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OCR for page 7
1
Introduction
Because of the dramatic increase of dual-earner and single-adult families
and the related decline of households with full-time homemakers over the
last 25 years, an increasingly greater proportion of workers in the United
States have responsibilities for family care as well as for their jobs. Yet
little systematic attention has been paid to the effects of these workers' dual
responsibilities. The Panel on Employer Policies and Working Families
was asked to synthesize and assess the research on employer policies and
working families, to evaluate policy alternatives, and to assess the needs for
further research.
The rapid changes in the labor force participation rate of women, which
underlie the recent changes in the work force, have meant increased income
for many families, wider employment choices for women, and an expanded
supply of labor for employers. At the same time, women working outside
the home have less time, energy, and opportunity to attend to family and
community needs. The implications of this shift are gradually becoming
clearer but how to compensate for the loss remains a very divisive issue.
The sea change in composition of the employed population in the United
States raises questions of balance among competing social needs. Difficul-
ties have increased for employees who must balance their responsibilities to
work and family, especially single heads of families; for dependents who
need care and can no longer count on the services of a full-time home-
maker; and for employers who can no longer count on workers who give
their jobs undivided attention. The potential conflicts between work and
family obligations have implications for work performance, for the cumula-
tive stress on workers and their families, and for the health and well-being
of children the nation's future.
7
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8
WORK AND FAMILY: POLICIES FOR A CHANGING WORK FORCE
Finding appropriate ways to strike the balance must take into account the
diversity of the labor force, which includes larger proportions not only of
women but also of workers of different ethnic and cultural identities. Many
household needs vary with income and by family composition, as well as
with the terms of the job.
The current search for means to do justice to both families and jobs
occurs within a framework of employment-related laws and regulations de-
veloped over the last 75 years. They include a wide range of programs
designed to ameliorate social ills through the mechanism of employment
status: Social Security, Workers' Compensation and Unemployment Insur-
ance, equal employment statutes, occupational safety and health rules, and
regulations governing health insurance and pension plans.
The engine that keeps the system functioning is the economic reality of
individual enterprises in the private sector, whose dynamics vary dramati-
cally by such factors as sector, size, region, regulatory burden, quality of
management, and degree of unionization at least as many variables as
characterize family and worker differences.
FOCUS OF THE STUDY
Tensions related to work and families are receiving a great deal of atten-
tion. Members of the administration and of Congress, employers, unions,
and academicians all agree that families need to be supported and have
joined the debate about the mix of policies and programs that will best
advance this goal. Underlying the debate is the recognition that new ap-
proaches to benefits must more flexibly meet the requirements of a diverse
work force. So far, however, there is no consensus on what new approaches
should be taken.
Recognizing the complexity of these issues, it was believed that an ob-
jective, analytic review would shed much-needed light. The panel was there-
fore established to synthesize and evaluate what is known in three major
areas related to work and family: (1) the effects of different employer pol-
icies (such as work scheduling, benefit and leave policies) on families; (2)
the effects of employees' family composition (such as dual earner, single
earner, female headed) and responsibilities (such as child care, elder care)
on their work availability, commitment, and performance; and (3) the fac-
tors that influence employers to adopt new, family-related policies (such as
size, industry, economic conditions, public policies).
The panel's focus is the effect of two of the most central aspects of
American life paid employment and family on one another. So it should
not be surprising that both strongly held beliefs and differing definitions of
crucial terms could be found within the panel as well as across our society.
As the panel pursued its review, the immense size, complexity, and rich
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INTROD UCTION
9
variation of our national life made the critical task of developing inclusive
definitions very difficult
The definition of a family that we adopted from U.S. government data is
two or more people living together, who are related by blood, marriage, or
adoption. It comprises both a social and an economic unit. Employment is
defined here as paid employment or self-employment found primarily in the
private for-profit sector of the economy. We also recognize that much work
in the United States is performed by those employed by government and
nonprofit organizations; important variations among enterprises are noted
as they relate to the issues at hand. The majority of the workplace policies
and programs that are the focus of this report are nonwage benefits, includ-
ing leave policies, health insurance, employee subsidies, and resource and
referral programs as well as terms of employment such as scheduling and
location of work. Wages and salaries, the core of total compensation, while
crucial to family well-being, are not the focus of this review.
