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/_ 13.3 : a-*?

day
care
services:
industry’s
involvement
Bulletin 296

/

S1

Women's Bureau
Workplace Standards Administration

U.S. Department of Labor

.

UL * 3 1971

day
care
services:
industry’s
involvement
Bulletin 296
1971

Women's Bureau
Elizabeth Duncan Koontz, Director
Workplace Standards Administration
Robert D. Moran, Administrator

U.S. Department of Labor
J.D. Hodgson, Secretary

For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402 - Price 25 cents

FOREWORD

The Women’s Bureau, in its efforts to focus attention on the
serious problem of day care needs and to help bring about solu­
tions, continues to explore developments in the field of day care
services as they relate to working mothers.
As our economy expands its utilization of womanpower and
as our Nation grows more concerned with the development of
its children, especially during their early formative years,
additional ways must be found to fill the gap between what is
available in child care and what is needed.
At this time there is no one solution to meeting the greatly
expanded need for child care services, but it is hoped that in­
dustry, which clearly has a stake in this, will accept responsi­
bility to help solve the problem. A number of hospitals, a few
companies, two unions, and several Federal Government agen­
cies are leading the way. Others are maintaining a lively inter­
est in day care, and some are developing plans for active
participation. However, much more remains to be done.
This is the first published report by the Government which
consolidates data on industry day care programs, and we hope
it will spur additional activity in the provision of these serv­
ices. It was prepared by Arthur Besner, with contributions
from Beatrice Rosenberg, under the supervision of Pearl G.
Spindler, Chief, Division of Legislation and Standards.
We wish to thank those companies that cooperated in provid­
ing information and in reviewing the data presented here.
ELIZABETH DUNCAN KOONTZ
Director, Women’s Bureau

in

CONTENTS

Page
FOREWORD....................................................................

iii

INTRODUCTION ..........................................................

1

LABOR FORCE PARTICIPATION OF WOMEN ...
Trends ......................................................................
Industry’s Reliance Upon Women Workers..........

2
2
3

THE DAY CARE PROBLEM......................................
The Need..................................................................
Child Care Arrangements......................................
Filling the Gap........................................................

6
6
7
7

CURRENT INDUSTRY DAY CARE PROGRAMS ..
Centers Operated by Companies............................
Companies Operating Day Care Centers (Sum­
mary) ....................................................................
Additional Centers Operated by Companies..........
Centers Involving Unions ......................................
Centers Operated by Hospitals..............................
Centers for Children of Federal Employees..........

8
8
11
13
14
16
17

ALTERNATIVE ROLES FOR INDUSTRY
INVOLVEMENT ........................................................
Leadership-Catalyst Role in the Community........
Financial Donations................................................
Assisting Employees To Find Day Care................
Other Types of Industry Involvement..................

19
19
20
20
21

IV

Page
COSTS OF ESTABLISHING AND OPERATING
DAY CARE CENTERS............................................
Capital Outlays........................................................
Operating Costs ......................................................
Subsidies ..................................................................
TAX ALLOWANCES AND EXEMPTIONS FOR
DAY CARE..................................................................
Allowances for Businesses......................................
Allowances for Users..............................................
Exemptions for Nonprofit Organizations..............
Historical developments in industry
DAY CARE PROGRAMS..........................................
Pre-World War II Period........................................
World War II Period..............................................
Post-World War II Period......................................

v

22
22
23
23
24
24
26
28
29
29
31
33

INTRODUCTION

While the number of working mothers and the need for child
care services have been rising steadily over the years, industry
has shown only an occasional interest in providing services for
the children of these workers. In recent years, however, there
has been increasing concern. Yet, this interest has been trans­
lated into actual programs in only a limited number of in­
stances.
Information about industry-related day care operations has
been revealed sporadically through the various news media and
at day care conferences sponsored by the public and private
sectors. To learn more about industry’s involvement, the Bureau
requested the assistance of State licensing agencies and
chambers of commerce in identifying private concerns that
operate day care programs for children of their employees or
as a public service available to other children. Further, the
Bureau contacted various components of industry and re­
searched printed material on the subject. The findings are pre­
sented here. There may be additional industry-sponsored day
care programs that have not been brought to the attention
of the Bureau.
This bulletin provides an overview of the need for services
for the children of working mothers and reports on the past
and present contributions of industry. It also discusses income
tax allowances and gives examples of unique programs which
suggest various ways in which industry can play a more real­
istic role in day care development. Franchise and other pro­
prietary operations are not included in this bulletin.

