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Podcast

Podcast

Harvard Business School Professors Bill Kerr and Joe Fuller talk to leaders grappling with the forces reshaping the nature of work.
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  • 11 Jun 2020
  • Managing the Future of Work

Covid-19 Dispatch: Stephen Kramer

Will Covid-19 overwhelm the care industry and rob workers of an essential means of maintaining work-life balance, if not simply working? With the haphazard reopening of the economy and civic life, the demand for care center spaces and in-home services is expected to swamp the diminishing supply. Stephen Kramer, CEO of Bright Horizons and a graduate of HBS, has been at the center of the care crisis in the US and internationally. He discusses the state of care—as a universal need and as an industry.

Joe Fuller: Welcome to the Managing the Future of Work podcast from Harvard Business School. I’m Harvard Business School professor and visiting fellow at the American Enterprise Institute, Joe Fuller. This episode is one of the series of special dispatches on the sweeping effects of Covid-19 on our economy, society, and the future of work. In addition to our regular podcast episodes, we will be bringing you shorter and more frequent interviews with business leaders, policy makers, and leading scholars on the coronavirus.

The coronavirus pandemic has intensified a growing crisis in the care economy, which has featured too little capacity and high prices. As businesses shifted to remote work and social distancing was implemented nationwide, many care sites closed, and a surprisingly large percentage of them will never reopen. Employees are going to face challenges, juggling childcare, senior care, and work like never before as the economy improves. Stephen Kramer, CEO of Bright Horizons and a Harvard Business School alumnus, is at the very center of the care crunch caused by Covid in the United States and internationally. His firm provides onsite childcare, in-residence back-up care for children and seniors, and educational advice for workers and their dependents, primarily through corporate accounts. He joins me today to talk about the state of care as a universal need and as an industry. What has been the impact of Covid on the care economy, and how might Covid shape its evolution? Stephen, welcome to the Managing the Future of Work podcast.

Stephen Kramer: Joe, it’s a pleasure to be here. Thank you.

Fuller: Stephen, I think our listeners who are familiar with Bright Horizons associate it with childcare facilities, particularly onsite childcare facilities. But your services are much broader than that. Could you just familiarize our audience with the array of activities your company’s involved in?

Kramer: Bright Horizons is definitely best known for the work that we do in partnership with employers, providing onsite and near-site childcare centers for their employees. But over the last 30 years of our existence, we have evolved the services to include, as you say, a more full array of supports that employees need, and that employers are willing to and interested in subsidizing. So, for example, we have back-up child and elder care. And back-up child and elder care is really focused when there is a breakdown in traditional care arrangements for an employee, either with their child or with their aging parent. And Bright Horizons can solve that challenge by providing access to our centers or partner centers, or providing a caregiver to the home to support that employee so they can get to work. In addition to that, we have also expanded into educational advisory services that take the form of college counseling support for employees with high school students transitioning to college. And in addition to that, we provide full turnkey support for tuition assistance programs for employers so that their employees can make the best educational decisions as they go back to school, and at the same time, are working full time.

Fuller: Stephen, those benefits related to both educational guidance for the teenage children of your clients’ employees and for continuing learning by their employees seem a bit far afield for a company like Bright Horizons. How do you make your way to offer services like that?

Kramer: So, certainly first and foremost, the common thread that you’ll see through all of the services that we deliver in a high-quality way are care and education. And in the cases of our College Coach service, as well as EdAssist service, which both are under our ed advisory umbrella, it really is around access to high-quality education. And so how we got there was truly being client-led. And our clients were always talking very favorably about the high-quality early care and education that we provided for employees with young children, and then at the same time, the care provision for aging adults through our Back-Up Care services. And what they realized and they helped us to see was there was a real void for those employees that had teens. And the core issues that were facing employees with teens was the transition to college. And so that really became the advent of College Coach that allowed employers to support their employees through what is a very challenging time—helping the child, helping the dependent to find the right colleges to apply to, help them through the application process, and ultimately think about how to pay for college. And so over the years, we had developed a real expertise around providing access to admissions and financial aid experts to help employees and their dependents. And through that, employers came back to us and said, “We love what you’re doing as it relates to supporting our employees and their dependents to make good educational decisions. But we spend millions of dollars each year on sending our own employees back to school, and we’d love to think about how you could support them.” And so we extended the work that we were doing with employees’ dependents into supporting employees going back to school themselves, and really started to take full responsibility for the management of tuition-assistance programs, inclusive of providing expert guidance to employees who were seeking additional educational opportunities to grow their career.

