Episode 2: Ways to Solve Childcare Challenges for Rural Manufactures Employers + Other Childcare News

Episode 2 Summary: Greg and Doug tackle the pressing issue of childcare in manufacturing, particularly in rural areas, in this enlightening episode. They kick off the discussion with an update on the CHIPS Act funding and the newly revised criteria for HSAs, FSAs, and HRAs. The core of the episode revolves around innovative strategies to overcome childcare hurdles for manufacturers, highlighting the untapped potential of licensed home daycares. The duo also sheds light on the pivotal role of employers in fostering effective childcare solutions. Delving deeper, Greg and Doug outline key factors for successfully launching a childcare program in a manufacturing context, emphasizing the necessity of pinpointing the fundamental problem and setting clear goals. The conversation takes a comprehensive turn, addressing the quintessential aspects of childcare solutions: affordability, proximity, availability, accessibility, and quality. Moreover, they explore how technology can revolutionize childcare solutions and draw attention to state-specific grant programs aiding childcare facility development. Key Takeaways: Discover how the CHIPS Act is revolutionizing semiconductor development in the U.S., including childcare support in the industry. Understand the impact of waitlist fees on families, especially those with lower incomes, and the challenges of managing multiple waitlists. Learn about the new opportunities for employers to aid their employees' childcare expenses through updated HSA, FSA, and HRA requirements. Gain insights into addressing childcare scarcity in rural areas, considering options like licensed home daycares. Recognize the importance of employer involvement in childcare solutions, aligning with community stakeholders. Find out the critical steps before implementing a childcare program: identifying the main issue and defining success. Explore how segmenting employees by their specific needs can enhance childcare solutions. Delve into the five key factors essential in resolving childcare challenges. Uncover the significant role of technology in expanding and improving childcare solutions. Investigate state grants available for developing childcare facilities.

Disclaimer: This podcast is for informational purposes only and shouldn't be seen as financial or legal advice. Tax rules change and can be complex, so it's always a good idea to check with a professional for your specific needs. Frankly, we're just two dads talking childcare tax credits for employers who want to see more employers leverage these resources.

Transcript

Greg (00:04.357)
We good? We're good to go. Yeah, I do want laughter for the inter.

Doug (00:06.414)
me good. You just want laughter for the intro. That's what it is. You want you want laughter like you want me sounding like a horse again as this comes in.

Greg (00:15.433)
Yes, so welcome to episode two of the Tax Break breakdown with your hosts Greg and Doug. If you don't know Doug, we have over 400 subscribers to our newsletter on LinkedIn.

Doug (00:31.086)
That's like 399 more than I expected.

Greg (00:34.601)
Yeah, minus us two, so that's actually 398 more people. Ha ha ha. No, over 400, that was as of earlier today, which is exciting. And everything that we do on the newsletter, there's a series that's going on now, which is looking at each state. So I think we've done everything up to California, so Delaware's next and.

Doug (00:38.154)
No, I never subscribed.

Doug (00:43.622)
That was just you. Wow.

That is exciting.

Greg (01:04.361)
so forth We just did Indiana last week that was a good one I got a lot of good feedback from that one

Doug (01:13.194)
Yeah, we got some Irish. It was great. Loved it.

Greg (01:15.901)
Everybody everybody's been pretty positive about it for the oh Yeah, Indiana deadlines tomorrow. So if you didn't know go check it out you got you Know I'm gonna try to get this out tonight Yeah, okay, I mean the bigger the biggest thing is the exporting, you know, um, but Downloads I think our podcast one week's like 30 Well, I mean we're I told

Doug (01:19.746)
Deadlines tomorrow. Or, well.

Doug (01:25.73)
By the time you listen to this, it will be past.

Doug (01:32.008)
Okay, all right.

Doug (01:36.29)
Yep.

Doug (01:43.633)
That's also 29 more than I expected.

Greg (01:46.169)
Yeah, I told my wife I'm a content creator now. Um, we told we told everybody, uh, we told everybody, um, Doug and I are very, very similar and you're going to find out over episodes. But the first, I don't think we said a first fact. Uh, but the first one, did we do a fact that I remember?

Doug (02:06.507)
Nope.

No, we didn't do a fact, but this is the weekly grug fact. Right.

Greg (02:13.381)
Yeah, Grug and Grug is our names combined and that's what they call us where we work I don't think so. Yeah, you're right But what people we're gonna start out with like the most The coolest one doug and I have the same birthday same year same month same day And we found this out at a company retreat in Palm Springs when we were wearing matching

Doug (02:17.549)
I don't know if anybody would have put that together, man.

Yeah, yeah, it's good.

Doug (02:39.192)
wearing matching Hawaiian shirts. Yep.

Greg (02:41.265)
Yes, in the middle of the street and we just gave each other a hug and said What like how what are the odds? That was a great moment a special moment It it definitely was Uh, so that's the grug fact of the day. We need to have like an intro like grug fact I'll try to i'll try to put one in there Yeah

Doug (02:49.934)
It was a special moment. It was a tender moment. It was a special moment.

Doug (03:01.115)
Well, when the budget increases, we can get the sound effects in.

Greg (03:04.873)
Yeah, that's right We're gonna try to do something new too. We're gonna have latest news some discussion topics and then we're gonna have our main topic the main topic is around solving childcare in rule areas for Manufacturers like this is probably one of the hardest populations to solve childcare for wouldn't you agree Doug?

Doug (03:29.13)
Yeah, it's really difficult. It's complicated. There's a lot of complexity to it. And it also makes it a really interesting challenge to go through. So excited to just kind of give an overview, but dive into a lot of the details and the numbers around it because it's staggering when you go through it the first time.

Greg (03:46.453)
Yes, and we have, if you're an HR team or looking to do something like this, we have questions you should ask yourself. And then we have ways just to think about it. So if you're going to try to solve this, there are certain things you should try to solve first before others, and we'll talk about those. First, latest news. I'm not sure if you saw this one, but Bay Systems got CHIPS funding from the CHIPS Act.

Doug (04:13.558)
We got chips running? Chips running got through. That's exciting.

