Testimony to the SC Special Joint Committee to Study Childcare
Frank Knapp Jr.
President & CEO
January 7, 2025
Chairpersons Turner and Erickson; Committee members. I am Frank Knapp, President and CEO of the South Carolina Small Business Chamber of Commerce, which I co-founded 25 years ago.
Thank you for the opportunity to testify today on the critical issue of the lack of affordable, quality childcare that is negatively impacting on our state’s small businesses.
We appreciate the Committee’s attention to this important issue.
You have heard from very large businesses in our state who accurately point out that the childcare issue is an economic one that is hurting their ability to successfully address their labor shortage.
I am here to share information with you that shows this childcare issue is even harder on small businesses that lack the resources of big businesses.
You have been presented with data showing that approximately 98% of our state’s businesses have fewer than 100 employees, our definition of a small business. According to this information, these businesses employ 1.4 million workers representing 60% of our state’s workforce. Data from the SBA Office of Advocacy shows that women make up 48.6% of workers in the businesses it considers small.
A 2021 national survey during the COVID pandemic by the national organization Small Business for America’s Future, which I was co-chair at the time, found that:
- 72% of small business owners said they have employees with at least one child under 13 or that have a need for daily childcare services.
- 55% of small business owners believed that the lack of affordable, high-quality childcare for employees has had a negative impact on their business. Of these:
- 56% said they have lost business income.
- 60% said they have lost growth opportunities.
- 45% said they have avoided hiring an employee due to scheduling complications.
- 52% said they had experienced employee turnover due to childcare needs.
This survey concludes that the high cost of childcare has created problems with employee hiring, retention as well as business operations for most small businesses.
In 2025, the lack of affordable, quality childcare is still negatively impacting our small businesses.
A recent national survey of small business owners by Goldman Sachs found that:
- 84% believe it has been difficult for working parents to afford high-quality childcare programs for their children.
- 57% say that where they live, there are not enough childcare programs that are high-quality and affordable.
- 35% say their employees have been forced to cut their work hours or forgo work entirely because of the cost and/or availability of childcare.
- 38% say that a lack of childcare has had a negative impact on their ability to operate or grow their business.
- 62% say that being able to offer a childcare benefit to their employees would have a positive impact on talent recruitment and retention.
As you can see, the lack of affordable, quality childcare is a major concern of small business owners, and it is a key contributor to their labor shortage problem.
Let me share with you the comment I received from a small business owner on my Board of Directors. He said:
As a single parent and a small business owner, I find childcare to be one of the most difficult parenting responsibilities to navigate, in large part due to costs, but also availability, quality of care, and flexibility to family schedules.”
It’s a shocking fact that lower income families are spending almost 30% of their income on childcare compared to their high-earner counterparts, at only 7%. I believe sliding scale daycare models or government funded assistance should be considered to help support lower income earners so these communities may have more opportunities to obtain stable employment and a better chance to stay active in the workforce.
As you would imagine, small business owners don’t have a singular opinion on the solution to this problem. They support almost any general and specific effort:
- Increasing federal funding programs that help families better access affordable childcare.
- Providing direct, ongoing financial assistance for childcare services to parents and families.
- Funding for childcare workforce development and wage increases for childcare professionals.
- Funding to subsidize childcare providers to increase their numbers.
- Funding dedicated to supplying childcare services in underserved communities.
- Universal access to childcare.
- Increased tax credits to businesses that want to help provide childcare for their workers.
Let me focus on this last possible solution.
We all should know that government at some level needs to step in to address our childcare crisis.
We need to think about a solution where government assistance for childcare is routed through our small businesses that are in the most need for labor and are not able to compete with bigger businesses for employees because those businesses can pay higher wages and offer benefits.
There was a recent story out of Iowa mentioning that one small business was sending a check to a childcare provider to pay for an employee’s childcare.
If that employer was simply withholding money from the worker’s paycheck and then sending it to the childcare provider to help that worker manage his or her money, that can work but it doesn’t make the childcare more affordable for the employee.
What we might need to consider is a program for small businesses in which there is a shared responsibility for the cost of a worker’s childcare needs.
Maybe that monthly cost is divided three ways—a government contribution per eligible employee, an employer contribution and the worker’s contribution. The payment for childcare would flow through the employer.
This would result in more childcare providers because now the consumers with the need can afford the service. This would also help small businesses recruit labor by being able to subsidize the childcare needs of employees. And the public would know that the government assistance is actually going to childcare providers because of the small business involvement.
As your committee hopefully drafts legislation to address this issue, the South Carolina Small
Business Chamber of Commerce would like to be part of that process.
One of the previous presenters, Ms. Shealy Reibold of the Joint Citizens and Legislative Committee on Children, recommended that some solution on affordable childcare must have something directed to small and medium businesses.
We agree.
Thank you for your attention and I am happy to answer any questions.Contact:
Frank Knapp Jr.
803-600-6874 cell
www.scsbc.org