Fuller: Stephen, we’ve been looking at care economics and the impact of caregiving obligations on employees and employers here at our project at Harvard Business School. I’m curious, before the Covid-19 outbreak, what were the main issues you were hearing from employers and employees about how to balance those obligations with job responsibilities and being productive in the workforce? And were companies broadening their definition of the types of things that they ought to be responsible for? I’m curious, for example, about the Back-Up Care benefit you are supporting.

Kramer: Sure. So I think that certainly employees over the years have become much more outspoken about the challenges that they face integrating their work and their life. And one of the largest challenges that is faced really comes in the form of caregiving. And so, if you think about childcare, first and foremost, when parents go out on either maternity or paternity leave, it is very difficult to find high-quality and affordable, accessible childcare upon their return. And so, again, as employers heard from their employees about this challenge, that was something they wanted to be leaning into. And ultimately, that turned into onsite and near-site childcare centers. Likewise, that same challenge manifested itself in terms of a temporary solution, which we call an “infant transition program,” where we support—Bright Horizons supports—employers to offer to their employees 20 or 30 days to get them jump-started with childcare accommodations as they find their permanent-care arrangements. And so again, Back-Up Care is not just for the breakdown in care arrangements, as I described it before, but it’s also—in the form of an infant transition program—can support new parents to get back to work and, at the same time, help to bridge that gap between when they were at home with their child full-time, and the time that they need to find permanent-care arrangements.

Fuller: I can imagine that’s taken on greater importance as maternity and paternity leave has become more widespread. And certainly, our research shows that those 90-day maternity leaves go by awfully fast, especially for first-time mothers.

Kramer: Yeah, that is absolutely the case. In order to find high-quality, affordable care, it not only takes time, but a lot of persistence, because even in typical times, a real scarcity of high-quality space is available that families can afford. And so going back to your earlier point around Back-Up Care, even when people, even when working parents are able to find high-quality situations for their child, like a Bright Horizon center, they will also have needs that go beyond that. So again, Back-Up Care really does support them when there is either a breakdown in care arrangements or when they’re just looking for an additional set of supports to their traditional arrangements.

Fuller: Stephen, of course, we’re talking in early June 2020, as the Covid pandemic is beginning to show some signs of ebbing. One of the things that we’ve been looking at here at our project is some of the system’s effects of Covid on various sectors of the economy. Some my research has been on the very great economic penalty that the childcare providers—often smaller firms, one-door firms—have suffered as a consequence of this, and what appears, to us at least, to be a likely, pretty dramatic reduction in available capacity for childcare, both because of some financial distress with smaller providers, but also—if states mandate lower ratios of adults-to-kids in sites—as a function of essentially imposing social distancing on those sites. What are you seeing in the marketplace?

Kramer: So the Covid crisis has been particularly challenging for childcare providers. And as you mentioned, the childcare landscape is really predominantly made up of individual local providers. So this crisis has been particularly challenging for that group of providers. As their need to close occurred, they still continued to have things like rent payments and other fixed expenses persist through this crisis with no revenue coming in, in the form of parent tuitions. And so I think, as you allude to, we are going to see—and it’s well researched and well reported—that we’re going to see many of those individual providers not have the financial wherewithal to reopen on the backside of this crisis. So prior to the crisis, there certainly was a supply-demand imbalance, and coming out of this crisis, we perceive that there will be an even greater supply-demand imbalance. So I think that the individual providers in this marketplace have been hard hit, and as they contemplate reopening—and there will be additional costs that are required through Covid protocols, and you mentioned some of them, including smaller group sizes, things like PPE, and other expenses that didn’t exist prior to the crisis—this will, again, exacerbate the challenges that they find operating in the current environment.