Greg (04:17.793)
Chips funding got through yes For those that are not familiar with the chips act. This wasn't from the administration I believe they put in 52 billion dollars to boost development of semiconductors in the US It was August 22. I think when they started it Really at the end of the day when you pull it back it's a it's supposed to be around national security so everything with chips and national security, which is why they

Basically have hinted why they gave the money to Bay systems first. It's for a new plant in New Hampshire And it's focused on like military applications. So chips in fighter planes and so forth The reason why we're bringing it up is because part of the Chips Act Included a provision and what did it say Doug the exact term? What is it? What was the exact sentence?

Doug (05:11.302)
exact sentence from the Chips Act. I don't know if I'm gonna be able to pull that up, but I bet you have.

Greg (05:18.794)
I don't have it. But talk a little bit about how child care is related to the Chips Act. How did child care get in there? What does it even talk about?

Doug (05:19.991)
Yeah.

Doug (05:27.406)
I mean, Chuck, I got in there because you need people to work in chip manufacturing facilities and to get people to show up to work, they need to have childcare. We look at the ability for an organization to retain, attract employees consistently. This is a huge hurdle, especially when you look at some of the areas.

where these manufacturing facilities tend to be, a lot of times they're in childcare deserts. And so when we build infrastructure as a country and a locality, we wanna make sure that the community is gonna be stable. And part of that, key part of that is childcare. And so it was a great inclusion on that part. And I think really will help the success of these facilities. And it was really geared towards.

Greg (06:13.293)
Yep.

Doug (06:22.318)
creating new facilities or expanding existing facilities. And to do that, more workers coming into an area and they have kids that are gonna need somewhere to go during the day.

Greg (06:26.805)
Yep.

Greg (06:37.709)
Yeah.

The other interesting thing is that it's a requirement and there's different levels of it. So at first, like you could submit an application and just have the intent to do it. And then the second round was like, you need to have a plan. The other fascinating thing is that the childcare is not just for the chip manufacturers, for the construction workers too. So it's for anybody that's involved in building the plant. They have to provide some level of childcare.

Doug (06:49.108)
Hmm.

Doug (06:59.645)
Mm-hmm. Yeah.

Greg (07:08.631)
even spoke with one of the designers of the CHIPS Act. And it was not just supposed to be

construction workers and employees like here's a website go find the child care yourself like the intent is that it actually has an impact on the community. And that's why what we've seen is companies leveraging the home daycare networks because they're small businesses and so For the employer, though, that's going to take these funding, you're going to need a system in place, you're going to need some type of

Doug (07:28.525)
Mm-hmm.

Greg (07:48.423)
not just your employee impact. That's a big difference and they called that out when we spoke to them.

Doug (07:54.066)
Yeah, and I think, you know, when we go through this, it's great news that the funding got pushed through. I know we've been kind of keeping an eye on it for a while now, like looking for this to happen and excited for this to happen, noting that it's coming. But as we go into it, I mean, it really is like part and parcel to what we're going to talk about tonight is what are the challenges, right, in manufacturing and childcare and especially in rural areas?

or it doesn't even necessarily need to be a rural area. It can just be an area where there's not a lot of childcare coverage or there's an expansion, like a need to expand the population. How do you get the community ready to support that? So, great bit of news, very timely as far as what we're gonna talk about.

Greg (08:38.697)
Yeah, second discussion topic here. I'm sure you are familiar with waitlist fees. This was an article that was put out by Moms First who they had an opinion on it. And it was a from Fast Company to they put out a like a POV of their thoughts and opinions on

Doug (08:46.03)
Ugh.

Greg (09:03.729)
um having waitlist fees they even said one of the things was in canada they actually banned child care programs that receive public money from collecting waitlist fees what um what are your thoughts on waitlist fees

Doug (09:09.677)
Mm-hmm.

Doug (09:20.526)
It's a tough thing, right? We look at availability is such a big issue, especially when we look at infant spaces. And I know, I actually go back to, I remember my sister looking for daycare for my youngest nephew in the Seattle area. And I think she was on like five different wait lists, right? And I had them ranked, and I think three or four of them had fees. And I see the art.

Greg (09:43.264)
Yeah.

Doug (09:49.266)
I see the argument on both sides of it. I think there's an administrative cost that comes to managing a waitlist. It's where does that cost get shifted? Is that the cost of doing business for a facility? Or does that shift to the parent? And it also can deter, if you have a waitlist, it can deter people from being on too many waitlists.

My general take on it is the argument for them, dissuading people from being on a bunch of wait lists, typically from what I've seen, those fees aren't super high. And so it becomes a question of, yeah, right? I've seen them be a couple hundred to hold a space. But at the same time, right?

Greg (10:33.621)
25 bucks, I think sometimes maybe 50 10 to 50

Doug (10:44.494)
When we talk about impacting childcare, right, and especially like the populations we like to talk about, right, and we really like to focus on frontline workers, right, those that don't have a ton of disposable income, right, it actually becomes, it's a regressive thing, because somebody who is making more money, right, has more stability, can afford to be on a bunch of waitlists, right, like that dollar is not the same.

you know, two different segments in the population earning differently. So to me, it's like, to me, I think it's net negative. I understand where it comes from. I understand it from the provider side. Um, but I wish there was a way, you know, if it's administrative cost, like, you know, there's technology out there that can help with those things. Um, like it doesn't have to be a huge administrative burden. Um, and yeah, I just.

Greg (11:15.657)
Yeah.

Greg (11:38.123)
Yeah.

Doug (11:40.778)
I'm always gonna come back to like, is it actually helping or hurting, right? Like those that need it the most, right? And to me, when you do that, it's gonna end up aggressive. So not a fan myself, but I do understand why it exists.

Greg (11:54.537)
Yeah. The, uh, the Indiana Act, remember last week, some of the funding could actually go towards paying for waitlist fees. That was interesting. Remember part of that? Yeah, even better. Which, yeah.

Doug (12:06.088)
Mm-hmm.

Doug (12:11.63)
You can go to priority waitlist fees. You can get to the front of the line. Better or not? I mean, I think there's listen. We're going to go through this in depth. But the way to address this, to me, does it help? Can it help an organization to have something like that? Yes. But when we look at solving the overall problem,

We're really just taking away from somebody else and giving that space here. So at some point supply, affordability are always gonna be the key drivers to this. And without attacking those, we're really just kind of kicking the can.

