Projects - FASC

Work-Life Supports: "The Great Equalizer" Work-life supports are employer-sponsored programs and practices that help workers balance the competing needs of work and family life. Work-life supports include flexible work schedules, employee assistance programs, child and elder care, and financial assistance. Numerous studies have shown that work-life benefits raise employee performance, loyalty and satisfaction. Small businesses that have difficulty competing with the salary levels and traditional benefits offered by big companies can use innovative work-life practices to attract and keep valued workers. They are so powerful that the U.S. Department of Health and Human Services' Child Care Partnership Project* calls work-life supports "the great equalizer" in today's competitive market-place.

*"Child Care Options for Small Businesses," from Engaging Business Partners: An Employee Toolkit Template, The Child Care Partnership Project, 1999. www.nccic.org/ccpartnerships

Project Mission

"Creating Family Friendly Small Businesses," a project of Family Action of Sonoma County, seeks to encourage small businesses to help workers support their families while carrying out their job responsibilities. Small businesses (those with fewer than 100 employees) make up the vast majority of Sonoma County companies.

Summary of Findings: Even small steps to support families can help these businesses, which are operating in an extremely competitive business environment, recruit and retain the workers they need. For workers, employer-sponsored benefits and supports such as health care, child care and flexible work hours can make an enormous difference in their ability to be both good workers and good parents. Major findings from our research include:

Many small businesses in Sonoma County would like to do more to help their employees balance work and family responsibilities. They are looking at work-life supports such as health care, flexible work hours and other supports that may help them recruit and retain valued employees.
These businesses recognize that many of their workers earn such low wages that it must be a struggle for them to pay for housing, child care and health care.
Small businesses face many obstacles to the creation of family friendly workplaces. These include the high costs of health and child care benefits as well as language, educational or cultural barriers that may keep employees from taking advantage of existing employer-sponsored programs.
Technical assistance and partnerships with other businesses and with community-based organizations can assist small businesses in providing more benefits and supports for their employees.

Snapshot of the 104 Companies Surveyed

95% are small businesses with 10-50 employees.

The majority, 59%, are in the service industries.

61% have been in business 20 years or longer.

95% offer some form of health insurance. (Most companies ask the employees to pay some portion of the premiums.)

65% pay a starting wage of less than $9 per hour.

Report Summary

This report examines the types of work-life supports that are currently offered by small businesses in Sonoma County, what keeps companies from providing additional benefits and programs to help families, and how companies in other parts of the country have overcome these barriers. The report concludes with technical assistance ideas to help employers expand their work-life supports.

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Methodology

Some Do It - The Benjamin Group Some small companies run child care centers and report that they and their workers thrive as a result. One nationally known example is the Benjamin Group, featured in Working Mother Magazine as one of the "100 Best Companies."* Headed by working mother Sheri Benjamin, the 73-person public relations and marketing communications firm has set up two child care centers serving 23 children. In addition, the company pays child care subsidies averaging $266 per child per month. According to Benjamin, her business has such a good reputation that she hardly needs the services of expensive recruitment firms, and the average tenure is about a third longer than at her competitors' companies.

*Business and Social Responsibility Education Fund Global Business Responsibility Resource Center, 1999. www.bsr.org.

Family Action used a variety of methods to collect information from small businesses in Sonoma County. We distributed a survey to over 500 businesses with between 10 and 150 employees, and received responses from 104 companies. In order to explore some of the intriguing questions raised by the survey results, we held a focus group with managers of seven small businesses, ranging in size from 16 to 200 employees. Researchers also conducted phone interviews with seven food service and retail businesses: industries that were not represented in the focus group and that employ large numbers of low-income workers. Researchers conducted telephone interviews and Internet research on promising small business models in other parts of the country. The businesses surveyed were not a scientifically selected sample and the focus group participants were self-selected. The information in this report cannot be used to describe all businesses in Sonoma County. Despite the research limitations, Family Action believes the information in this report is rich and informative, and points the way to action steps that can help both employers and workers.

Findings

When companies were surveyed about strategies for keeping valued employees, the most frequently cited answer was the offering of flexible hours (sometimes known as "flex time"). All the focus group participants, with one exception, said they were flexible about work hours depending on employee needs. Typically, workers with family emergencies were allowed to leave the work site, and make up the time later. Some employees were allowed to work fewer hours or do some of their work at home after having babies, others came in earlier so they could take off one day a week to attend school. Most companies left decisions about flex time to the discretion of managers; only two businesses reported having written policies. Several focus group attendees commented that at times managers had trouble dealing with the varying schedules. But the six out of seven who offered flex time felt it contributed to employee morale and loyalty.