1

LABOR FORCE PARTICIPATION OF WOMEN

TRENDS
Overview.—Today’s increasing interest by industry and
business in day care parallels the rise in the participation of
women in the labor force.
Women accounted for about two-thirds of the total increase
in the labor force from 1940 to 1970. There were 31.5 million
women 16 years of age and over in the civilian labor force in
1970.
Manpower needs and consumer demands of our expanding
economy, as well as changing social and cultural patterns, are
expected to bring ever-increasing numbers of women into the
labor force.
Participation of mothers.—Labor force participation of
mothers has risen even more dramatically than that of other
women. From 1940 to 1970 the labor force participation rate
of mothers rose almost 5 times, from 9 to 42 percent (table
1). In contrast, the rate of all women rose only 1% times,
from 28 to 43 percent.
Table 1.—Labor Force Participation Rates of Mothers and of All Women,1
Selected Years, 1940—70
Year
1970
1967
1964
1960
1950
1940

Mothers'2
42.0
38.2
34.5
30.4
21.6
8.6

...........................................................
...........................................................
...........................................................
...........................................................
..........................................................
...........................................................

All women3
42.6
41.1
37.4
36.7
33.1
28.2

1 Includes women 16 years of age and over in 1967 and 1970 but 14 years and over in
earlier years.
2 Data are for March of each year.
3 Annual averages.
Source: U.S. Department of Labor, Bureau of Labor Statistics; U.S. Department of Com­
merce, Bureau of the Census.

2

Since 1948 1 the proportion of mothers who work has stead­
ily increased about 1 percentage point a year. Between 1948
and 1960 the participation rate rose more slowly for mothers
with children under 6 years of age than for those with children
6 to 17 years only (see chart). Between 1960 and 1967 the
rate for mothers of young children increased much faster
than for other mothers, but over the next 3 years the rise was
the same. Fifty-two percent of the mothers with children 6 to
17 years only and 32 percent of those with children under 6
were in the labor force in 1970.
INDUSTRY’S RELIANCE UPON WOMEN WORKERS
A number of industries rely heavily upon women workers.
The industries in which 260,000 or more women were em­
ployed in April 1970 are shown in table 2. Women were more
than two-thirds of all workers in apparel and other textile
products manufacturing, general merchandising, and medical
and other health services. They accounted for more than half
of all employees in many other industries, including banking,
insurance, eating and drinking places, and personal services.
1 Comparable data not available for earlier years.

3

MOTHERS ARE MORE LIKELY TO WORK TODAY
THAN EVER BEFORE

Labor Force Participation Rates of Mothers, by Age of Children,
Selected Years, 1948-701

Percent
0

20

40

GO

With children 6 to 17 years only
With children under 6 2

■

'

1 Includes women 16 years of age and over in 1967 and 1970 but 14 years and over
in earlier years. Data are for March of each year, except 1948 when data are for April.
2 May also have older children.
Source: U.S. Department of Labor, Bureau of Labor Statistics; U.S. Department of
Commerce, Bureau of the Census.

4

Table 2.—Industries Employing 250,000 or More Women, April 1970
Employed women

Number

Industry
Finance, insurance, and real estate:
Banking ..................
Insurance carriers ..................................................
Government:
Local ....................................................
State ..........................................................................
Federal ..................
Manufacturing:
Apparel and other textile products......................
Women’s and misses’ outerwear ......................
Men’s and boys’ furnishings ............................
Electrical equipment and supplies ......................
Fabricated metal products ....................................
Food and kindred products....................................
Textile mill products ..............................................
Printing and publishing ........................................
Machinery (except electrical) ............................
Retail trade:
General merchandise stores....................................
Department stores ..............................................
Variety stores........................................................
Eating and drinking places....................................
Food stores................................................................
Grocery, meat, and vegetable stores................
Apparel and accessories stores ............................
Drug stores and proprietary stores......................
Services (miscellaneous) :
Medical and other health ......................................
Hospitals ................................................................
Personal ....................................................................
Laundries and drycleaning plants....................
Educational .........................................
Colleges, universities ..........................................
Miscellaneous business ............................................
Hotels, tourist courts, and motels........................
Transportation and public utilities:
Communication..........................................................
Telephone ..............................................................
Wholesale trade ..........................................................