Greg (12:43.177)
Yep.

Greg (12:55.253)
Yep. Which kind of leads into the next news, for those that haven't heard. But there are new eligibility requirements for HSA, FSA, HRA. And there's a new company out that I thought was pretty fascinating. The company is called TrueMed. Not sponsored.

Doug (13:02.615)
Oh yeah.

Doug (13:20.846)
Mm-hmm.

Greg (13:22.601)
Not sponsored in any way shape or form But the What's fascinating about them and why I wanted to bring it up here because it goes along with our ethos of Using what's already out there and if it's hard to get let us figure it out for you FSA's HSA's are a little complicated. They're clunky to use. I think some are better than others, but what this company did

Doug (13:25.346)
We're good with the non-sponsorships. That's our thing.

Doug (13:43.264)
Mm-hmm.

Doug (13:48.49)
Mm-hmm.

Greg (13:51.617)
was they actually looked at it from the provider side. So there's only a set amount of things that you can spend things on. You could in theory spend it on gym memberships, certain types of diets and foods. The problem with that is that you basically needed a doctor's note and then you have to submit it to the...

Doug (13:58.743)
Yep.

Greg (14:14.705)
Yeah, submit it to the HSA FSA provider and they're going to claim, you know, deny it or accept it. This company actually did like the reverse. So they went to all these providers. So daily harvest was one of them and you can actually qualify for their stuff and how it works. I've kind of started to test it out. I'm just fascinated with it because it's such a, it's so unique because there's so much money. I think they, they claimed like, there's like $150 billion that go into

Doug (14:26.658)
Mm-hmm.

Doug (14:37.442)
Yeah.

Greg (14:44.699)
HSA, FSA accounts and a lot of not a lot of that, but there's a portion that's just sits there and so if you could use it on other things and I have an FSA and I put the full amount I put like three thousand a year and it goes towards contact lenses, it goes towards glasses, it goes towards premium, I can't go towards premiums but it can go towards really unique things. You could get sunscreen.

Doug (14:49.995)
Yeah.

Doug (15:05.75)
No premium expenses, yeah.

Greg (15:11.593)
Like there's all these little things you can get Dr. Scholl, you can get like all of these things that are related. And I think that's fascinating. But for this one, they basically partnered with like all these gyms and all these like wellness companies. And so you would apply basically and tell them, you know, any conditions you have and they'll let you know like you can qualify and then they'll actually do A doctor's note for you.

And then you submit that like, yeah, that's so genius. Maybe a new business idea. I don't know.

Doug (15:40.17)
Right, like handle that administrative burden. Yeah.

Doug (15:49.025)
I mean, these FSAs, HSAs, they're great things. The administrative burden, like I get like the regulations around them, it's hard. They're tough to use. I have a decap rate, depending care FSA claim that I've been going back and forth between my provider and the administrator for a month and a half.

finally got what I needed and submitted it. And I used the wrong date, and now we're going through the whole cycle again, because I used the date it was printed, right? Or what it was run for, not the first billing. Just absurd. We'll get there. But it doesn't need to be that way, you know?

Greg (16:23.181)
Mm-hmm. Little things, I know. It doesn't, and I see this is just one step. So there's like the front end of it, and then there's this back end, and there's gonna be people that are gonna make links in between. But it's, I mean, one of the biggest advantages for companies is money contributed there is tax free. So you're saving on the FICA tax.

Doug (16:49.496)
Yep.

Greg (16:49.513)
And on the employee, it's pre-tax. Also both sides you're saving tax, which for me putting $3,000 into an FSA, that's gonna save me, I think about $600 in taxes. Cause you're maybe not, maybe nine, six to 900 bucks in taxes. But again, a lot of people don't know that exists. A lot of people can't wait until filing to see that money saved. And so,

Doug (17:13.738)
I mean, that's the other thing. We start talking about the populations, right? Is, can you actually afford to go out of pocket for something and then get reimbursed? And how does that model work? And there's ways where that model can work and work fine, and there's ways where it's a challenge. And the longer that distance is, right? Between submitting a claim and getting money in your account, the harder it is, the lower the utilization is gonna be with those things.

Greg (17:22.653)
Yes.

Greg (17:30.557)
Yeah.

Greg (17:41.893)
Yep. And.

I remember actually talking with an FSA company, one of the largest, and I'd ask them a question, like, is there any legal reason why companies just don't pre-fund like a dependent care or an FSA account like they do in HSA? And the answer is no. You as an employer could do it, and almost all FSA companies allow it. It's a click of a button. That just means you have to pre-fund it

Doug (17:50.629)
Mm-hmm.

Doug (18:10.508)
Yep.

Greg (18:15.091)
pre-funded and have to double dip. So you could actually make this a lot easier as an employer.

Doug (18:21.61)
Yeah, can be done, not the norm. One of those things that, you know, again, we're looking for easy ways to move the needle on this. It's there. Yep.

Greg (18:28.929)
That's an easy way, very easy way. And now for the main segment. Intro music, do I have music? I wish. There is a thing you could do that's like a little board and you could press it and it can like clap in like intro music. But maybe we'll add some music right now.

Doug (18:36.526)
Do we have theme music for that? You can put, you can put... You can put...

Doug (18:52.354)
We have to get some actual sponsors first for that.

Greg (18:55.949)
That's true. Well, let's talk about this episode, which is episode two talking about solving childcare for manufacturers in rural areas. Take it away, Doug.

Doug (19:08.898)
Mm-hmm. Well, before we dive into the details and the stats with it, why is this so hard and rural?

Greg (19:21.453)
Why is this so hard in rural areas? Think about it. Why, and why is childcare so hard in rural areas? Yeah, well, population's lower in these areas. Infrastructure is a lot lower in these areas. There's businesses out in those areas, specifically manufacturing, all types of manufacturing. Protein manufacturers. Yeah.

Doug (19:23.67)
Yeah, why?

Doug (19:28.117)
Yeah.

Doug (19:32.394)
Populations lower. Yep.

Yeah.

