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Employer Sponsored Child Care, Research Paper Example

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Research Paper

Introduction

Child care is one of the most important factors in a working parents decision on the type of job, time and days needed to be on the job site.  Many employers have been establishing benefits to facilitate their employees with daycare expenses, as well as providing sponsored daycare centers on site or nearby the job locations.  The National Conference of State Legislatures (National Child Care Information Center 1), indicated that child care is a major factor in the outcome of a workers’ productivity.  In addition, the study suggested that child care provides benefits to the company in recruiting employee’s efforts and keeping employees, as well as employee productivity, decreased adsenteeism and decreased tardiness.  There are several benefits to the employee as well.  In fact, a report in 1996 by the General Accounting Office (GAO) indicated that the lack of sufficient child care affects the employee job training.  Another survey found that many employees have quit their job due to the lack of adequate child care. (1)

There are more businesses taking part and responding to their employee’s needs for child care since there are proven numerous benefits to both the employers and employees in regard to employer supplied child care services.  This report focuses on previous studies on child care benefits from employers and analyzes results from data collected on a recent survey in regard to the employee interest in child care services through their employer.

Discussion and Analysis of Findings

Previous Literature Findings

In a study conducted in 1989, there was a cost-benefit study analyzed.  As it turns out, the Union Bank in Pasadena California saved between $138,000 and $232,000 in one year due to reduced turnover and absenteeism when they incorporated child care into their operation. (National Conference of State Legislatures 2)  Another study conducted in 2007 by the Consulting Practice at Bright Horizons analyzed the effect of employer-sponsored child care on working parents.  4000 parents participated in the study.  3,200 of the parents were participating in full-time service employer sponsored child care and 800 of the parents participated in back up child care, which was also sponsored through the employer.  The study also implemented other datasets from similar surveys to assess the response of over 100,000 parents from the past 10 years.  The results of these findings analyzed the benefits for employer sponsored child care and indicated the repercussions for employers that did not provided this benefit to their employees.

The study found some important key factors in the employer providing child care benefits.  For the parents that use child care full time, more than 65% said that workplace child care was an important factor in job decision.  One of the main findings found that 90% of the parents said that having access to work-site child care helped them to concentrated on the job and be more productive at their job.  In addition, more than 20% of people turned down job offers due to the lack of on-site child care centers.  (Bright Horizons Family Solutions)

Benefits to Employer-Sponsored Child Care

There is a multitude of reasons that employers should support the notion for employer-sponsored child care.  For one, research has found that employers see the significant impact providing such services has had on their business.  Research has identified the following components for reasons employers should implement this system: improves employee morale and ethics, reduces turnover rates and absentees, increases work productivity, and benefits the community. In addition, employers were able to find and keep more valued employees because they were less likely to leave their job due to the lack of child care or quality child care.  This leads to a loss for the business because now they are stuck with hiring and training fees.  In addition, the lack of sufficient child care leads to an employee taking more time off to take care of child care problems.  (National Child Care Information Center 2)

Different Types of Employer Child Care Benefits

 Employers can offer a variety of child care benefits, such as On-Site child care, Off-site child care, and the employer can pay for child care, flexible benefits or reimbursement accounts, referrals services, or flexible work schedules.  The on-site child care is where the employer actually manages a child care center at the job site.  The off-site child care is where an employer manages a child care center off of the job site.  When the employer pays for the child care, they can choose to cover all expenses or part of the child care expenses.  Some employers even provide vouchers to the parents for payment.  A flexible benefit of reimbursement account is almost like a 401K plan.  These accounts are funded using pre-tax payments from the employee paycheck; therefore, the employee is saving money since they do not have to pay taxes on the child care portion of their paycheck.  Another way employers are providing help with child care is through referrals and flexible work schedules.  A department within the company maintains lists of child care services in the area that have good referrals.  In addition, some employers allow the employees to work part-time, adjust schedules, or even work from home.  (All-things-child-care.com)

Employers seem to be gearing toward the flexible benefits plan.  The reason is that it offers flexibility and allows individuals to choose benefits best suited for their individuals child care needs.  For instance, the employees can choose their dollar limit.  What happens is the employees indicated a fixed amount of their money before-taxable income for the child care costs.  They are then reimbursed for child care from those funds.  These are beneficial to the employee because with this reduction in salary, employees are paying for child care with before-taxed money and they are also saving in payroll and Social Security taxes.  (The Maryland Child Care Resource Network).

