Summary 98-9

August 1998

Employer-sponsored Childcare Benefits

1Reimbursement accounts can be part of

flexible benefits plans or can be stand-alone

plans. Both are governed by Section 125 of the

Internal Revenue Code. Reimbursement

accounts were available to 26 percent of

employees in surveyed establishments. Three

out of 4 of these employees had stand-alone

plans. The estimate of employees with

reimbursement accounts that cover dependent

expenses is based on stand-alone plans.

Types of child-care benefits in private industry by establishment size, 1995-96

Percent of covered employees

 All types Employer funds On-site Off-site

All establishments

Small establishments

Medium and

large establishments

W

hat contributions do employers make to caring for

children while their parents

work? In the United States, childcare

benefits provided by employers remain

relatively uncommon. Private industry

extended these benefits to 1 out of 25

employees in 1995-96. The incidence of

employer-provided childcare benefits,

which was barely measurable for fulltime workers in medium and large

private establishments in 1985, has

increased only slightly since the Bureau

of Labor Statistics first began collecting

comprehensive data on them in 1990.

Childcare benefits reported in 1995-96

include employer-managed facilities (on

and off the work site) and direct

payments to other care providers.

Worksite coverage

Some employees are more likely than

others to have employer-provided

childcare benefits. For example,

workers in large establishments (100 or

more employees) were more likely to

receive benefits than were workers in

smaller establishments (7 percent versus

2 percent). However, full-time employees were no more likely to receive

benefits than part-time employees were.

Yet, among full-time employees, 15

percent of professional and technical

workers in larger establishments have

these benefits, compared with less than

1 percent of blue-collar and service

workers in small establishments. There

are only small differences in the

incidence of childcare benefits for fulltime employees covered by collective

bargaining agreements versus those not

covered, and for those in the service

sector of the economy versus those in the

goods-producing sector. The incidence

of childcare benefits differs little among

the geographic regions of the Nation, and

(based on 1994 data) employees in State

and local governments were not appreciably more likely to have childcare benefits

than the private sector employees.

BLS collects data on the incidence of

three types of childcare benefits.

Nevertheless, owning to the infrequency

that these benefits are offered, only

limited data are available.

• Employer funding of childcare.

Employer makes full or partial

payment for the cost of childcare

services, regardless of location.

• On-site childcare. Employer

manages a childcare facility at the

work site.

• Off-site care. Employers, or a group

of employers, manage a childcare

facility away from the work site.

Most benefits are in the form of direct

payments to care providers or to an onsite facility managed by the employer.

Each of these options is offered to 2

percent of the employees. The third

option, employer-managed facilities

away from the work site, is available to

1 percent of employees. In some

establishments, employees are offered

more than one option.

Reimbursement accounts

Employers can also assist parents in

financing their childcare expenses by

establishing reimbursement accounts.

These are funds from which employees

pay for expenses not covered by their

regular benefits package. Reimbursement accounts usually are funded with

employee pre-tax contributions. One

employee out of 5 works for a company

that has established a reimbursement

account to cover expenses for dependent

care.1

0

1

2

3

4

5

6

7

8
Absent any employer-provided

childcare benefit or reimbursement

account, taxpayers can offset some of the

cost of childcare through income tax

credits. Any married taxpayer filing a

joint return or single taxpayer filing as

head of household can take a credit of up

to $480 against their annual Federal

income taxes for each of 1 or 2 children

in care.

These data on the childcare benefits

paid in private industry are from the

BLS Employee Benefits Survey, an

annual survey of the incidence and

provisions of employer-provided benefits

to private sector and State and local

government employees. The survey

collects information on the incidence of

other benefits related to the family, such

as paid and unpaid family leave,

adoption assistance, long-term care, and

flexible workplace plans. For more

information, call (202) 606-6222, send

e-mail to ocltinfo@bls.gov, or visit the

Employee Benefits Survey home page

(http://stats.bls.gov/ebshome.htm).

Information in this report is available

to sensory-impaired individuals. Voice

phone: (202) 606-7828, TDD phone

(202) 606-5897, TDD message referral

phone: 1-800-326-2577. This information is in the public domain and, with

appropriate credit, may be reproduced

without permission.

Incidence of childcare benefits in private industry, 1995-96

(in percent)

Employees with childcare benefits

All Small Medium and large

establishments establishments establishments

All employees ................................................. 4 2 7

Part-time employees .................................. 3 2 6

Full-time employees ................................... 4 2 8

Professional and technical ...................... 10 4 15

Clerical and sales ................................... 4 2 7

Blue-collar and service ........................... 2 (

1

) 3

Union ...................................................... 2 - 3

Nonunion ................................................ 5 2 9

Goods producing industries ................... 2 (

1

) 4

Service producing ................................... 5 2 10

Northeast ................................................ 6 1 12

South ...................................................... 4 2 7

Midwest .................................................. 3 2 5

West ....................................................... 4 2 8

 

1Less than 0.5 percent. Dash (-) indicates zero.