Doug (19:44.702)
Yeah, manufacturing, agricultural focus on manufacturing today. Right. Um, but yeah, density is an issue, right? It's spread out, right? You know, you live in San Diego. I live in Kansas, right? It may take you an hour to travel the same distance. Uh, it takes me to travel 15 minutes, but I'm covering about 10 times the ground. Right. Uh, right. So, so population density is a factor. Population is.

Greg (19:54.869)
Yep.

Greg (20:07.817)
Right.

Doug (20:12.754)
absolutely a factor. You know, I've worked, being in the HCM space, now doing what we do today, you know, working with organizations in these areas, like populations growing down, right? You know, I think the last assessment I did, and I was in like rural Nebraska was like, populations dropping, right? And but in the state, it's going up, right? So this disparity is continuing to grow.

Greg (20:24.545)
Yep.

Doug (20:40.406)
but it's still the core of our manufacturing base and our agriculture. It's somewhat important to us as a country and an economy. And how do you get more population?

Greg (20:49.577)
Yeah.

Greg (20:55.029)
Well, one thing, one stat that I read, one fourth to one half of the population live in a rural area. And we just talked about rural areas. They are starting to and trying to, and they actually always have been, trying to recruit families and more and more younger families. But...

Doug (21:01.687)
Mm-hmm.

Doug (21:13.655)
Mm-hmm.

Greg (21:15.849)
One of the big gaps that they've identified is the supply of child care, especially in the rural areas. And because of that, it affects economic households, businesses, and also tax revenues.

Doug (21:31.358)
Well, and when those drop, right, it affects the entire community. And I go back, I remember, I was 10 years ago, right. And customer worked with when I was at SinglePoint, the HCM space. Shout out to Trent Doherty. And yeah, we, you know, the challenge, right, they were, they were having trouble recruiting people. They're having to recruit people from like 20, 30 miles away, right. To come in to work at the facility.

because things had gotten to a point where there wasn't, like the community, the safety in the area, it wasn't appealing to younger families. And they were relying on, the thing I heard time and time again when I talked to these kinds of customers is, our workforce has been here for a long time, they're aging out, people are retiring. What do we do? How do we attract younger workers? And then, a lot of it was,

You know, there's a lot of things going on around like same day pay. Like some of these things were starting to spring up to try to attract people and make it more attractive. You can raise wages, but ultimately like that population now is getting older, right? Millennials and now Gen Z coming through, like they're going to start having kids, right? And they want to have a family and they want to be somewhere. And that rural family kind of atmosphere, like some of these areas struggle at the moment, but it can turn around, right? And I think

The investment that we're seeing now is quarterly.

Greg (23:04.333)
Mm-hmm and Investments including the Indiana one last week. There's like three others. We're gonna touch on today I Think I touched on this last time like there are a lot of dollars going to solve this a lot of people Just don't see it yet. And so just wait it's coming I See it when we see it left and right and that's exciting

Doug (23:09.558)
Yep.

Doug (23:20.215)
Yep.

Doug (23:30.678)
Well, yeah, let's get into some of the numbers, right, with the challenges, right? So in towns with residents, right, with 500 residents or fewer, right, less than 500 residents, only 51% of those residents have access to a child care center, right? 34% have access to a family child care home, right? So just the supply is not there.

Greg (23:47.179)
Yeah.

Doug (23:55.818)
Okay, let's bump the population up just a bit, right? 2,500 residents are below, 2,500 to 500 residents, right? Only 70% have access to a childcare center, 40% to a family childcare home, right? Or family childcare center. That's not gonna do it. At the end of the day, like supply has to be there.

Greg (24:16.615)
Yeah, and shout out here to the Bipartisan Policy Center. They've done a tremendous job at sharing the research. I would definitely go to their site. It's not only just on childcare. They do everything around hunger. They do everything around homelessness. I mean, it is, I think, a very interesting take on it. But this is from research that, you know, they have done.

Doug (24:27.042)
Hmm.

Doug (24:42.519)
Mm-hmm.

Greg (24:42.893)
One other fascinating stat is that parents report, especially in rural areas, that they can pay less than $200 a week for full-time childcare. That's $800 a month.

Doug (24:55.022)
Mm-hmm.

Greg (24:58.437)
And my gut is that this is also like at the top of their budget, you know, they may have been asked a question like what's the max like $800 and you're making $36,000 a year in a rural area. Significant.

Doug (25:13.698)
Well, and that goes to one of the stats, right? That the, another one that the stats that they put out, right? 86% of rural parents, right? Say that one of their partners stays home to watch the kids because of that cost gap, right? We supply affordability, right? Right? Can we address those two, right? When we get to availability, like what is it? But can we address those two things first? The other thing that I think is like,

Greg (25:28.926)
Yep.

Doug (25:41.354)
makes it that much harder. You look at the nature of the work in these areas, focus on manufacturing, but agriculture as well. Is a lot of times we're needing care during non-traditional hours. So when you look at your normal brick and mortar daycare center, it'd be open maybe for early care by seven if you're lucky. And they're gonna close the doors at six. And what do you do in those off times? What if it's transportation?

Greg (25:52.553)
Yeah.

Doug (26:08.31)
you know, is this even close to where the support network is? Again, density, things are spread out. People may be traveling from towns away. And there's a lot that needs to go in to be able to solve for.

Greg (26:20.257)
Yep. And one option that families may not have choices on, they just allow their kids to stay at home. And if they're on a farm, the kids are on a farm. And one of the stats that they showed was 97% of farm families are concerned that their children could get hurt on the farm. I know we have a couple team members we work with that actually grew up on farms and they're like,

Doug (26:47.894)
Heh.

Greg (26:50.371)
for kids. It's not.

Doug (26:50.542)
Is that, that's us? That one was crazy, but the stat on here that really like threw me was 33 children are seriously injured every day in agriculture related incidents. Big country, I get like, yes, that seems like a lot. It seems like too much. I feel like that should be too much.

Greg (27:14.381)
I think so. So we, I mean, addressing the core root of safe quality childcare, I think can help with that. This, I think another, when we look at, again, all of this leads up to like impact, and they did an analysis to show economic impact.

Doug (27:22.967)
Yeah, absolutely.

Doug (27:33.792)
Mm-hmm.