Fuller: Now, you’ve had a substantial number of facilities open throughout the crisis, providing care for essential workers and public safety workers. What have you learned about what it takes to maintain an environment that’s going to meet the standards that states are laying out?

Kramer: Yeah, so as we went into this crisis, we took the decision to close 80 percent of our centers globally. On the other hand, that still left us with 250 centers globally—and 150 of which were here in the United States—that we chose to keep open and focus on the real needs that existed, to support healthcare workers and their families, as well as other essential workers. And so through this crisis, through the depths of this crisis, we have truly focused on ensuring the continuity of care and availability of care for these incredibly important heroes in our economy. With that, we certainly have, through those operations, implemented very, very stringent Covid-19 protocols. We develop them first by referencing the guidelines of the CDC and local health authorities. And we also partnered with Dr. Kristin Moffitt, who’s an infectious disease physician at Boston Children’s Hospital, who really helped us to effectively put these protocols in place and make sure that our teachers and other staff members were implementing them on the ground in our centers. We learned a tremendous amount through this experience and feel like we are both better as an organization because of the understanding that we’ve gained, but also, as we look to reopen the balance of our centers, we feel very well-equipped to make sure that we’re doing appropriate social distancing at drop off and pick up, that our staff are providing health checks to all families and staff coming through into the center, that all of our staff are wearing masks, that we have very stringent protocols around hand washing, and again, limiting our group sizes, especially in the older age groups, to make sure that we are operating with 10 children plus teachers in our facilities. So we really feel ahead of the curve as it relates to making sure that both children, families, and staff are staying safe and healthy in the current environment based on the experience we had in the depths of this crisis.

Fuller: Now, when you talk to your employer customers, your actual clients, what are they anticipating is going to be the effect of both the loss of childcare capacity, and, frankly, peoples’ anxiety about the safety of childcare facilities and their own families’ continuing health?

Kramer: We enjoy partnerships with over 1,200 employer clients, and we have been in constant contact with our clients through this pandemic, and certainly as they think about their own reopening plans. What I can say is that they are hearing loud and clear from their employees, and they also recognize for themselves, that the availability of childcare support is going to be critically important to their employees’ ability to get back to work and be productive. There is one thing that this pandemic has certainly proven, which is, it is impossible to be a productive two-working-parent family, and have both your employee responsibilities, as well as be a full-time caregiver for your young children. And so whether employees are thinking about continuing to work at home or going back to their offices, one thing is universally true, which is, they absolutely need support in the form of childcare. And so employers are taking even greater interest than they ever have around trying to procure and provide supports for their employees in this area. And so we’re having very detailed conversations with both our current employer clients, as well as non-clients, about what we can do to reopen their childcare centers, if they have one on site, or to support them in other ways, including getting priority access into our consortium lease centers or providing additional back-up support that will help their employees to be productive as they come back to the workforce.

Fuller: Certainly one thing we saw in the Great Recession of ’08–’09 was that employers adopted on a short-term basis responses to that economic calamity. And many of them did learn that the parts of their response were actually things they could carry forward on an ongoing basis—in a phrase, they “learned from the crisis.” And one of the things that certainly we’re going to be looking for—and, in fact, that I’m anticipating a little bit—is that care benefits are going to become much more basis of selection for those workers that are most sought in the economy, those jobs that are hardest to fill going forward; that care benefits might become closer in terms of salience and job selection as health benefits, and that this might lead to a belief on workers’ part that accounting for care is really an integral part of the employer-employee relationship. Is that consistent with what you’re hearing, Stephen?