The employee share of costs for health insurance makes it impossible for some workers to join company plans or to pay additional money to cover their families.
Lack of English language skills and low educational levels make it difficult for some workers to understand explanations of benefits that include terms such as "cafeteria plans" and "pre-tax dollars."
Employees choose not to participate in programs that employers think would be attractive to workers, such as English language classes.

The research looked at employer responses to three kinds of work-life supports particularly important to working families: flexible work hours, health care and child care.

Flexible Work Hours

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Health Care Benefits

Health insurance is one of the most valuable benefits a company can offer. Unfortunately, it is also one of the most expensive. Health care costs are rising again, and the premiums paid by small businesses are rising faster than those for larger companies.* One focus group participant reported that coverage from a local health care provider will cost his business 9% more next year. Two local health-care plans will increase their premiums 9% in the year 2000.**

Not surprisingly, small businesses around the country are much less likely than big companies to provide health coverage. Given this, Family Action was surprised to see that 95% of the companies surveyed reported offering health insurance for their employees. One of the focus group participants, representing a food manufacturing company, was surprised when her company conducted an earlier survey of similar businesses in Sonoma County. This survey also found a large number of businesses providing health insurance not only for employees but also for their families.

Employers Offer Benefits, Workers Turn Them Down
Several business managers were troubled by the fact that workers did not sign their families up for health care coverage, given that their companies were willing to pay a percentage of costs. The managers commented that their workers seemed to lack skills in managing family finances, since they turned down family coverage and ended up paying for expensive emergency room care. However, it is more likely that these workers simply cannot afford the costs of company plans. A recent study by the nonpartisan Center for Studying Health System Change in D.C. showed that 20% of workers who were eligible for coverage didn't take advantage of it because they could not afford the costs. The study also pointed out that in companies paying lower wages (which are typically smaller businesses), the employers paid less toward the cost of health care. Family Action's Realities Report "Child Care - A Quiet Crisis for Sonoma County" reported that the high costs of housing and child care in Sonoma County may leave no room in a family budget for health insurance. For example, a salesperson earning $1,557 a month may be paying $700-800 a month for an apartment and $454 a month for child care. This leaves little money to pay health care costs of $200 to $400 or more a month to cover a spouse and one child. Even two parents working at these low wages may not be able to afford the company health care plan.

However, the health care benefits picture is complex, as companies pay varying portions of both employee and family benefits. If the seven businesses that participated in the focus group and interviews are typical, many small companies offer health insurance plans, but few pay the full cost. Most part-time employees received either reduced- cost benefits or no benefits at all.

Child Care and Cafeteria Plans

Very few companies offered assistance with child care, only 9% reported providing any help. However, child care ranked high on the list of benefits companies would like to offer as an incentive for employees to stay on the job. Of the 32 companies responding to the question, 66% listed child care as a benefit they would like to offer.

The hard part is figuring out what small businesses can do to help with these needs. Many focus group participants were leery of operating their own child care centers citing cost and liability concerns. Others noted that employees without children would feel left out (a problem businesses often solve by offering dependent care benefits that cover both child and elder care).

One manager from a fast-growing high tech firm offered another solution. Her company plans to offer a child care subsidy, which will allow workers to choose the kind of care they want for their children. Several companies have cafeteria plans, which offer an indirect method of providing child care benefits. Cafeteria plans allow workers to choose from a menu of benefits in addition to a core set of benefits provided to everyone.

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Technical Assistance:

A Key Ingredient to Help Small Businesses Help Workers Our research uncovered a number of obstacles faced by small businesses in doing more with benefits and work-life supports for their workers. For many small businesses these are new ventures; often, the company has no experience in setting up or managing these programs. Other companies feel their workforce is too small to justify the expense of administering their own programs. The research has also uncovered some potential solutions involving technical assistance and the formation of partnerships. Ideally, those businesses having the most experience with work-life supports would become resources to businesses interested in providing such supports to their employees. This can be established through a direct mentoring relationship or more simply with an information sharing and referral arrangement. Mentor businesses can provide more support during the implementation phase and be available for consultation as businesses become familiar with work-life supports. Since many businesses are interested in offering the same work-life supports, collaborations may develop that would allow these businesses to benefit from economies-of-scale.

Dependent Care Spending Assistance Plan
An Easy Benefit for Businesses One of the offerings typical of cafeteria plans is a Dependent Care Spending Assistance Plan (DCAP). This allows employees to set aside money each pay period for child care. The money is taken out of their paychecks before taxes are deducted (giving it the name "pre-tax dollars"), thus lowering the amount of tax money workers will owe at the end of the year. DCAPs also help companies save on taxes, since they do not have to pay Social Security, federal employment and most state and local taxes on the amounts set aside for dependent care. Once established, cafeteria plans are very easy to administer, and popular with many small businesses. Some businesses, however, find them too expensive to administer for a small workforce. In addition, a number of managers said they have had trouble persuading their workers to participate in DCAPs. This may be because low income workers typically live from paycheck to paycheck, and cannot afford the reduced cash flow. In addition, the concept of "pre-tax dollars" may be confusing. IRS rules and jargon are hard enough for most people to figure out, and they are especially daunting for workers with lower educational levels and/or limited English. Several managers reported that when they took the time to explain benefits such as cafeteria plans and DCAPs carefully and repeatedly, employees were able to understand and take advantage of them.