In the course of our deliberations we recognized that the functioning of
employers and the well-being of families are influenced by a broad set of
social issues and policies, and the role of employer policies must be placed
within this larger context. We reviewed briefly the range of employee ben-
efits that have been built up over the last 75 years and are already in
place such as pensions and health insurance and examined information
that sheds light on employers' reasons for implementing benefit changes.
Finally, we examined the extensive role of public policy in shaping the
economic and social environment for both businesses and workers.
Constraints
Because of the complexity of these issues, the limitations of available
research, and the diverse perspectives of the panel members, it is important
to clarify both the considerable constraints encountered and the shared as-
sumptions underlying this report. Essentially the panel's assignment was to
examine the facts underlying a current policy debate and to report on what
is known about the interactive effects of work and family. The nature both
of the question and of the focus of study makes this a difficult assignment.
The research literature in this area turns out to be quite sparse; this is
especially true of data on the effect of family status on various measures of
employee performance and especially on the important question of produc-
tivity. Herein lie at least two constraints that increase the difficulty of
attaining statistically useful data: productivity research in general has had
very little success beyond a few studies of production workers in the manu-
facturing industry. Nor are any great advances expected in measuring the
wide range of service, administrative, and professional and managerial tasks
that increasingly constitute the employment situation in the late twentieth
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10
WORK AND FAMILY: POLICIES FOR A CHANGING WORK FORCE
century. Similarly, research has been very sparse on what causes employers
to change benefit structures. Employers have come to make management
decisions on the basis of information they have on tardiness, absenteeism,
turnover, etc., that is thought to be related to productivity. They may also
use more informal assessments and an understanding of general practice.
What works to inform management practice does not in this case aggregate
to form a solid scientific base. We present the data that exist, but there is
very little solid research evidence on productivity and benefit structures.
A very different constraint on available data is the sensitivity of ques-
tions about how family affects work. Employees, particularly women, may
be anxious to maintain their often precarious position in the work force.
Employers, for their part, may be anxious to avoid charges of unfairness.
Our review of available research therefore draws on a wide range of related
sources, from data on macro trends to small-sample opinion surveys, in an
effort to display as comprehensively as possible what is known.
A final constraint is the lack of research and experience on the costs and
benefits of existing or proposed public policies. There is also disagreement
in interpreting the effects of particular programs; value judgments are fre-
quently involved. In light of this we have tried to make our assumptions
and value judgments explicit, and we have used caution in carefully evalu-
ating the probable gains and losses.
Framework
In the course of our review, the panel met five times and also held a
2-day workshop. The panel consulted a large number of experts from man-
agement, labor, government, public policy, and research. Our work ben-
efited from the work of scholars who prepared background materials crucial
to our deliberations on a wide range of topics; a list of the background
materials, their authors, and the experts we consulted is found in Appendix A.
Throughout the report, to the extent that they are described by the data,
we clarify the variations among businesses in size, type, extent of unioniza-
tion, and location, as well as the differences among workers in family sta-
tus, income level, gender, and ethnic characteristics. In assessing the policy
alternatives, we paid careful attention to three questions: who decides on
programs and policies, who provides them, and who pays for them?
Who Decides?
Employers inevitably play a large role in finding solutions to the prob-
lems of workers with dual responsibilities to jobs and families, although the
extent to which they play a proactive role, rather than simply making ad-
justments to stay competitive in local labor markets, varies considerably.
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INTROD UCTION
11
Some employers have adopted innovative policies on their own initiative,
taking into account different market conditions. But such actions have
frequently been taken in isolation, without regard to the broad implications
of the changes they introduce. At other times, employers have introduced
new programs as a result of collective bargaining. On occasion, federal and
state governments have imposed requirements.
Voluntary Benefits
During periods of labor shortages- whether general, regional, or for par-
ticular skills there is considerable incentive for employers to voluntarily
provide benefits that will attract and hold workers. For example, day care
centers to provide care for workers' children were established during World
War II (with a good deal of government support); in recent years, hospitals
are among the institutions that have most frequently provided them (Auer-
bach, 1988~. In both these instances, there was not only a labor shortage,
but also a specific need to attract women.
When there is an ample labor supply, incentives for business to provide
"extra" benefits are very limited. Tax policies encourage employers to pro-
vide new benefits voluntarily, but they reduce public-sector revenues and
are very uneven in their reach. Also, today's diverse labor force, coupled
with national economic and organizational shifts, presents an enormous chal-
lenge in designing fair and appropriate benefits.