As percent
of total
employed

655,700
541,900

63
52

3,622,100
1,115,500
767,000

50
42
27

1,117,800
364,800
317,100
769,400
256,100
431,000
446,700
359,300
306,300

81
85
84
39
18
25
46
32
15

1,552,300
1,014,600
251,300
1,411,300
608,600
509,800
467,500
263,300

69
69
78
57
35
33
66
60

2,456,400
1,508,900
620,700
336,100
575,200
284,100
523,200
340,500

81
81
62
66
48
41
34
51

552,000
505,400
869,000

50
55
23

Source: U.S. Department of Labor, Bureau of Labor Statistics.

5

THE DAY CARE PROBLEM

THE NEED
Projections made in 1967 indicated that the number of chil­
dren born in each of the following 10 years would increase
sharply.2 As of July 1969 there were 22 million children aged
5 and under. In 1969 there were 4.5 million children under 5
years of age with mothers in the labor force.3 It has been esti­
mated that day care in licensed centers and family homes is
available for only about 640,000 children.4 It has also been
estimated that those who need such services total 8 to 10 times
that number.5 In addition, there is a great need for after-school
day care programs for children of school age. The need for
day care will continue to increase in the decade ahead because
of:
a growing number of children aged 5 and younger;
the accelerating trend in employment of mothers;
increased emphasis on providing child care services for
welfare mothers who desire to work;
widespread awareness that a child’s early years are of
crucial importance to his future.
2 U.S. Department of Commerce, Bureau of the Census: Current Popula­
tion Reports, P-25, No. 381. 1967.
3 U.S. Department of Commerce, Bureau of the Census: “Statistical Ab­
stract of the United States.” Table 64. 1970.
4 U.S. Department of Health, Education, and Welfare: March 1969 pre­
liminary data. (March 1970 estimate is 778,000 children.)
5 House Republican Conference, Task Force on Education and Training:
“Report on Programs for Early Childhood.” In Congressional Record, April
2, 1970.

6

CHILD CARE ARRANGEMENTS
There is no indication that dramatic changes have taken
place since 1965, when the most recent survey of child care
arrangements of working mothers was made. The survey was
limited to mothers who worked 27 weeks or more, either part
time or full time, in 1964 and who had at least one child under
14 years of age living at home. It showed that these 6.3 million
mothers had a total of 12.3 million children under 14 years;
of these children, 3.8 million were under 6 years.6
Less than half (47 percent) of the preschool children were
cared for in their homes; not quite a third (31 percent), in
someone else’s home; a little more than 5 percent, in group
care centers; and the remainder, under other arrangements.
Some were cared for by their mother while she worked; others
—“latchkey children”—cared for themselves.
FILLING THE GAP
The gap has been widening between the number of children
of employed mothers and the number of available places in
day care facilities. A partial answer to filling this gap lies
with industry. While some employers do provide such services
and many more have expressed interest in establishing day
care centers for their employees’ children, there remains an
enormous task ahead.
6 U.S. Department of Health, Education, and Welfare, Social and Rehabili­
tation Service, Children’s Bureau, and U.S. Department of Labor, Wage and
Labor Standards Administration, Women’s Bureau. Low, Seth, and Pearl G.
Spindler. “Child Care Arrangements of Working Mothers in the United
States.” Children’s Bureau Pub. No. 461-1968.