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Family Action plans to continue the work started with this report. We will pursue opportunities to assist small businesses in overcoming barriers to providing work-life supports. We are looking to develop partnerships and collaborations that will enable groups of employers to do what single employers cannot afford to do on their own. If you have suggestions or want to help, please contact us.

Family Action thanks the following people for their help with this report: Small Business Practices Subcommittee

Diana Altschuler
Sonoma County Jewish Family and Children's Services
Lee Hilbert
Karen Clem
Sonoma County Business Journal
Jo Sandersfeld
Santa Rosa Memorial Hospital

Consultants

Judy Pope
Author Eleanor Smith
Focus Group Consultant

Staff

Suzie Shupe
Director, Family Action of Sonoma County
Terese Voge Policy Project Coordinator
Hymala Stevens Assistant

Small Businesses Collaborate to Help Workers

All around the country small businesses are forming partnerships and collaborations to help workers. At the same time, they help themselves retain valuable employees, share costs and benefit from economies-of-scale. Here are a few examples:

Industrial Park Collaborative Serves Very Small Businesses In 1988, A & A Manufacturing, located in the New Berlin Industrial Park in Wisconsin, lost three valued employees who could not find child care. Responding to this crisis, A & A joined with other small businesses in the park to establish the New Berlin Child Care Center, which now serves over 200 children. Most of the businesses that sponsor the center have fewer than 100 employees.

*"Child Care Options for Small Businesses," from Engaging Business Partners: An Employee Toolkit Template, The Child Care Partnership Project, 1999. www.nccic.org/ccpartnerships

The Boulder Business Dependent Care Association contracts with a private firm, the Work Options Group, to develop a menu of work-life supports and benefits for workers. The menu includes back-up child care when regular caregivers become ill, information and referral on finding child care, and school age child care vouchers worth up to $50 per year per child.

(Work Options Group can be reached at 1.888.610.2273.)

Leadership from the Chamber of Commerce In Vidalia, Georgia, the Toombs County Chamber of Commerce is leading a consortium of about ten businesses that will soon open one or more child care centers. The businesses range in size from seven employees to 1,000. By providing much needed child care in this fast-growing, highly competitive area of the state, consortium members will be better equipped than their competitors to attract new workers and keep the ones they've got. The consortium has hired the nonprofit International Children's Resource Center (ICRI) to help with the planning. ICR's Executive Director, Ken Jaffe, reports that, contrary to what many businesses believe, liability insurance for child care centers is inexpensive, broad in coverage and easy to obtain.

(ICRI can be reached at 510.644.1000.)

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Technical Assistance May Provide Some Answers

Technical assistance ideas suggested by the research include:
Help employers inform employees about the government funded Healthy Families program. This state program provides health insurance for children of families who earn up to 250% of the federal poverty levels (which for a family of 4 comes to $41,750). Community based organizations working to expand Healthy Families could contact small businesses through local Chambers of Commerce or other professional associations and arrange to make presentations about the program and provide written information, which is available in a variety of languages.
Help small businesses explore all their child care options. The many choices include: joining with other small companies to set up a child care center; providing employees with child care stipends; contracting with child care centers to reserve spaces for employees; and working with child care resource and referral agencies to help employees find affordable, quality child care.
Set up centralized bookkeeping and other administrative services to help small businesses start and manage DCAP programs and cafeteria plans, at fees affordable to small companies.
Encourage/make it easy for small businesses to join public/private community partnerships working to increase support services such as affordable child care.

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The mission of Family Action of Sonoma County is to effect long term policy change that will have a positive impact on the lives and health of children and their families in Sonoma County. Family Action of Sonoma County is funded principally by The California Endowment and works in partnership with the Sonoma County Community Foundation and California Parenting Institute. The mission of the Sonoma County Child Care Planning Council is to advocate, advise and plan for quality, accessible, and affordable child care services in Sonoma County.

FAMILY ACTION OF SONOMA COUNTY
3650 Standish Avenue
Santa Rosa, CA 95407

PHONE: 707-586-3032
FAX: 707-585-2158
WEBSITE: www.fasc.org

SONOMA COUNTY CHILD CARE PLANNING COUNCIL
P.O. Box 6011
Santa Rosa, CA 95406