Greg (27:33.821)
So they projected rule, the rule projected economic loss is 33 to $50 billion annually. Nationwide projected loss is 142 to 217 billion because of these gaps. That is huge. And it affects again, a lot of rural manufacturers, a lot of rural families, a lot of rural communities.

And so I think summing it up, if we were to think of, there's a couple different solutions, but underlying all of this is that supply has to be addressed.

No question about it. And supply of not only all types of care, so whether that means new construction, renovation, maintenance, home daycares, nannies babysitters, friends, family, all types of supply have to be addressed. And there's a lot, including that Indiana, that are looking to address this.

Doug (28:13.951)
Yeah.

Greg (28:38.501)
But can employers wait for that and then how do employers take advantage of that if not directly or indirectly? They're going to be competing against the community at large as well Supply has to be addressed

Doug (29:13.656)
I think

Doug (29:18.702)
pushes the can further down the road, right? It makes it harder to gain traction, makes it harder to retain employees, makes it harder to build the community. And I think that's like, when we look at this, yes, there are states that are putting more into it, you can access funds, it can help build supply, and again, Indiana was a great one to go through on the first podcast, but there are things that can be done today that don't have to be overwhelmingly expensive for an organization, but the return is massive.

Greg (29:48.713)
Yeah. And so what's the solution, Doug? What is the holy grail here?

Doug (29:49.226)
consistently.

Doug (29:57.602)
supply. That's the crazy, right? We look at this, right? Like day and day out, right? We look at this in different areas, right? And how do we solve it, right? With the piece we have available? It's never the same, right? It's never the same for a community, right? And you have to you have to ask yourself, as an organization, as a community, right? The questions of, like, who are we trying to solve for? Right? And

Why do we need to solve it? What's the impact of solving it? And who are the stakeholders involved? And you have to keep that lens the entire time. Because when you have these conversations, you start talking about the investment into it. I know one of the solutions we see organizations go through in rural areas is like, okay, we're just gonna build a childcare facility. We're gonna build one on site. It's awesome, it's great.

Greg (30:29.449)
Yeah.

Doug (30:53.974)
But then supply, then you have to think of affordability. So if you lose that lens of who you're building it for, this worker that's making an average of $36,000 a year, hey, here's a shocker space to keep the doors open. It's going to be $1,200 a month. Well, that may not work. We've seen it not work. And so ultimately, I think the solution is holistic. We have to look at all types of supply.

Greg (31:11.445)
Yep.

Doug (31:21.81)
When you're looking at a specific area, it's what's there, but also what are people gonna use? What can they afford to use? How long does it take to stand up? And how long do you wanna wait before you're starting to see an impact from those things?

Greg (31:37.825)
and liability. We see a lot of companies that explore from the employer perspective, they explore building an onsite and whether they have like a third party running it generally is some shared liability and a lot of a lot of C levels can't stomach that liability from it. But I think you're right that if you really want to solve this and I think our opinion

Doug (31:40.904)
Yeah, there's liability to.

Greg (32:05.585)
It's not just on the employer though. Um, it's a shared responsibility, right? So parents, providers, the employers, the businesses, the governments.

Getting them to all work together would be the holy grail and there's a lot of organizations You know we had we had this concept three years ago And we've seen it started to play out Not only you know not only the stuff that we do in our day to day But we see other governments so Michigan doing the tri-share that's been successful been Been renewed more money funding into it one of the things you know we when we Started to think about how to solve this and said parents providers

Doug (32:27.415)
Yeah.

Greg (32:47.659)
employers and government, one piece that the bipartisan policy talk that I was at included philanthropy as part of that. So we didn't really have that as part of our model, and I think that's an interesting angle because it can support. Yeah.

Doug (33:02.71)
It can make a difference. Yeah, I mean, I think it's in those core four, right? Like, I mean, that's where it has to happen. But that doesn't show up overnight, right? Like it has to like somebody has to move first. Right. And some of these states, right, we see we see the governments, right, Indiana, you know, Michigan, and, you know, others, right, they move first, they say, here's this program, we're going to make it broad, right?

Greg (33:20.737)
Yeah.

Doug (33:31.054)
We're going to support this because we need it in our communities. We've seen it in others where the organization goes, this is like we need to do this and we can do this, not just for employees, but for our community because there's a net benefit. There's a long-term net benefit to investing in childcare for employees, for the community as the community improves. More people want to be there. There's a larger labor pool to pull from.

Greg (33:47.581)
Yeah.

Doug (33:58.306)
Right? At the end of the day, from an organizational standpoint, it comes down to labor. We look at manufacturing, you're not manufacturing anything if you don't have somebody there to do it. No matter how much automation we put in, somebody's got to be there still today. Maybe we'll get past that at some point, but we're not there at the moment.

Greg (34:08.073)
Yep. Yeah. No. I've even seen employers, though, that say, I want to solve this. And if the government helped out a little bit, I would 100% do it. That is a very good sign. But it just goes to show that if you want to create a sustainable model,

It's gonna be very hard for the employer to cover everything and you know, I've seen a case study where a large manufacturer had a new plant about 1500 employees Put in five million dollars for an on-site center. They've seen such great responses to it However, they've also admitted how are you gonna scale that across every single plant that you have I Have some ideas

Doug (35:03.562)
It's a lot of child care centers. I know you have some ideas.

Greg (35:05.909)
Yeah, I got some ideas. I mean at the end of the day leveraging the licensed home daycare network is a solid option A lot of people then say well quality, you know, I don't want just somebody to be a babysitter That's such an old-school way of thinking I think there is unfortunately a stigma Around home daycares, but when you look at licensed home daycares you look at the ones that have

Doug (35:13.623)
It is.

Greg (35:36.203)
I mean, there is a home daycare, the gentleman in New York. His daycare is called, I think, it's called Daddy's Home or Daddy's Place. And he has a Russian language.

program that he teaches kids in the predominant Russian area of New York, the Russian language program. I mean, that's like needs based at its finest. And that's what you can get with a lot of licensed home day cares. They're not just babysitters.

