Business & child care: corporate America is finally listening to its employees' requests to help solve the day-care dilemma

Black Enterprise, Dec, 1993 by Marjorie Whigham-Desir

However, some child care providers, such as Roberta Bergman of the Child Care Company of Dallas, believe that discount initiatives are "depressing the quality of child care offered." Instead, child care and compensation experts suggest that companies opt to help employees defer costs by paying the difference.

Some companies do just that by subsidizing an employee's child or elder care costs. Typically, vouchers, coupons or checks, made payable to licensed child care providers, are offered to employees with family incomes under $30,000.

Gwendolyn Harrell, a bank teller for NationsBank in Columbia, S.C., is taking advantage of the company's subsidy benefit, Child Care Plus. A working mother of 9-year-old twin girls and another 3-year-old daughter, Harrell says the program has subsidized 50% of the $10,000 she and husband, Jesse, spent on child care last year. Individuals earning less than $29,000 per year and families making less than $35,000 per year qualify for the subsidy; children must be under the age of 13. Starting in 1994, employees with custodial care will also qualify for the program.

"Child Care Plus gives me the option to choose a higher quality of care and education than I would otherwise be able to afford," says Harrell. Before starting to work for NationsBank four years ago, the Harrells relied on their parents and relatives to pick up the twins from kindergarten and keep them in the afternoons. Now, the couple can afford to send their daughters to a licensed child care center two blocks from their school that provides transportation for the girls.

After the birth of her third daughter, Harrell used the program to obtain infant care only five miles from her home. "I went back to work after five weeks," she says. Now all three children attend the child care center--day care for the 3-year old, and after-school and summer programs for the twins.

Because of the cost related to such programs, only 1% of companies offer subsidies to their employees. Since not all employees will qualify, there are also equity issues to be considered. But companies that do offer these options receive a tax break, since an employer does not pay FICA taxes on the amount of the subsidy.

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Resource And Referral Services Are Favored

A popular dependent care option for both employers and employees are resource and referral services designed to help employees identify child care resources in their area. The cost to employers is usually minimal, since companies contract with one of 200 outside national referral agencies, such as Work/Family Directions in Boston, for a fixed fee. The advantage of this system is that it allows employee needs to be tailored and can cover a wide scope of services, from identifying in-home care providers or family day-care homes, to child care centers or after-school and summer programs. There is no cost to employees, since the employer has picked up the cost of the service.

"If I'd had this kind of service when my older children were kids, I wouldn't have had so many problems finding care," says Bill Johnson, the IBM manager in San Jose, Calif., and father of 2-year-old twin girls. A remarried widower, Johnson raised his three now collegeaged children alone for 10 years after their mother died. "I went through difficult times finding and keeping child care. The referral service made it much easier today," he adds.