The Business Case for Quality Child Care
Access to Child Care is Good for Business - Just Ask Vermont
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I’ve become somewhat of a broken record when talking about Vermont and the state’s willingness to invest in child care. (Though that phrase itself - broken record - is likely so outdated that my kids wouldn’t even understand what it means). But at a time when federal support for significant child care infrastructure investments is iffy, those of us who follow these issues can take time to learn from the states and localities that created transformational change.
It always comes back to this: how did they do it?
Followed by: could we do this elsewhere?
In Vermont, there are many answers to the first question but one of the key ways that Vermont got near-universal child care was by leveraging the support of the business community. The business community in any jurisdiction tends to wield substantial power and influence, and in Vermont, under their proposed funding mechanism, it was the business community who would be shouldering the bulk of the cost with a payroll tax.
When I spoke with Aly Richards of Let’s Grow Kids, the advocacy group in Vermont responsible for coalition building and spearheading Act 76 through to fruition, she said there was no way this bill could have passed without the business community’s support, describing it as “absolutely critical.”
So how did they do it? Business peer-to-peer conversations. One of the key people behind this effort was Michele Asch, the Chief People Officer at Twincraft Skincare, a soap and lotion manufacturing plant located outside Burlington, Vermont. Twincraft produces everything from luxury lines and designer labels of soap and lotion, as well as the basic, inexpensive bars and bottles left on hotel room sinks. The manufacturing plant runs two 10-hour shifts per day, four days a week with an overtime option as needed. They also have a room full of samples, which is akin to the Vogue Shoe Closet in shows like Sex and the City, in terms of the child-like joy at being able to touch, smell and sample so many soaps and lotions.
But all the free soap samples in the world still may not move the needle on child care. At over 400 employees, Twincraft is one of the top employers in the state. Covid-19 caused a boom in skincare products (maybe it was all those Zoom meetings staring at our faces?) To meet the extra demand, they’ve hired over 180 people in the past 18 months.
But, years earlier, Asch had begun to notice a problem in hiring workers: people couldn’t find local child care. One standout employee, she recalls, spent an hour driving each morning to drop her kids off in two different towns before driving to work - though she lived only 15 minutes away.
Child care, it seemed, was preventing some of her best and brightest from getting to work. It was slowing down her hiring processes. It was preventing her company from operating at its ideal capacity.
So Asch decided to do something about it.
She joined the board of Let’s Grow Kids, and the CEO Task Force, a group assigned to devise a funding plan for child care that business leaders in the state could get behind, facilitated by a former state tax commissioner, and together they came up with the payroll tax. Asch hosted a meeting in the Twincraft conference room - attended by all the big names in Vermont manufacturing: Bag Balm, Runamok Maple, Birrn Chocolates, Vermont Creamery, Lake Champlain Chocolates, Burton’s Snowboard, and Mamava. (And yes, Asch confirmed, they gave out soap samples as take-home gifts).
Asch began speaking one-on-one with business leaders on the need to invest in child care. Asch’s biggest challenge wasn’t that her business colleagues disagreed with the need for child care, but that they didn’t fully understand why this state-organized effort funded by the payroll tax was the proposed solution. “Once they understood [the child care plan] they would enthusiastically or reluctantly support it,” she said. “I don’t pay individually to have our roads done. I pay into a system to have the trucks come in to pick up the soap. [Child care] is necessary infrastructure for doing business.”
In June 2023, the legislation passed with bipartisan support, and after a veto from the governor, passed with a bipartisan veto override. The payroll tax took effect in July 2024: 0.44% split between employees (0.11%) and employers (0.33%). Some employers, Twincraft among them, have opted to cover the entire tax for their workers. In January 2024, child care providers began seeing a change in compensation, and since the legislation has taken effect, child care supply has boomed in the state: 90 new child care programs have opened, with a net gain of 1,000 new child care spots. For the first time since 2018, more child care programs have opened in the state than closed.
So what does this tell us?
→ Child care is a powerful economic engine. Obstacles to child care remain one of the top reasons that parents cannot access paid work. Data from Let’s Grow Kids and the University of Vermont estimated that with the additional child care funds in the state, 5,000 additional parents could participate in Vermont’s workforce, creating a $375 million annual boost to the state’s economy due to such influx. Even in message testing surrounding child care, arguments about the economic and workforce benefits are considered the most persuasive.
→ Businesses will need to be part of the solution, and buy into whatever revenue stream is needed for child care investment. Had the CEO Task Force not signed off on the payroll tax, Vermont may not have enough support to win bipartisan approval of the legislation.
→ Here’s the Vermont kicker: Vermont businesses, like Twincraft, seemed particularly motivated to stay in the state and were aware of a demographic problem that Vermont would not have enough workers to keep them there. So what made the Vermont manufacturers want to stay and improve what was broken, rather than toss it aside and start over somewhere new? There does seem to be a level of pride in the “Made in Vermont” labels affixed on everything from socks to chocolate to snowboards. Could that state-specific pride and can-do attitude be what scales to other localities looking to invest in child care?
→ And finally: could this work somewhere else? I spent the week in New Mexico for some on the ground reporting. New Mexico has also invested in their youngest children, albeit through a different funding mechanism and they haven’t enshrined this into law - at least not yet. But what else do these two states have in common besides investing in children? Excited to report more on this for future stories and Substacks.
A portion of this essay was adapted from an article in Fast Company: Affordable Childcare Seemed Like an Impossible Task. This is the Simple Way Vermont Pulled it Off.