Doug (36:10.054)
So two things from that I think are really interesting. One, I think some of the stigma comes and I'll admit like that was that was something that I was concerned about. We were looking for daycare for my youngest. Right. And we were looking at, you know, the centers were full and we started looking at home daycares and we're kind of like, I don't know. Right. And as you get into it. Right. And there's around the time we started talking. Right. And it was like, once you actually go, you meet these people.

that a lot of them are like educators, like they've worked in facilities, right? Or they've been teachers, right? They're doing it because they love it and they wanna provide for the community. There is curriculum, right? You know, and so I was really impressed. Like ultimately, like we ended up going with a center because of like location and where it was and the availability, like the hours of it. But we've looked multiple times. We've always included home daycares in our search since then.

Greg (36:43.57)
Yeah.

Greg (37:08.353)
Yeah.

Doug (37:08.706)
right, as we look for the right place. And so, but most people, a lot of people don't experience that, right? But the second thing I think from the one in New York that's interesting is it's in the community, right? It's in this area where there's a high density of people that speak Russian. And it's an incredible value to have in the community. Now, could you have a whole daycare center dedicated to that? I don't know, maybe, but it's not there.

Greg (37:15.413)
Yep.

Greg (37:38.133)
Yeah.

Doug (37:38.414)
I don't think. But you can have that. And I think, you know, we've encountered situations, right, and, you know, where there's segments of populations, right, it could be, really could be anything, right, especially when you get into rural America, it could be refugee groups, right, it could be anything. And it's an opportunity to have that support within the community. It's an opportunity to have a small business, right, within that community that

Doug (38:07.69)
restructuring some of these areas, growing the population, right? Like building strong community health, it could be a huge asset.

Greg (38:15.325)
Yeah. When you talk about a home daycare too, let's talk about one that's already licensed. It's already there. You don't need a brand new building. So think about environmental impact.

Doug (38:23.596)
Yeah.

Yeah.

Greg (38:26.729)
And then also, if you want to start a new home daycare, you're not looking at how long it takes to build an on-site center, generally about a year, and you're talking single digit millions. Home daycares, the startup cost is significantly cheaper. The time to start is significantly less. And then when you think of being able to expand or contract,

Doug (38:35.479)
Mm-hmm.

Greg (38:51.509)
your supply, like your capacity, a center is pretty fixed. If you wanna add more kids, well, you need more bathrooms. You need more public parking spaces. On a home daycare, you would just create a new home decor or even expand it. You see some that are small licensed, they expand, they can go to large. You know, like use what's already there. That is a big thing. When, yeah, go ahead.

Doug (39:07.978)
it.

Doug (39:18.759)
Yeah, as I said, the ability to use existing infrastructure to build child care supply is a cheat code in these areas. There's houses. The other thing is, we talk about the quality and the safety of it. The licensing process is the same. They have to go through the same checks and balances that a daycare center does with a home daycare. But I didn't know those things until I got into this space.

Greg (39:35.721)
Yep.

Greg (39:45.193)
Yeah.

Doug (39:45.954)
And so learning about it, like it is, you know, as you scale, and that could even be somebody that eventually opens a daycare center of their own, right? It can grow, right with it. But yeah, time to value, how can we address this now or in a shorter term, right? It's a good option.

Greg (40:06.653)
So for employers that are thinking about this, we have some recommendations. The first thing I think it's important for teams to think about is to what extent should we even enter this space? Some want to build an onsite and that is a lot more and some others want networks to help and some want to do subsidies and some want to do like...

Doug (40:22.228)
Mm.

Greg (40:34.787)
extent do they really want to help? And then that leads into, I think, as a company, does the company believe they have a responsibility? Or do they have a role that they really do want to play? Like those are some pretty foundational questions that I think when I've seen companies take that approach, that's coming up with the solution makes more sense because you've already aligned on, yes, we want to be in this space.

Doug (40:51.095)
Yeah.

Greg (41:02.525)
And yes, we believe that we have a responsibility, but then we need help with the solution, but we've already agreed and we've already said we are going to do this. Now let's find a partner or let's do it ourselves. And that then leads into, you touched on this.

Doug (41:06.188)
Mm-hmm.

Greg (41:22.357)
But then we would recommend asking a couple questions to yourself. So what's the root problem you're looking to solve? You had mentioned in manufacturing, in rural areas, it's labor. In other places, other organizations, it could be diversity. In other areas, it could be retention against the labor, recruitment, absenteeism.

Doug (41:44.63)
Mm-hmm. Yep.

Greg (41:49.657)
We've seen industries where organizations place a strong emphasis on career progression. There's a large tire company that I went to and they have a big sign in their store that says, 100% of our managers come from within. And so, you know, when you tie that with career progression,

Doug (41:57.867)
Mm-hmm.

Greg (42:17.397)
going from an hourly employee to a management, you're taking on more responsibility. And so career progression, obviously, a barrier could be childcare. So what is the root problem you're trying to solve? Anything you wanted to add to that first question?

Doug (42:28.811)
Mm-hmm.

No, I think you're, you know, especially like a manufacturer in rural areas, like you're not just supporting somebody for, for a year, right? Typically you're wanting people that are going to stay and grow that community. You're supporting them through their entire life cycle. Right. And one of the challenges and where we've seen population reduces, you know, a lot of younger people left the rural areas, right? Like, how do you bring them back? Right. There's, um, there's an opportunity I think to build something interesting and revitalize.

Greg (42:54.165)
Yep.

Doug (43:01.354)
a lot of these areas and really stabilize and grow the populations and some of these things that can be thriving now. And so that's at its core is you have to support the entire life cycle for that family, not just can we get them in the door. Because I think what's the average turnover rate manufacturing was around 40%, I think. That's a lot. That's a lot to replace. If you can move that, if you could cut that number in half.

Greg (43:09.738)
Yeah.

Greg (43:20.268)
Yeah.

Greg (43:26.069)
Yeah.

Doug (43:31.022)
It's still high, right? But it becomes more manageable, right? And this is a way you can do it, right? We've seen it with programs.

Greg (43:36.461)
Yeah. And that then leads into another question you should ask. What would you consider success? We've seen, and after talking with hundreds of companies,

that their answer really is, if you could beat the numbers today, I will consider a success. So if turnover is 45%, beat that amongst the cohort, and this is a solid approach. And that's like, I think that's table stakes. We've seen companies, high single digit, mid double digit reduction. That is, it's great.