Kramer: It’s absolutely consistent. We are certainly hearing both from employees who utilize our services, as well as their employers, that there is a growing expectation that childcare and dependent care supports in general will become much more of an expectation in the employer-employee contract. So I think that over time there was a growing sentiment that that was the case. And I think this crisis has certainly accelerated both the employers view that it’s important for them to lean in, but also the employees’ expectation that their employers will be offering such supports.

Fuller: And where is the greatest need you see among the employees of the companies’ institutions you serve? Is it around after-school programs? Is it about toddlers? And what about senior care?

Kramer: So I think that the greatest place that employers and employees are seeing the need and are anticipating even greater need coming out of the crisis is for those employees that have young children. So high-quality, affordable, accessible childcare is something that everyone expects is going to be in even shorter supply, and the need for it is even greater than it has ever been. So I think that certainly supports for the youngest children are really coming into focus, given how difficult it has been for working parents with young children to, as I said, be both an employee as well as primary caregiver. So I would say that is the place where we’re seeing the most interest. This summer, I would say that the additional support that families are looking for and employers are leaning into is really around school age. As many summer camps are not reopening, there is a real challenge for those employees that have six-year-old through 12-year-old children, that they’re not able to keep busy and focused throughout the summer, really need additional support uniquely this summer. And certainly our clients and prospects are asking us to lean into that and stand up very safe, very healthy summer camp-type programs that are leveraging the same protocols that we have for young children for this school-age population.

Fuller: Stephen, let’s talk about senior care for a moment. Obviously, the Covid has had a very, very harsh impact on residential nursing homes—an industry association recently announcing a double-digit decline in occupancy, more emphasis now is being placed than ever trying to keep seniors in their homes or in single-residential settings as long as possible. How are you thinking about the evolution of the senior-care sector?

Kramer: Sure. So I think those factors and features are absolutely at work. And I think that more and more seniors are trying to stay in their homes longer. And that puts additional stress and pressure on their children—so typically the employees of our employer clients—to make sure that they are very dialed in and supporting their seniors in ways that residential programs would historically have done. And so, as more seniors stay at home, there are more breakdowns in care, there are more episodes where the actual child needs to get more involved in their parents’ care. And so, again, the expectation among working parents who are also trying to support their aging parents continues to grow. And employers are certainly looking to step into that, understanding that that can have an incredible impact on the productivity of their workforce, and so recognize they need to be continuing to add supports in the elder-care area.

Fuller: Stephen, you operate across the country. I’m curious as to what types of differences you’re seeing about changes in standards or temporary regulations that affect care sites, and how difficult is it to deal with any kind of lack of coherence across those standards?

Kramer: So childcare has always been—and I suspect will always be in the United States—a very local set of decisions, practices, and protocols mandated by most typically the state. And so, in typical times, we are regulated by state licensure—and in some cases, a city or town supplements that licensure in terms of requirements. That continues to persist through this crisis, where states are making very specific decisions about the regulatory environment in which they have, and the protocols that they are looking to have followed in the regulations that they’re looking to implement. So for a national provider like ourselves, where we operate in 42 states around the country, part of what we do is make sure that we understand what those local standards are. But in typical times—and I would argue in these times—Bright Horizons really prides itself on going above and beyond whatever sort of local regulation there might be. And, therefore, our standards tend to be quite national in their approach and implementation, because they tend to be at a premium to any local or state mandates that are in place. And so, as we see unique regulations coming out from individual states, we are finding, like in typical times, that the Covid protocols that we have put in place and continue to put in place are at a level that minimally meet and in most cases exceed the expectations of the regulator.

Fuller: Do you see those types of standards becoming more widespread and documented for in-home care, as with seniors?

Kramer: Yeah, so I think that in-home care, again, has standards and has practices and protocols. On the other hand, a lot of the care that happens for seniors is considered companion care, and that companion care doesn’t have as strict and stringent requirements as some other forms of home health. So ultimately, what we find is that, again, Bright Horizons enforces for itself protocols and practices that certainly meet, but in most cases exceed, any regulations that exist within a state or municipality.

