EBS ART CWC 5/95 CHILD-CARE BENEFITS TO EMPLOYEES EMERGING BENEFITS ML Methods of Providing Child-care Benefits to Employees William Wiatrowski Few employers provide direct support for child care; reimbursement accounts offer alternative The Bureau of Labor Statistics (BLS) has documented the increased prevalence of employer-provided benefits designed to assist employees with family responsibilities, given the increased importance of these benefits in recent years. Such benefits include time off to care for family members, referral and support services for family problems, and funding for daycare and elder care. In 1993, for the first time, data became available on the types of child-care arrangements employers provide for their employees.1 Employers have responded to the child- care needs of their employees in two basic ways. First, child-care support--either facilities or payments--are provided to a small percentage of workers. More prevalent are employer- sponsored reimbursement accounts, the majority of which allow employees to set aside pretax funds to defray child-care expenses. Such accounts, also known as flexible spending accounts, allow employees to determine the level of funding. Direct employer support of child care is relatively uncommon--only 4 percent of workers in private industry and State and local governments had such benefits available in 1992-93. Reimbursement accounts were considerably more prevalent--30 percent of workers had such protection available. The prevalence of these benefits varied widely by full- or part- time status, private and public sector, and size of establishment, as shown in table 1. BLS has tracked the incidence of these benefits through the Employee Benefits Survey for several years.2 Since the mid-1980s, the incidence of reimbursement accounts has risen steadily, while the availability of employer-subsidized child-care benefits has grown slowly. For example, in 1985, 1 percent of full-time employees in medium and large private establishments had access to employer-subsidized child-care benefits, compared with 7 percent in 1993. Similarly, in State and local governments, eligibility rose from the 2 percent of full-time workers in 1987 to 8 percent in 1992. Until now, however, no detailed data have been collected on child-care benefits.3 The increased need for child-care services has been demonstrated by the growing percent of women who work, and especially those who work full time. There is also a documented increase in the percent of families in which both parents work outside the home. Furthermore, the percentage of women who leave the labor force for extended periods to raise their children has declined in recent years.4 In the 1993 survey of medium and large establishments (those with 100 workers or more), three additional questions were asked of employers who had indicated that they provided child-care benefits to their employees. The questions were intended to describe the manner in which child-care benefits were provided. Employers were asked to indicate how many of their workers had the following types of child- care benefits available: Employer funding of child care--in such cases, the employer makes full or partial payment of the cost of child-care services, regardless of the location. On-site child care--in such cases, the employer, or a group of employers, manages a child-care facility at the employer's work site. Off-site child care benefits--in such cases, the employer, or a group of employers, manages a child-care facility away from the employer's work site. Only limited data are available on the incidence of these types of benefits among workers eligible for child care. In some cases, workers were eligible for more than one type of benefit, such as situations where employers provided funding and also managed an off-site facility. Of the 6 percent of workers in medium and large establishments who were eligible for child-care benefits, half received some form of employer funding, half could take advantage of an on-site facility, and 1 in 5 could take advantage of an off-site facility. Because of the small number of workers actually eligible for any child-care benefits, breakouts of these data by full- or part-time status, union status, or occupation are not available. The Employee Benefits Survey provides annual data on the availability and characteristics of benefits provided by employers. Begun in 1979, the survey tracks changes in employer-provided employee benefits, including traditional benefits such as health insurance and retirement income plans. In recent years, it has also tracked the emergence and rise in incidence of family-related benefits such as employer-provided child care, parental leave, and flexible work arrangements. Data on types of child-care arrangements for small private establishments and State and local governments will be available from the 1994 survey. Table 1. Participation in child-care benefits and reimbursement accounts, 1992-931 (Percent of employees) Child-care benefits Reimbursement accounts All Full-time Part-time All Full-time Part-time All employees 4 5 3 30 34 10 Private sector 4 4 3 27 31 8 Fewer than 100 employees 1 2 1 11 14 2 100 employees or more 6 7 5 46 52 19 State and local governments 7 8 2 47 50 25 Notes: 1 Data for State and local governments and for private establishments with fewer than 100 employees are for 1992. Data for private sector establishments with 100 employees or more are for 1993. William Wiatrowski is an economist in the Division of Occupational Pay and Employee Benefit Levels, Bureau of Labor Statistics. Telephone (202) 606-6222. 1 Data from the Employee Benefits Survey are published in an annual bulletin. For the most recent data available, see Employee Benefits in Medium and Large Private Establishments, 1993, Bulletin 2456, Bureau of Labor Statistics, November 1994. Earlier studies of family- related benefits have been prepared using survey data. See, for example, Joseph R. Meisenheimer II, "Employer Provisions for Parental Leave," Monthly Labor Review, October 1989, pp. 20-24. 2 For information on a 1987 study detailing employer child-care practices, see Howard V. Hayghe, "Employers and Child Care: What Roles Do They Play?," Monthly Labor Review, September 1988, pp. 38-44. 3 The Employee Benefits Survey determined the number and percent of workers who were eligible for these benefits. Data were not collected on the number or percent of workers who actually used the available benefits. 4 For information on the participation of women in the labor force, see Howard V. Hayghe, "Are Women Leaving the Labor Force?", Monthly Labor Review, July 1994, pp. 37-39.