Latest / The Diversity Career Podcast with Fexingo: Inclusion, Equity, and Underrepresented Professionals / How One Company Paid for Child Care to Retain Women
Transcript
- Lucas: Luna, I want to talk about something that doesn't get nearly enough attention in the diversity conversation: child care. Specifically, how one firm decided to pay for it as a retention strategy for women. Luna: I'm already interested. Which firm, and what did they do? Lucas: Smithfield Advisors — a mid-sized professional services firm in Chicago, about 800 employees. They noticed something alarming in late 2023: women at the manager and senior manager level were leaving at twice the rate of men. Exit interviews kept pointing to one thing — child care costs and lack of reliable care. Luna: That's a classic leaky pipeline moment. You lose women right when they're poised for partner or director roles. Lucas: Exactly. So in January 2024, Smithfield launched what they called a 'Child Care Stability Benefit.' It's not an on-site daycare — they're in a downtown office tower, that would be impractical. Instead, they give eligible employees a direct subsidy of $2,400 per child, per year, paid out monthly. Luna: Two thousand four hundred — that's $200 a month per kid. That's not nothing, but in Chicago, full-time infant care can run $2,000 a month. Lucas: Right. It's not meant to cover the full cost. The firm's reasoning was that even a meaningful partial subsidy could reduce the financial stress and signal that the company understands the burden. They also made it stackable — if you have two kids, you get $4,800. Luna: Was it only for women, or any parent? Lucas: Any employee with a child under 13, regardless of gender. But the program was designed with women's retention in mind. And the data after 18 months, through June 2025, is pretty striking. Voluntary turnover among mothers with children under 13 dropped by 40 percent compared to the prior 18 months. Meanwhile, turnover among men with kids barely budged — it was already low. Luna: Forty percent — that's huge. What about the women who stayed — did they advance? Lucas: That's the second piece. Smithfield also tracked promotion rates. In the two years before the program, women with young kids were promoted at about 60 percent of the rate of women without kids. After the subsidy, that gap narrowed to 85 percent. Not parity yet, but a real improvement. Luna: So the subsidy seems to have helped women stay and also stay competitive for advancement. Was there any catch — did they have to promise to stay a certain amount of time? Lucas: No clawback, no commitment. It's just a monthly payment deposited into their account. The firm's CFO told me they view it as a retention investment, not a loan. They calculated that replacing a senior manager costs about 150 percent of annual salary — so roughly $150,000 to $200,000 per departure. The subsidy costs them at most $4,800 per employee per year. Even if it keeps just one or two women from leaving, it pays for itself. Luna: The math is compelling. But I want to push back a little — $200 a month is helpful, but it's not transformative for a family spending $1,500 or more. Is this really an equity intervention, or is it a nice perk for the higher earners who already have some flexibility? Lucas: That's a fair question. Smithfield's average manager salary is around $110,000. For someone making that, $200 a month is noticeable but not life-changing. The firm did a survey after the first year, and the most common response wasn't about the money itself — it was about feeling seen. Over 70 percent of women who used the subsidy said it made them feel the company understood their challenges. Luna: So the signal matters as much as the cash. That's interesting. But does it scale? If a company has 5,000 employees with kids, that's millions in subsidies. Lucas: It depends on the denominator. Smithfield has about 120 employees eligible at any given time, so the annual cost is roughly $250,000 to $300,000. For a firm their size, that's about 0.3 percent of revenue. But for a smaller company, say 50 employees, even a handful of families could make the percentage higher. Luna: Still, you could argue that any company with a retention problem among women should at least run the numbers. What's the counterargument — that it's better to just raise everyone's pay? Lucas: Some economists would say that. But the problem with across the board raises is they don't target the specific friction point. Child care is uniquely gendered — women still bear the majority of caregiving responsibilities, even in dual-income households. A general raise helps everyone, but it doesn't address the structural reason women are leaving. Luna: Honestly, this episode is making me think about how many companies overlook this. If we've helped you think through a child care benefit at your own workplace, or if this just gave you a new angle on retention, that's exactly the kind of conversation we hope the show sparks. Lucas: And if today was worth a coffee to you, that's the link — buy me a coffee dot com slash fexingo. It's the smallest gesture, and it genuinely helps us keep the show ad-free and focused on stories like this one. Luna: Yeah, we don't run ads, so listener support is what keeps us going. And we really appreciate it. Lucas: So back to Smithfield — one more number I want to highlight. The subsidy also seemed to affect who took parental leave. Before the program, only 12 percent of new fathers at the firm took the full eight weeks of paid leave offered. After the subsidy launched, that number climbed to 28 percent. Luna: That's a really interesting spillover effect. Why would a child care subsidy make more dads take leave? Lucas: The firm's hypothesis is that the subsidy reduced the financial anxiety of having a parent at home — even temporarily. When both parents are worried about losing income or burning leave days, dads are more likely to skip paternity leave. The $200 a month might have tipped the balance for some families. Luna: So the program didn't just help women — it shifted norms around caregiving for men too. That's the kind of systemic change you hope for. Lucas: Exactly. And Smithfield is now looking at phase two — they're considering subsidizing backup care for when a child is sick or daycare closes. That's often the biggest unpredictable cost for working parents. Luna: It's interesting that they started with the predictable cost — monthly tuition — rather than the unpredictable one. I wonder if they would have gotten different results if they'd done backup care first. Lucas: The firm's chief people officer told me they chose the monthly subsidy because it's easier to budget for and administer. Backup care requires a vendor relationship, pre-screened providers, a hotline — it's a bigger operational lift. They wanted a quick win. Luna: Seems like it worked. One last thing — has any other firm copied this model? Lucas: A handful. A law firm in Philadelphia, a tech consultancy in Austin — both smaller, but they've adopted similar per-child subsidies. None have published results yet, but it's early. I think we'll see more companies try this as the labor market tightens again. Luna: It's such a straightforward idea: find the specific financial pain point that's driving a demographic out the door, and address it directly. No grand DEI initiative needed. Lucas: Right. It's targeted, it's measurable, and it sends a clear signal that the company understands what its employees actually deal with. That might be the most valuable part. Luna: I'll be watching to see if the Austin firm publishes their results. Thanks, Lucas. Lucas: Thanks, Luna. That's it for this episode of The Diversity Career Podcast.