Future labor shortages,
now predicted by a number of experts, may provide the impetus for better-
designed benefits for the new work force. However, to the extent that U.S.
industry must compete in world markets with firms having lower labor
costs, incentives to decrease total compensation costs will work against
benefit improvements unless greater productivity can be achieved.
Collective Bargaining
Organized labor is one source of pressure for employers to provide new
benefits. Freeman and Medoff (1984) found that unions have had a greater
effect on the provision of benefits than on wages. For a long time, how-
ever, unions, representing mainly male workers who were the family bread-
winners, were concerned almost exclusively with standard benefits such as
pensions, vacations, and health insurance. Recently, unions have become
more interested in family-oriented benefits in response to large numbers of
women members.
This trend is particularly pronounced among public-
sector unions (Cook, 19891. Overall change has nonetheless been slow, in
part because of the general weakening of the labor movement in organized
industries and the declining percentage of organized workers in the labor
force as a whole. Also, the fear that new programs would be offered only
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2
WORK AND FAMILY: POLICIES FOR A CHANGING WORK FORCE
at the expense of wages, which have in many instances barely kept up with
inflation, has been a constraint.
Government Actions
The benefit packages available today have, in significant part, been shaped
by government actions: tax policies (such as unemployment insurance and
Social Security), tax incentives (such as the dependent care tax credit), and
various regulatory policies. Those who seek to ensure that specific benefits
are available to all working people favor government action, because estab-
lishing benefits under law is the only way to ensure universal coverage.
Moreover, to the extent that productivity increases as a result of such
programs because firms can hire more qualified people, receive greater
loyalty from present employees, have a more stable labor force, or benefit
from better public relations net costs to employers will be reduced. It is
also true that, when all firms offer comparable benefits, businesses are in a
better position to shift the cost burden to consumers without being at a
competitive disadvantage to domestic competitors.
The difficulty with this course of action apart from serious philosophi-
cal differences about the appropriateness of government interventions in
labor markets is that adding benefits normally results in higher total wage
costs for employers, and the ability to provide them differs greatly among
employers. Increased labor costs may result in fewer jobs, as employers
attempt to offset increased benefit costs. Exemptions for small or low-wage
firms are the most frequently proposed means of minimizing job losses.
However, creating exemptions from benefit coverage often results in low-
wage workers' not being covered.
Small enterprises pose a particular challenge in crafting benefits legisla-
tion. Many benefits are more costly to small firms because they do not
profit from economies of scale. For example, health insurance is consider-
ably less expensive when it is purchased for large groups. Developing less
expensive alternatives for small firms has proved a difficult and elusive
goal. In addition, there is skepticism about governments' making the ap-
propriate decisions about what benefits are needed, in part because they
lack knowledge about the particular needs and problems of specific groups
of workers and employers.
Who Provides the Programs?
The policies and programs discussed in this report can be grouped into
two categories: terms of employment and direct services. Terms of em-
ployment such as leaves, work schedules, and work locations directly
affect the work process. Although they may be influenced by unions and by
OCR for page 13
INTROD UCTION
13
governments, they are available only to employees and can be implemented
only by employers. Services- such as insurance, counseling, care for chil-
dren, and care for the elderly can be provided and paid for by employers,
but they can also be provided by governments or communities, and they can
be sold in the marketplace. Services are beneficial not only to employees,
but also to people who do not work. The responsibility for paying for such
services is often shared in many different ways. Flexible spending ac-
counts, for example, enable employees to spend part of their earnings, in
pretax dollars, on programs they choose from among a specified assort-
ment. They are offered only by employers to employees; however, govern-
ment must establish enabling tax policies and bear the burden of reduced
revenues.
With respect to programs that are increasingly accepted as necessary,
or at least very desirable, the debate focuses on who should provide them.
Summers (1989) suggests that some people favor government programs
because they need not be restricted to workers and their dependents and
because the taxes needed to pay for them can be related to income. In
addition, they emphasize that governments are generally the only available
providers of benefits for nonemployed people and their dependents. Other
people prefer employer-provided benefits because they expect employers
to avoid government inefficiencies, and this approach offers more choices
for both employers and employees.
