Child-care benefits shift to lower-wage workers

HR Magazine, Sept, 1995 by Bill Leonard

"It really is an issue of labor force availability," says Cassandra Piper, a dependent-care consultant with Workplace Options in Raleigh, N.C. "To attract and retain workers, companies now have to offer innovative child-care benefits to lower-wage and entry-level employees. These employees also tend to be shift workers and have a wide range of work hours."

Throughout the 1990s, the number of people entering the U.S. workforce has declined steadily. Employers have felt the drop in available job applicants most acutely in lower-wage and entry-level positions.

"This means that employers are now offering the most innovative benefit programs to job categories that traditionally have not received a lot of benefit options," said Piper.

Employers that have not offered benefits to lower-wage employees will find themselves in a serious bind, according to Piper, and those without dependent-care benefits in place will be at a disadvantage in attracting the employees they need.

According to a recent article in The Wall Street Journal, most employer-provided dependent-care benefits are available only to "the privileged few." Piper says, however, that this is not completely true. She adds that the current trend among most of her clients is to concentrate on providing dependent-care benefits to lower-wage workers.

"Higher-paid employees aren't the ones who need dependent-care benefits," she said. "They can afford to pay for dependent care and most likely [TABULAR DATA OMITTED] have adequate child care. Lower-wage employees need the help, and employers are finding that it makes good business sense to provide dependent-care benefits to them."

Piper said employers who provide such benefits to their lower-wage employees are seeing excellent returns in reduced absenteeism, increased productivity and more applicants attracted to fill open positions. Although an innovative dependent-care benefit program will not solve the workforce shortage and attract applicants to entry-level positions by itself, companies like Marriott International Inc., Armour Swift Corp. and ConAgra Frozen Foods have discovered that molding an innovative dependent-care program into their benefits package is necessary to maintain a competitive position in today's labor market.

"We don't offer these types of benefits just to be nice," said Charles Romeo, director of benefits for Armour Swift in Downers Grove, Ill. "While we are concerned about the welfare of our employees, we have made some hard, bottom line-based business decisions to offer these types of benefits to our workforce."

BENEFITS TAILORED TO THE WORK SITE

Developing dependent-care benefit programs is a complicated process. Each company or plant site is unique, and the needs of each work-force vary widely. Larger companies like Marriott and Armour Swift cannot simply offer blanket benefits, but must tailor their dependent-care benefit programs to each work site.

Marriott International developed a telephone resource service designed specifically to help on-call employees and shift workers. Employees can call the service and get names of available babysitters or child-care providers. The service is available 24 hours a day, seven days a week.

DAY-CARE PARTNERSHIP WITH THE COMMUNITY

Armour Swift has been exploring the option of providing dependent-care benefits at several of its processing plants. At two work sites, the company came up with an innovative program by partnering with the local 'communities' Head Start programs. Head Start is a nationwide preschool program for disadvantaged children. Armour Swift approached the Head Start programs in Huntsville, Ark., and Joplin, Mo., about partnership opportunities and received a favorable response.

"The Head Start agencies in these communities didn't have much money to operate and didn't have very good facilities," Romeo said. "We were able to give them some funding, and we provided financial support to build a child-care center. So we were able to join forces with Head Start for the greater good."

According to Romeo, when Armour Swift made the commitment to support the child-care centers in Huntsville and in Joplin, the company decided right off the bat to locate the centers away from its plant sites. Instead, the company donated land and helped finance construction of the centers. All along, Romeo said, Armour Swift insisted that the centers remain open to everyone in the communities.

"In Joplin, we had 150 slots at the center for child-care, and we guaranteed that half of the slots would go to employees at our plant. The remaining 75 were open to the public," Romeo explained.

The Head Start agencies now operate out of the centers Armour Swift helped build. Romeo describes the situation as a win-win-win. The Head Start programs in Joplin and Huntsville have received tremendous boosts from their partnership with Armour Swift. In turn, the company has found a way to provide a cost-effective benefit to its employees. And at the two plants, Armour Swift employees now have reliable dependent-care in communities where child-care options were severely limited.