“Baby bonuses” could keep mothers (and fathers) at work

Employers are battling the labor shortage by ratcheting up retention incentives, and some are focusing on a demographic more likely to leave their jobs: Parents.

While mothers are especially at risk of dropping out of the workforce, plenty of companies looking to retain and recruit employees are including fathers in the benefits, too. It’s known as the baby bonus.

The perks of the baby bonus

To give parents a reason to stay with their company after returning from parental leave, employers are offering one-time bonuses, sometimes called a “baby bonus,” of a few hundred to a few thousand dollars.

Parents of any gender who work at women’s health app Flo get a one-time bonus of $5,000 if they return from leave before the child is 12 months old. Chief people officer Ann Roberts says the company wants to demonstrate that it supports parents’ reintegration into the workplace. “It’s during this time where people become more open to other opportunities as they have concerns such as, ‘Am I still relevant? Do I still have a place at Flo? Will I be able to adapt back to work with my new life context?’”

Medela, a company that manufactures breast pumps, offers a $500 bonus once the employee has returned from leave and stayed for 12 weeks. “It’s designed to be an incentive and a reward to help them commit to that transition because those first few weeks postpartum are difficult,” says Dana Kirwin, Medela’s director of employer groups. “We want parents to feel like they have a good reason to stay and commit to making it work. If we can get them to 12 weeks, some of that turbulence starts to settle and they’re able to find that routine,” she says.

When she had her daughter 18 months ago, the bonus allowed her to delay daycare a little longer, and knowing there was a little extra in the bank helped. It also gave her a reason to “stick it out,” she says. “Even if the dollars aren’t going to make or break your financial situation. The world looks so different at week 12 than it does at week two.”

A few companies designate the cash sum for specific use. Software maker Loopio gives a $2,000 to subsidize childcare costs when a parent returns to the office. Telematics company Geotab gives new parents who apply for it $5,000 after the birth or adoption of a child. The company’s VP of human resources, Alex Cocq, says that though it’s not mandatory, they encourage parents to save the bonus for their child’s education.

A way to retain mothers and fat after family leave

Women left the workforce by the millions in 2020. Globally, women still do the vast majority of caregiving, including childcare. And in the US, working mothers face significant challenges to staying in their jobs, especially as they lack supports like affordable childcare and paid family leave.

Though women’s workforce participation has largely rebounded since the pandemic’s start, those with children still remain particularly at risk for dropping out, especially as employers call employees back to the office and roll back Covid-era benefits like childcare subsidies and flexible schedules.

And mothers continue to exit the workforce. This year, about a quarter of mothers surveyed by advocacy group Motherly identify as stay-at-home parents, up from 15% a year ago. What would bring them back to work? More than half cited affordable childcare.

So companies are offering cash payments as an incentive to stay—and making them available to all parents. Mothers are familiar with the challenges of being both parent and professional, along with the damage it can do to a career. As caregiving duties are shared among parents, fathers are learning about the parenthood penalty. According to a recent survey of working parents by childcare provider Bright Horizons, 44% of fathers say they are worried that taking full advantage of work-life balance benefits could adversely affect their performance reviews.

Online care marketplace Care.com gives $1,000 to parents for every birth or addition of a child. “The reality of [family] benefits is that the end result for us is to attract and retain folks,” says the company’s CHRO Wes Burke. “That’s ultimately what we’re trying to do. Our hope is that it leads to long-term retention. In many cases, it does.”

The shortcomings of one-time childcare bonuses

But a one-time bonus alone is not likely to retain a parent who’s returning from leave. It doesn’t address the problems that cause parents, and women in particular, to drop out of the workforce, says Allison Whalen, the founder of Parentaly, which provides career coaching to parents before, during, and after family leave. “I am a skeptic,” she says. “If the goal is to retain parents to get them to come back and actually stay, I think we need to ask ourselves, ‘why aren’t they coming back?’”

Whalen says the mothers and fathers she works with are more likely to leave because they’re passed over for important projects once they return or their career stalls, because they’re overwhelmed, or because they can’t afford childcare.

Freelance writer Claire Zulkey says a one-time bonus would not have been enough to keep her at her job in alumni relations at the University of Chicago after her second child was born in 2015. “Money would have been nice,” she says, “but that wouldn’t have affected the quality of life. That wouldn’t have made my commute shorter, [and] it wouldn’t have made it easier for me to pick up my kids when they were sick.”

Some bonus structures incentivize the parents to return to work early and cut their leave short, potentially solving one short-term problem but creating new ones by returning to work prematurely.

Some parents are eligible for state-sponsored baby bonuses around the world

Governments are also throwing money at the problem, albeit in greater amounts. To boost the low country’s birth rate, South Korea gives mothers a bonus of 2 million won (about $1,520 USD), plus smaller monthly payments until the child reaches school age. Singapore has a similar scheme, and in fact just increased payments by S$3,000 (or about $2,230 USD) this year. Parents receive $11,000 per child up to two children, and S$13,000 for their third and fourth children, paid in monthly installments.

Canada, France, Poland, Argentina, Australia, Italy, the Czech Republic, Sweden, Lithuania, and Luxembourg all provide a state-funded “baby bonus” or childcare allowance, though they vary in amount and payment structure, and most are means-tested.

It’s less common, though, for parents to get a cash bonus from their employer. Few people would say no to a few hundred extra dollars, but these payments may not be effective in retaining workers without longer-lasting financial, social, and cultural supports. After all, the money runs out fast.

“The challenges associated with returning to work are so huge that this feels like a Band-Aid,” says Whalen at Parentaly. “If I come back to work, and I’m overwhelmed, and all these problems are thrown at my feet, and I’m working around the clock, and if somebody throws me a $500 bonus, I’m going to not be happy,” she says. “I want to have a job that is actually meaningful and that has boundaries—and allows me to be my best self at work.”