Governments local, state, and federal- are the representatives of the
community and act on its behalf. People with common interests, however,
can also form voluntary associations in order to pursue their goals. This
country has a long tradition of many worthy ends being achieved through
voluntary efforts. The social utility of voluntary programs is recognized in
the tax-exempt status accorded many voluntary organizations. Some of the
services needed by employees such as the provision of information about
the availability and quality of child and elder care programs-are probably
best provided in this manner. We note, however, that, as more women have
been entering the labor force, the supply of volunteers has diminished.
Over time this is likely to affect the ability of these organizations to func-
tion in their traditional capacity.
Who Pays?
The costs of nonwage benefit programs can be borne by the workers
themselves, sometimes in the form of lower incomes; by consumers, who
purchase the goods and services produced by the workers who need the
benefits; by investors, who receive profits from the sale of the firm's prod-
uct; or by taxpayers, as members of a society that benefits in a variety of
ways when everyone is adequately cared for. All too frequently it is simply
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4
WORK AND FAMILY: POLICIES FOR A CHANGING WORK FORCE
taken for granted that making the initial outlay is tantamount to carrying the
total burden. This is by no means necessarily the case: how the burden is
shared is largely determined by underlying economic forces.
To cover the cost of a new benefit, a firm may raise prices, but that is an
option only if sales will not fall so much as to do more harm than good.
Perhaps the most important factors influencing this situation are whether
competing firms also increase their prices, which is far more likely when
they provide the same benefits to their workers, and how responsive con-
sumers are to a change in the price of the particular product. Under favor-
able conditions, most of the additional cost can be passed on to consumers,
although even then output and employment of the firm would be expected
to decline somewhat, because it is unlikely that a business would be able to
find an equally favorable combination of price and quantity to sell under
the new conditions.
Alternatively, a business can pay lower wages or provide fewer of the
other benefits than would otherwise have been the case. If workers value
the new benefits at least as much as what they are giving up, there will be
no negative effect on the amount and quality of labor available. Should
they value them more, the supply of available workers might increase. If par-
ticular programs are worth more to some people than to others, however, it
will be easier to attract those workers who value the benefit and harder to
attract those who do not. There is some evidence that employers pay some-
what lower wages when benefits are increased (Ehrenberg and Smith, 19823.
A third alternative is for the federal (or other) government to help busi-
nesses that are confronted with providing increased benefits. This can be
done by offering direct subsidies, by permitting the employer to make pay-
ments in pretax dollars (as is the case for ordinary and necessary business
expenses), and by not taxing employees for the value of the benefits re-
ceived (which may induce employees to accept decreases in wage compen-
sation). Governments can also directly administer a benefits program but
require that it be funded to a greater or lesser extent through taxes. In any
case, either government expenses are increased or revenues are decreased,
and the costs are borne by the public, in the form of higher taxes, reductions
in other government programs, or an increase in the public debt. In sum,
the costs of employee benefits are likely to be shared by consumers, work-
ers, and the public. How the costs are shared, however, is likely to vary
considerably.
THE BROADER CONTEXT
While employer policies are inevitably part of any solution for work and
family conflicts, they are necessarily limited in scope and must be consid-
ered in a broader perspective. Individuals, employers, community groups,
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INTROD UCTION
15
and governments all have a stake in productive workers and families that
raise healthy and capable children. Government policies beyond those di-
rectly related to the terms and conditions of employment are beyond the
panel's charge. Employers do undertake policies and programs in each of
the following areas, and in that context they are discussed throughout this
report. Government policies that go beyond the role of employers are broader
than the panel's charge; however, because they are so intimately related to
the issues we are concerned with, we briefly consider the issues of eco-
nomic security, equal opportunity, dependent care, and health care.
Economic Security
In order to enjoy an adequate standard of living, all families need a
minimum income. Workers should also have the opportunity to obtain jobs
commensurate with their individual abilities, have access to health care for
themselves and their families, and be able to obtain satisfactory dependent
care. These goals are interrelated. Sufficient income will enable most house-
holds to purchase their own health insurance and provide their own depen-
dent care, although this may be a very expensive way to achieve these
goals. But even getting the best job warranted by a worker's qualifications
may not provide a family with an adequate income.
Currently, there are three main approaches to economic security for work-
ing people: require a sufficiently high minimum wage; offer supplements
to incomes, such as earned income tax credits for low-wage workers; and
improve workers' skills so they can compete for higher-wage jobs. Each is
a way of increasing the wage earnings of workers and preserving the dignity
of being self-supporting.