Fuller: Stephen, the care sector has often been the subject of some debate because of the wage levels offered. Certainly in things like home-health care assistance, things like that, wages have been chronically low. And in a robust labor market, that has led to high turnover, which means often the workers either don’t develop the types of skills that you’d like them to see, and, of course, we don’t have a lot of credentialing for some of those types of jobs. How do you think about wage levels in the industry, and what could be done to improve them?

Kramer: Sure. So Bright Horizons has always been an advocate for professionalization of the field of caregiving—as well as teaching—at early childhood levels. So over our 30-year history, we have been incredibly focused on professionalizing the field and continuing to push both wages, as well as benefits, for this field. The way we’ve been able to accomplish this is through the third-party support that we receive from employers. Because, ultimately, when you think about the economics of childcare or eldercare, most of the investment that is made by either a parent or an elder is focused around the wages. So in order to keep that even reasonably affordable for working parents, the reality is that wages have continued to be depressed. That is just a byproduct of that reality and that affordability. So we brought employers to the party so that we could ensure that, instead of the full brunt of the investment being born by families, the third party of employers really has made a huge difference in our ability to increase wages, provide benefits in a way that’s really distinct and different from the field in general. But ultimately, one thing that certainly the pandemic has underscored and highlighted—and I would say is the only silver lining of the pandemic—is the important work of early childhood educators and caregivers. Certainly they are now seen in the light of the heroic work that they have always done and will continue to do. It’s really been featured through this pandemic as they supported working families—specifically healthcare workers, and essential workers. So my hope coming out of this is that, ultimately, there will continue to be that recognition in the form of wages and benefits, and certainly Bright Horizons will continue to be a great champion of high-quality educators and their ability to earn at an appropriately wage.

Fuller: Stephen, you’ve got some international operations and are a major corporate player in the care sector. Are there any countries out there that you look at that you think are further evolved in the way they think about care broadly and might serve as role models for the United States or other countries that are going to be wrestling with these dilemmas posed by the need of workers to meet their caregiving obligations in order to stay employed?

Kramer: Yeah. So about a third of the centers that we have today at Bright Horizons are outside the United States—very specifically, the majority of which are in the UK and in the Netherlands. I would say that the Netherlands really represents quite an exciting model as it relates to government support of childcare. What they do in the Netherlands is, first, they have as a sort of national priority set childcare in very strong esteem, as it relates to the fiscal responsibility that the government and employers have, as it relates to financially supporting childcare. What they do is, they provide a tuition subsidy to their citizens to ensure that affordability for their citizens is made possible. That subsidy comes not employer by employer, but rather through an employer tax that ultimately accrues through the government back to families to support that affordability. So I think you see in a market like the Netherlands, we operated all of our centers in the Netherlands through the pandemic. The government stepped in very early, stated that they would be supporting tuitions for families through the pandemic who were enrolled at the center. The centers ultimately were only open to essential workers, but the tuitions were continued to be supported by the government on behalf of families. Now again, they have reopened the childcare centers to all in the community, and they continue to persist with very strong subsidies. So I think the Netherlands represents a really interesting approach. In the UK, they do things a bit differently in that they focus on a three- to five-year-old children and ensuring that 30 hours a week of fully funded care is provided to all of its citizens that have three- to five-year-old children in childcare. They can bring that subsidy to any nursery provider in the country. So again, they have taken a very strong stand as it relates to ensuring that its citizens have access to childcare for three- to five-year-olds.

Fuller: Well, Stephen Kramer, CEO of Bright Horizons, it’s great to welcome you back to Harvard Business School. We know you’re an alum, and hope you’ll be able to come back for one of those reunions coming up in a couple of years.

Kramer: Absolutely. Really appreciate the opportunity. It’s been a real pleasure, Joe, and thank you for including me.

Fuller: Thank you for listening to this special episode of the Managing the Future of Work podcast. To find out more about our project on the future of work and for more information on the coronavirus’s impact, visit our website at hbs.edu/managing-the-future-of-work and sign up for our newsletter.

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