Doug (44:19.058)
I remember the first time, or first time we were able to calculate it like in detail, we went like, we think something's wrong. Um, like this, like such a big difference. We had to go back and like audit each piece of it. It was real. And then we took it, right. We went, we repeated it, repeated it, repeated it. And it's always right. A factor of like five X plus like up to number. Sometimes we're like, okay, let's do that again.

Greg (44:26.566)
Yeah

Doug (44:46.898)
And they hold. It's crazy.

Greg (44:47.103)
Yeah. Next question. So after we identify the root of what we're trying to solve and after we have some level of what we're gonna think success looks like, who are we trying to keep front and center? The way I go about this, and I do whiteboarding sessions, but I'll pull up a whiteboard.

And I'll say, how do we segment our employees? What are the different cohorts of employees that are pretty similar? So manufacturing, you'll have frontline workers, hourly production workers. Then the next level is usually management, or yeah, management. And then the level after that is usually corporate, or sometimes they call it above the plant. Each of those,

Doug (45:35.76)
Mm.

Greg (45:39.245)
is different. Each of them have different income levels. Each of them have different needs. Each of them have different schedules. Each of them have different They're all just a little bit different, but they all have when you look at each one of them, they all have similar challenges. And so if you are looking for a solution to solve everybody's care problem, I mean we would recommend against that on day one. But generally

Doug (45:58.466)
Mm-hmm.

Doug (46:06.03)
I'm sorry.

Greg (46:08.561)
Everybody we've I mean it's most of the people we spoke with unless you're in the Law or high tech, you know, they're focused on the top 10 percent. I think a lot of people have been We come from a stance of what about your bottom 90 percent? And so it's really important to keep front and center who are we trying to help? What is their income what they can't what can they afford and I'll give an example that I always give is Okay, if we're keeping front and center frontline workers

Doug (46:18.55)
Yeah.

Greg (46:38.415)
year and we agree that we want our employees to use this benefit. We want to use the child care that we offer to them. Well, what you wouldn't want to do is give them access to nannies and babysitters. It is just logically flawed. It is not going to happen. They do not have the funds to pay for a nanny and babysitter. So now working backwards, you can start checking off the types of care that you're going to be able to offer. Like you have to work backwards and keep them front and center.

Doug (46:43.639)
Mm-hmm.

Doug (47:08.286)
Yeah, I mean, I think the simple way to go about this, right, is focus specifically on manufacturing, right, is the majority of your workers are on the line, right? Be really weird if it was just a bunch of people in the office and like one dude on the line making everything. And so right, and they typically are going to be your lowest paid workers, right? That's your population. If you can solve for that population, everybody else will benefit. Right?

Greg (47:37.293)
Yeah. Yep.

Doug (47:37.482)
And so that is, right, like, what is the population and what do they make, right? Because you have to, like, it needs to be affordable, right? Like it exists, great, now can it be affordable.

Greg (47:50.397)
Yep. Last question that you should ask yourself, and then we're gonna go through the five things that you need to consider when trying to solve this, and then we're gonna wrap it up. Is what we're going to implement for childcare, is it gonna benefit just us as a company? Is it gonna benefit the employee and us? Is it gonna benefit us, them, and the community?

There's different levels here you have to think about. And once you can answer all of those questions, then it's a matter of finding a solution for yourself. And whether that's partnering with somebody, whether that's doing it yourself, there's definitely different ways. Now shifting into the five areas that...

Doug (48:26.582)
Mm-hmm.

Greg (48:41.493)
And this is an order that you're gonna have to solve. So keep in mind, let's keep front and center our hourly workers. First thing that you have to solve is affordability. If you cannot implement a benefit that a 36,000 earning employee per year could afford, you're gonna have low utilization. So affordability is key. We talked about some ideas here, subsidies from employers, grants from the government. Those are really the two big ways.

is another way for affordability. We also talked about the FSA decap account. Like that actually does reduce the cost of care. So on decap account, you could save 30% on your taxes. What's the next one they should think about?

Doug (49:26.722)
Next one's gonna be proximity. On average, people don't wanna drive more than 15 miles out of their way for childcare. Now, this is always a really interesting one, especially when we go through assessments, is that could be proximity to the site. When we talk about an on-site center, it tends to be really, well, everybody's coming here. So we might as well put the supply here. And sometimes that's the right answer. And sometimes...

It's not when it's not is right when your population is very distributed, right? Because what we've found is people tend to prefer care near their home. Right. Because that's where their support network is. So driving 30 miles one way, right? I'd say manufacturing worker like has, you know, is working a second shift. They're not off till, you know, seven, eight in the evening. Right.

somebody else coming and picking them up if they live 30 miles away. So you have to look at your population site proximity, but to where, right? Where is the greatest impact? Near site, on site, I think is always some part of the solution. But we've also seen areas where there's pockets of employees where that would be a really big struggle for them. And a more distributed model, right? Or a broader program may actually pay bigger dividends for the organization and the communities at large.

Greg (50:28.757)
Yeah.

Greg (50:49.621)
Yeah, I mean, I'm thinking also if you're traveling 30 minutes to an hour and you're working a first shift, you're having to take the kiddo in your car with you for an hour. To work and then they're hanging out there and then taking them home right what if you work second shift third shift.

Doug (51:00.458)
Yep. It's a lot.

Doug (51:06.153)
Mm-hmm.

Greg (51:10.161)
That's a lot on them. And yeah, we've seen it time and time again, a lot of employees, a lot of people in general, to have care close to where they live. The next is, all right, you have a $36,000 a year employee, so gotta make it affordable. It's gotta be close. It's gotta be in distance to where they'd like. The next is, can it be open during the times that a manufacturing plant work? That opens, second shift, third shift.

Doug (51:31.371)
Yep.

Greg (51:41.131)
Usually on-site centers are not supporting your second, third shift. There are some that I've heard that are 24-7.

Doug (51:49.506)
Mm-hmm.

Greg (51:50.677)
But a lot of home daycares actually can and do support 24-7 care. Another example of who are we trying to help matching it with the types of care that exist out there. So availability, I can afford it. Is it close? Now, is it even open?