Data Results

In order to suggest the necessity and interest for working parents, a survey was conducted to individuals in order to determine their child care concern.  This survey was conducted in order to determine the best type of child care strategy that business should use and provide to their employees. Ten individuals were given the survey and it was anonymous in order to determine an effective outcome with honest answers.  In the survey, the gender, number and age of children, if children are in childcare, percentages of wages that go toward childcare and the type of employer child care interested in were asked.  In addition, a survey about the understanding of a reimbursement package was also indicated.

The results from the Survey Questions indicated that all individuals surveyed all used some sort of childcare.  In addition, all 10 of the individuals were interested in the employer sponsored childcare program.  Six of the 10 individuals indicated that they were interested in Employer Funding of Childcare, regardless of the location.  Three of the 10 individuals were only interested in the On-Site Employer Sponsored Childcare and one of the individuals was interested in the Off-Site Employer Sponsored Childcare. (Table 1)

Table 1.  Results from Survey Questions that were handed to 10 individuals.

Number of Individuals who use Childcare 10
Number of Individuals Interested in Employer Sponsored Childcare 10
Number of Individuals Interested in Employer Funding of Childcare, regardless of location 6
Number of Individuals Interested in On-Site Employer   Sponsored Childcare 3
Number of Individuals Interested in Off-Site Employer Sponsored Childcare 1

The individuals were also asked to provide the percentage of their monthly wages that were put towards child care services.  Half of the people indicated that 0-10% of their wages was put towards childcare.  Three of the individuals indicated that 10-20% of their wages were put towards childcare and two people indicated 20-30% was put towards childcare. (Figure 1)

The amount of monthly wages

Figure 1.  The amount of monthly wages indicated on the survey from the 10 individuals that currently use childcare. 

In Figure 2, the number of individuals that understood what a Reimbursement Plan was, the number of individuals that understood that they were able to deduct child care on their Federal taxes each year, the number of individuals that understood the differences between reimbursements and tax return deductions and the number that needed more information.  It seemed that for the most part half of the individuals understood each of the questions and all of the individuals wanted more information.

Reimbursements Accounts

Figure 2.  The response to questions in regard to Reimbursements Accounts.  The individuals were asked if they understood that reimbursement accounts were pre-taxed contributions, if they knew they could deduct child care on their Federal Taxes each, if they knew the difference between reimbursement accounts versus tax deductions on their Tax return and if they needed more information.

Conclusions

From the analysis of previous literature and the current survey, it seems that individuals are very interested in employer sponsored childcare.  In addition, it seems that both the employer and employee benefit from this service.  For the parents, not only do they have a peace of mind that their children are in a quality daycare, they receive benefits and financial assistance from their employer to help with the costs.  For the employer, studies have shown that there is an increase in productivity, work quality and profitability when implementing an employer sponsored child care system. (Horn and Berlein 3)  From the recent survey, all individuals were interested and wanted to find out more information in regard to employer sponsored child care.  Therefore, it is recommended that business pursue these strategies in order to increase their own business and make their employees satisfied.

Works Cited

All-things-child-care.com.  Do You Know if Your Employer Offers Child Care Benefits? (2010).  Web. Retrieved from: http://www.all-things-child-care.com/child-care-benefits.html

Bright Horizons Family Solutions.  The Lasting Impact of Employer-Sponsored Child Care. (2008).  Web. www.brightsolutions.com

Horn, J. and Beirlein, J.  Employer Options for Child Care Effective Strategies for Recruitment and Retention.  Penn State University. Web. Retrieved from: www.betterkidcare.psu.edu/employer_options.pdf.

The Maryland Child Care Resource Network.  Employers and Child Care Options for Businesses.  Web. Retrieved from: www.mdchildcare.org/mdcfc/pdfs/employersandchildcare.pdf.

National Child Care Information Center.  Web. Retrieved from: www.nncc.org/EO/nccic.employercc.doc.pdf.

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