Equal Opportunity
The goal of equal opportunity for similarly qualified people is a very
broad one. The absence of equal opportunity inhibits both efficiency and
equity; failing to employ workers according to their individual abilities robs
both the worker and society. Workers lose the income and benefits that
would have been paid absent discrimination, and society loses the contribu-
tion that those workers could have made. Most people agree that govern-
ment should intervene in a case of overt discrimination. It is beneficial to
individuals and efficient for business when employers are prevented from
discriminating against qualified people solely on the basis of their race or
gender. What it takes to prove discrimination and in what form restitution
should come, however, are matters of continuing dispute.
More generally, as long as there is inequality in areas other than the
labor market, such as access to good schooling or unequal burdens of house
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6
WORK AND FAMILY: POLICIES FOR A CHANGING WORK FORCE
hold responsibilities, the group that is disadvantaged in these respects will
not have equal opportunity to acquire valuable work-related experience.
Dependent Care
.
The basic problem with respect to child care, so crucial to the well-being
of the family, the economy, and society, is that without assistance many
families cannot afford to pay the price of good-quality care. In addition,
however, there are chronic problems in arranging child and elder care, in
part because consumers, and even some providers, lack adequate knowledge
of how to evaluate quality. Research on dependent care is only beginning
and is very inadequate. Making information about existing facilities and
their quality more readily available would be useful, but arguments are also
made for a variety of other policies. Possibilities range from government-
operated centers to subsidizing private centers, making payments to fami-
lies, and providing tax deductions for dependent care expenses. All these
approaches exist already in some form and are currently being considered
further by policy makers.
No single approach will be best for both children and dependent adults
or for all families. Needs and preferences differ widely. Public and private
policies making possible a variety of approaches could ensure the availabil-
ity of care while preserving a range of choices. The availability of good,
affordable dependent care would benefit a large proportion of the popula-
tion directly and everyone indirectly by giving a better start to the next
generation. Therefore, the substantial costs that would be incurred, espe-
cially if caregivers were paid a high enough wage to attract and keep ca-
pable, responsible people, might well be justified.
Health Care
Most Americans believe that the country's health care system is serf
ously flawed. Health care costs are increasing much faster than other costs,
yet more than 30 million Americans have no health care coverage and
millions more have very inadequate coverage. In addition, the costs of
some types of health care, notably long-term care, are not covered under
existing insurance arrangements. Critics suggest that these shortcomings
help explain why the United States lags behind other advanced industrial-
ized countries in terms of important health indicators, particularly infant
mortality.
One proposed solution with a large government role is a system of uni-
versal health care not tied to employment. An alternative that would reduce
the need for an expanded government role is to require that employers
provide health insurance for all full-time workers and their families, with
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INTROD UCTION
17
prorated contributions for part-time workers. Because of high and rising
costs for health care, there is great resistance in the business community to
any required expansion of health care coverage. Although public and ex-
pert opinion favors broad reforms, no consensus exists on how to proceed
or on the appropriate roles for the public and private sectors. Addressing
problems in health care financing and delivery is both critical to the future
health of the society and the economy and part of the larger context in
which this report must be read.
ORGANIZATION OF THE REPORT
The panel's assigned tasks and the broader context establish the frame-
work for this report. We begin in Chapter 2 by tracing the history of family
structure and composition in the United States, the changing nature of em-
ployment, and the central role of the employment relationship to the social
welfare system. In Chapter 3 we review available research on the advan-
tages and disadvantages for adults, children, and the elderly of being mem-
bers of families in which all the adults are employed. Given extensive
changes in the family and the workplace and identified problems, we exam-
ine how dependents are currently cared for, as well as the outcomes and
costs of various types of programs in Chapter 4.
Chapters 5 and 6 provide a detailed review and evaluation of existing
programs offered by employers and ideas for innovative programs, includ-
ing what can be learned about their costs and benefits. Among these are
such standard benefits as sick leave and health insurance, as well as such
new family benefits as leave and flexible schedules. Chapter 7 examines
the practices of other advanced industrialized countries and what we can
learn from their experiences. Finally, Chapter 8 presents the panel's find-
ings and conclusions for policies, programs, and future research.
Representative terms from entire chapter:
dependent care
