Summer spurs boom in backup day care
Niche care providers help firms extend emergency coverage on those days when a worker's child has nowhere to go
It happens to almost every working parent: The kids are sick. School, or a local park program, is canceled for the day. The regular baby sitter is out of town.
And before they know it, those parents are spending the better part of the morning watching Nickelodeon, instead of working.
In fact, parents miss work because of a breakdown in child care an average of seven days a year, according to one study. The problem peaks as schools close, affecting many working parents, not to mention employers already operating with small staffs.
In one three-month period during 1997, 29 percent of employed parents nationwide experienced some type of child-care breakdown that resulted in absenteeism, tardiness, and reduced concentration at work, according to a study of nearly 1,000 families by the Families and Work Institute in New York.
The institute also found that only 20 percent of working parents rely on day-care centers, where a corps of teachers make individual absences relatively insignificant. The remainder depend upon relatives and friends, which usually means they depend upon the health and availability of one person.
As a result, corporate backup care has become a hot item, even if a sluggish economy has slowed its growth, according to Judith Presser, senior consultant for WFD Consulting, which specializes in work and family issues.
Proponents say such care helps employers recruit and retain workers and can be cheaper than the costs associated with employee absenteeism.
"The pitch is, 'We will save you three to four dollars for every dollar you spend,'" said John Marvin, president and CEO of ChildrenFirst, a pioneer in corporate backup child care.
Founded 10 years ago, the Boston-based ChildrenFirst now runs some 30 care centers serving more than 260 companies nationwide, including General Mills, Target, and Bank One. It differs from traditional day-care centers that also provide backup or "drop-in" services in that it deals exclusively with emergency care.
The advantage, Mr. Marvin says, is that teachers are specially trained to help children adjust to a new place. Furthermore, instead of one child being placed with a dozen regulars, everyone is new.
The centers often "enroll" up to a few thousand youth - every young child of every employee. But because those children attend the center only when regular day care falls through, classrooms usually run well below capacity. Designing the centers to accommodate much more than the average daily demand allows for plenty of room during peak times, including the summer. Mr. Marvin says attendance doubles as school lets out.
In the rare occurrence that a classroom or center does reach maximum capacity, ChildrenFirst tries to move children to other centers nearby .
While ChildrenFirst is one of the best-known names in the industry, other backup care providers have sprung up across the United States. For example, Lipton Corporate Child Care Centers Inc., based in Washington, D.C., serves nearly 200 East Coast clients, including PepsiCo.
Other providers take a different approach. From its northern California headquarters, FamilyCare offers its 50 clients emergency referrals to existing care providers.
New York-based Caregivers on Call provides in-home care for the employees of nearly 100 clients in 60 cities.
The price for such benefits is substantial. ChildrenFirst charges client companies between $30,000 and $40,000 annually for every 500 employees served, while FamilyCare prices range between 50 cents and $2 per employee each month.
Once the base fee is paid, parents can also incur some cost. Although employees of client firms can use the day-care setting of ChildrenFirst free, some employers ask them to copay a modest amount. With FamilyCare, clients pay only for the referral service and parents are responsible for the provider's fee.
Ms. Presser emphasizes that many businesses - especially smaller ones that can't afford corporate care - still rely on cheaper alternatives, such as offering employees more flexible schedules or subsidizing emergency care on their own on an ad hoc basis. IBM, for example, has developed its own "Gap Camps" to help employees bridge the gap between the end of school and the start of summer programs.
But other firms, especially those that employ lawyers or accountants who bill by the hour, say the expense of corporate backup care is worth it.
Nationally, absences cost companies $3 billion annually, a figure that doesn't surprise Kathie Lingle, national WorkLife director for KPMG LLP, an accounting and tax firm with more than 100 offices across the country. Since 2000, KPMG has contracted with both ChildrenFirst and Caregivers on Call, and each year its return on employee child-care investments has increased. The accounting and tax firm estimates that it saved about $2 million last year alone.
"It pays for itself immediately," Ms. Lingle says. KPMG employees are in front of clients eight hours day, Lingle adds. Missed work means lost money, making backup care vital. "You don't have to be a mathematician to realize this keeps people in productivity," she says.
Lingle adds that employees rank the child-care benefit as one of the company's most valuable perks.
With unemployment high and layoffs routine, companies are finding that employees are forced to do more with less, says Cathy Leibow, who founded FamilyCare more than 15 years ago.
Despite recent economic woes, not one client had opted to save money by dropping her service, she says. "By doing something relatively inexpensive, there's a lot of good will."