,300 people to its workforce as it prepares to roll out an electric SUV in 2024.

Volvo already employs 1,500 workers in Berkeley County producing the S60 luxury sedan.

And when another automaker, Volkswagen subsidiary Scout Motors, announced earlier this year it chose Blythewood for a $2 billion plant to assemble electric trucks and SUVs, Richland County Council threw in land to build a daycare. Its incentive package to lure the company also included property tax credits to reimburse Scout for money it provides employees for childcare.

On a national level, Tyson Foods is adding a childcare center at a Tennessee chicken processing plant. So is Walmart at its Arkansas headquarters, said Jessica Brown, a University of South Carolina professor studying the economics of childcare.

Employer-supplied care means fewer parents calling in sick because their babysitter isn’t available. It may also help companies retain workers longer, she said.

The primary attraction to working parents: On-site childcare is convenient, a benefit that for many outweighs uprooting their child to take another job. It also saves them from a potentially drawn-out search for a caregiver, something Brown experienced firsthand.

She and her husband started looking for childcare for their 2- and 4-year-olds in April 2019, after she accepted the job at USC. Four months later, they still hadn’t found a center in Columbia with openings. They ended up hiring a private nanny, a more expensive option.

For many parents — particularly moms — whether they can take a full- or even part-time job is a math problem. They must weigh their salary against the cost of childcare and determine whether it’s enough of a difference to justify working outside the home, Brown said.

“I think it’s very common to be making that calculation,” Brown said. “I hear moms talking about it all the time.”

Availability and high cost of childcare have long been a problem. Even before the coronavirus pandemic, few-to-no licensed childcare facilities existed across 40% of the state. And the number of childcare workers has yet to return to pre-pandemic levels, Brown said.

Meanwhile, the average cost of full-time childcare in the state ranges from $9,000 for an infant to $8,400 for a 4-year-old, according to Child Care Aware data.

How might legislators help?

“It’s like sending your child to college,” said state Sen. Ross Turner.

The Greenville Republican sits on a special committee formed this fall to address these issues. Legislators want to find ways to get more South Carolinians into available jobs, Turner said.

A record number of people — 2.3 million — were employed in the Palmetto State as of September, when the unemployment rate was a historically low 2.9 percent. But those numbers don’t give the whole picture.

South Carolina also has a workforce participation rate below the national average: 57% of South Carolinians 16 and older are either employed or looking for work, versus nearly 63% nationally. (The rate excludes people incarcerated or in nursing homes.)

The discrepancy is partly due to the state’s large retiree population. But a 2022 survey by the state Department of Employment and Workforce identified other factors.

The agency surveyed residents who lost work during the pandemic and couldn’t find new jobs. The biggest obstacles of those who responded were low pay and poor health, according to the survey, but lack of childcare also ranked high.  

“I think companies are noticing it,” Turner said. “Everyone is fighting trying to keep employees.”

The committee, which hasn’t met yet, will likely focus on how to strengthen existing programs. That could include further expanding access to free, public 4-year-old kindergarten, Turner said.

The state Chamber of Commerce wants changes to a long-standing but little-used tax break the state offers to employers that start or operate child care for workers or provide direct payments for private options. 

In 2018, 32 employers claimed a total of nearly $263,000 in credits. The numbers have fallen steadily since to a low of 18 businesses claiming less than $24,000 in credits in 2021. There was a slight uptick last year, with 19 companies taking $26,000 in tax credits, according to the state Department of Revenue. 

The state chamber says the problem is twofold. Some companies don’t know the credit exists, and the offer needs updating. 

For nearly 30 years, the credits have been capped at $100,000 in startup expenses or $3,000 per employee for continued operations or direct payments. And the credits can’t exceed 50% of a company’s income tax bill.

Chamber President Bob Morgan said part of the issue is that most South Carolina companies already pay little in corporate income tax, especially those that received tax breaks to move or expand.  

Allowing businesses to write off the expense on payroll or withholding taxes would make it more attractive, he said. The chamber also will lobby to raise the caps and give them on a per-child basis rather than per employee.

Former Revenue Director Burnie Maybank, a lawyer who now works with companies seeking to locate in South Carolina, said very few businesses made use of the tax benefit even 20 years ago when he led the state’s tax-collection agency. At that time, he said, most firms were concerned about taking on the added liability.

Now, with employee retention being so critical, Maybank believes employers may re-examine it.