Doug (52:08.526)
And this is where I know we haven't, you know, we went back and we said like, nannies and sitters aren't an option, right? When we look at like Friends, Family, Neighborate Network, and some of the like, company stipend programs, right? Child care stipend programs we've looked at, right? Being broadened to expand, right? And some of that could actually be affordable in home care, right? Because, you know, like there's a lot of ways to address it. And again, leveraging the community aspect too, is an option for some of those things.

Greg (52:26.953)
Yeah.

Doug (52:38.534)
And so like, again, we keep that lens as we go through and say, okay, does this make sense? Does it cover as much as we can? Are we using all of the available options?

Greg (52:51.485)
Next, is it accessible? Do they even have open spaces? I mean, it's like, this is hard, right? It's gotta, and it's gotta be affordable. It's gotta be where they actually need it. It's gotta be open. It's gotta match the times. And so, like, do they even have open spots? That's the next one. After that, the last is quality.

Doug (52:53.134)
Accessibility. Yep.

Doug (53:06.894)
Hmm.

Greg (53:13.425)
So you wouldn't fix quality first, because if someone can't afford it, they're not going to use it. And so generally that's been the stance is out of the five, quality is important, but it is the last one that you would solve for.

Doug (53:24.81)
Yeah, you have to solve for it, right? It's not to minimize the impact of it, right? Like everybody wants that, like, you know, there'd be like high levels of quality and they go through this. But if you can't hit the other ones, it doesn't matter that there's quality, right? Like you can't get there, you can't use it, you can't pay for it. There is not a space for you. It's not open during the hours. What does it matter what the quality is at that point? It still has to be solved, right? I think that's...

Greg (53:54.669)
Yep.

Doug (53:54.71)
That's the key piece of this is like, we can't minimize it and take it away and say quality doesn't matter, right? As a parent, neither of us parents, we wouldn't say that. But when you're building a solution, right? You need to make sure that you're willing to address the other four, or it's not gonna matter that you address quality.

Greg (54:11.573)
Yeah.

Yep. And if you actually break these into two categories, affordability is around cost, proximity, availability, accessibility, and quality is about supply. Like those are the two things. And I think one other thing to think about, what role does technology play in this? You know, I've talked to a few folks that have indicated that, you know, technology is not actually needed for this. But I would actually argue the reverse.

to scale this. So if we agree that it's a shared responsibility where parents and parents, you know, families, providers, government, philanthropy, businesses all need to work together, well what's gonna tie them together? At a basic level, a telephone, email, like you need to be able to communicate a carrier pigeon, you need to be able to connect.

Doug (54:48.032)
Mm-hmm.

Doug (55:03.63)
Carrier pigeon.

Greg (55:09.829)
Now just layer on like where we're at. We know where we're at with technology and marketplaces.

If the fundamental understanding here is that everybody should pitch together, then a centralized technology solution, I think, actually can provide the scale that you need. Now, you'll have to match that with somebody that can also address the supply issue. So, if you have a provider out there that has this ecosystem, but also has the ability to address like what the gaps are, whether it's a proximity, availability, accessibility, the supply, you have the holy grail.

I mean, I don't see a way even if you built an on-site you still have technology that connects the families to the on-site Registration system payment system, right? So if you want to scale just that model Technology is involved

Doug (56:02.706)
And but that's a huge piece of it, right? We talk about, right, the total solution getting all these parties involved. But we just talk about utilizing, right? Leveraging the totality of childcare options that are available, right? You need, you wanna have line of sight to that. You wanna be able to integrate those things together because the way you manage, right, expand these programs efficiently, right? To maximize their impact is by looking at data.

Greg (56:21.885)
Yeah.

Doug (56:31.85)
right, which is really hard to get in this space. We go through it all the time. It's why it's so exciting. The studies out there, we can work with numbers that are already there. We're not going hunting them down on our own. And it's when you can look at, what are people actually using? What do they wanna use? What can they afford to use, right? Again, you don't always know what people's needs are, right? You can survey, right? We do internal surveys and you get answers.

Greg (56:32.829)
Yeah. I mean, yeah.

Doug (57:00.61)
But do those answers always match the behavior? They do not, right?

Greg (57:04.305)
No, they're one time when somebody, you know, when you do a survey, you're asking somebody about childcare, they could have, they could be, you know, on maternity leave and they don't have childcare for another six months. You're going to miss out on that if you do a one time at your survey. But I do believe that technology is a way to build a sustainable model. There are models that are not sustainable. But if you want to be able to scale it, you have to have a way that everybody's going to talk together.

Doug (57:15.096)
Mm-hmm.

Doug (57:18.41)
Yeah, that's it.

Greg (57:34.379)
I mean even if you're looking to scale like a nanny network, how are you gonna background check everybody in person? I think you gotta be able to just do these basic like technology things With that said, Dougy Fresh, I'm gonna end with um

Doug (57:40.108)
Yeah.

Doug (57:48.886)
Yes, sir.

Greg (57:53.697)
Couple tidbits for everybody. There are three other grant programs if you're interested in checking them out. There's Colorado Employer-Based Child Care Facility Grant. It's a grant program. It's to provide financial assistance to employers for the development or expansion of on-site childcare facilities, up to 250,000 per facility. If you have more than 50 employees in California, look that one up. Number two. What's that? Did I say it?

Doug (58:16.334)
Colorado, not California. You said California, it's Colorado. You said, Colorado, yeah. I'm just, I got your back, that's it.

Greg (58:21.949)
It's Colorado, yeah. I'm in California. OK, thank you. Iowa Child Care Challenge Fund.

It's this is an initiative. It's a grant program, affordable, high quality child care throughout Iowa public private entities, including childcare provider schools community are eligible. Lastly, the Illinois early childhood construction grant ECCG program grant program. Financial assistance for the construction and renovation expansion of childcare facilities in Illinois up to 2 million

Doug (58:58.685)
Mm-hmm.

Greg (59:00.495)
doesn't just mean a center, a home, licensed home does count in public schools. That'll be it for our episode two. So why don't we cue the music?

Doug (59:13.218)
We have an outro?

Greg (59:15.837)
It's going right now. Thank you everybody. Have a good day, bye.