Affordable childcare seemed like an impossible task. This is the simple way Vermont pulled it off
Walking around the factory floor of Twincraft Skincare, outside Burlington, Vermont, there is the unmistakable scent of soap. The general manager points out the luxury lines and designer labels for whom they manufacture soaps and lotions, as well as the basic, inexpensive bars and bottles left on hotel room sinks. The factory runs two 10-hour shifts per day, four days a week, with an overtime option as needed. At over 400 employees, Twincraft is one of the top employers in the state.
In the last few years, there’s been a boom in skincare products and, to meet demand, Michele Asch, Twincraft’s chief people officer, says they’ve had to hire over 180 people over the past 18 months.
But, pre-pandemic, Asch had begun to notice a problem in hiring workers: People couldn’t find local childcare. 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.
In 2020, Asch met with Aly Richards, the director of Let’s Grow Kids, the organization responsible for spearheading the decade-long campaign to provide a comprehensive fix for the state’s childcare shortage. Via Zoom, Asch recalls asking, “‘Aly, we make skincare. Can’t I just pay into a system so we can get this childcare fixed?’”
But “fixed” isn’t so simple for childcare. Childcare is an industry in crisis, where the demand is high, the supply is low, and market forces alone cannot correct it. The high teacher-to-student ratios required for childcare mean that parents pay high costs—often more than they can reasonably afford—while providers are compensated little. Many providers rely on public benefits or are unable to afford sending their own children to the childcare locations in which they work. Like Asch’s employee who had to drive an hour to find care, half of the country is living in childcare deserts, where no workable care options exist.
“Vermont is in a deep demographic crisis now,” says Richards. With a dwindling and aging population, Vermont was losing potential workers and the tax base that accompanies it. “Many women with education and careers would work if they had access to affordable childcare.” And if businesses, like Twincraft, wanted to stay, grow, and manufacture products in the state, they needed to find a way to retain young employees and bring new ones in.
Richards appointed Asch to the board of Let’s Grow Kids and to the CEO Task Force, a group assigned to devise a funding plan for childcare that business leaders in the state could get behind, facilitated by a former state tax commissioner. Initially, the task force was adamantly against a payroll tax to finance childcare. But after exploring every funding option—including an income tax and property tax—the payroll tax emerged as the solution “that checked every box,” according to Asch. A payroll tax allowed the payment burden of the childcare program to be placed on workers, not retirees. As more people took advantage of the program and went to work, the revenue stream would grow.
Asch began speaking one-on-one with business leaders on the need to invest in childcare. She personally invited other manufacturing leaders in the state to meet with Richards, vet the proposal, and ask any and all pointed questions. The Twincraft conference room was filled with business leaders of Vermont’s most recognizable brands: Bag Balm, Runamok Maple, Birrn Chocolates, Vermont Creamery, Lake Champlain Chocolates, Burton’s Snowboard, and Mamava.
Those peer-to-peer conversations were critically important, explains Richards, because “you have a trusted business partner running a successful business. They can literally say, ‘I’ve studied this deeply with my values and my prowess and I’m here to tell you, [this] is the deal with childcare in summary form.’”
‘Childcare is necessary infrastructure for doing business’
Childcare has long been a social policy issue without a designated home. It is part education, part parenting, part economics—as obstacles to childcare remain one of the top reasons that parents cannot access paid work. Even in message testing surrounding childcare, arguments about the economic and workforce benefits are considered the most persuasive. Data from Let’s Grow Kids and the University of Vermont estimated that with the additional childcare funds in the state, 5,000 additional parents could participate in Vermont’s workforce, and by parents paying less for care and receiving more income as wage-earners, and providers receiving more, there would be a $375 million annual boost to the state’s economy due to such influx.
Asch’s biggest challenge wasn’t that her business colleagues disagreed with the need for childcare, 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 childcare 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. [Childcare] is necessary infrastructure for doing business.”
In January of 2023, Vermont’s business leaders testified in support of the childcare legislation, now named Act 76, in front of the state’s Senate Economic Development Committee, both for the need for childcare to support their employees and hire more, and to show their willingness to shoulder the payroll tax that accompanied it. Cara Tobin, a chef and mother of two who’d opened the restaurant Honey Road in Burlington and become a James Beard finalist, testified that it was “easier to open a restaurant than find childcare.” Tobin was one of 10 business leaders who testified in support of Act 76, including a cross-section of business interests of the state: a solar company, an entrepreneur, a ski resort, and, of course, manufacturers.
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, childcare providers began seeing a change in compensation, and since the legislation has taken effect, childcare supply has boomed in the state: 90 new childcare programs have opened, with a net gain of 1,000 new childcare spots. For the first time since 2018, more childcare programs have opened in the state than closed.
Asch has noticed that more of her employees can find childcare closer to where they work, and have more affordable options “and therefore less stress,” she said. She’s exploring opening a childcare center adjacent to Twincraft.
Tobin’s youngest child went to kindergarten when Act 76 took effect; she hasn’t been able to personally take advantage of the program, but her restaurant employees have. “I see it working for other people for sure,” Tobin said. “This completes the circle: You are supporting your workers who can make money, then spend money in the community, and it keeps coming back around. When we support the community, they support us.”