7

CURRENT INDUSTRY DAY CARE PROGRAMS

There are several ways in which industry is involved in
child care arrangements for the children of employees. Of
particular interest is the variety of approaches utilized, al­
though only a small number of companies and two unions are
involved directly and a few others, indirectly.
CENTERS OPERATED BY COMPANIES
There are at least 11 companies operating day care centers
for their employees’ children. However, when preparation of
this bulletin was begun in July 1970 the Bureau had received
information on only nine of these: Avco Economic Systems,
Dorchester, Mass.; Curlee Clothing Co., Mayfield, Ky.; KLH
Research & Development Corp., Cambridge, Mass.;7 Mr. Ap­
parel, Inc., High Point, N.C.; Skyland Textile Co., Morganton,
N.C.; Tioga Sportswear, Fall River, Mass.; Tyson Foods, Inc.,
Springdale, Ark.; Vanderbilt Shirt Factory, Asheville, N.C.;
and Winter Garden Freezing Co., Bells, Tenn. The two com­
panies whose day care programs the Bureau learned about
since July 1970 are Control Data Corp. of Minneapolis, Minn.,
and Bro-Dart Industries of Williamsport, Pa. Brief descrip­
tions of their programs appear on pages 13 and 14.
Types of businesses.—Of the nine companies, five—Curlee
Clothing, Mr. Apparel, Skyland Textile, Tioga Sportswear,
and Vanderbilt Shirt—manufacture textile products. Avco is
engaged in printing and publishing; KLH produces sound
equipment; and Tyson Foods and Winter Garden Freezing
7 The KLH center, now primarily a community-focused and proprietary
operation, is discussed as industry focused, which it had been originally.

8

are food processors. The work forces of most of these com­
panies are predominantly female.
Dates of establishment.—Only one of the companies—Curlee
Clothing—established its day care program before 1962. Tioga
Sportswear started its program in 1962; Winter Garden
Freezing started its in 1967; and both KLH and Mr. Apparel
started theirs in 1968. Skyland Textile, Avco, and Vanderbilt
Shirt established their programs in 1969. The most recent
program is that of Tyson Foods, established in 1970.
Facilities.—All of the day care centers are within, adjacent
to, or adjoining the plant facilities. The centers operated by
Curlee Clothing, Mr. Apparel, and Winter Garden Freezing
are converted residences. The KLH facility is a renovated cold
storage warehouse. Tioga Sportswear rents a church school
building directly across from the plant. The program of Avco
is conducted on the plant’s second floor, away from machinery
maintained on the basement and first floor levels. The facility
used by Vanderbilt Shirt is contiguous to the plant but without
entrances into the plant. Skyland Textile and Tyson Foods
constructed facilities specifically for their day care programs.
The Skyland Textile structure was built so that conversion
to manufacturing processes would be possible.
Eligible participants.—Participation in the day care pro­
grams of Curlee Clothing, Tioga Sportswear, and Tyson Foods
is restricted to employees’ children. Skyland Textile, which
limited participation to employees’ children and grandchildren,
began accepting children of nonemployees as of August 1970.
The other centers permit children of nonemployees but give
preference to employees’ children. Vanderbilt Shirt restricts
admission to children of working mothers, with preference to
children of its employees.8 Day care is provided to children of
AFDC (Aid to Families with Dependent Children) recipients
in the programs of Avco and KLH under a contractual ar­
rangement with the Massachusetts State Welfare Depart­
ment. KLH’s contractual arrangements also include the Mas­
sachusetts Institute of Technology and individual community
residents.
Ages of children.—Most of the centers accept children from
2 to 6 years of age. Tioga Sportswear sets a minimum age of
3 and a maximum of 5. Winter Garden Freezing also has a
8 This appears to be the only company with this restriction.

9

minimum age of 3 years; and KLH, 2% years. Under a special
arrangement with the Massachusetts Department of Public
Health, Avco may enroll children as young as 3 months.
Capacity and enrollment.—With the exception of Skyland
Textile’s center, which can accommodate 118 children, the ca­
pacity of the centers ranges from 40 to 65 children. Tyson
Foods expects to expand its facility to accommodate 100 chil­
dren if employees’ favorable reaction to the program continues.
The centers of only three companies—Curlee Clothing,
KLH, and Winter Garden Freezing—are operating at capac­
ity. During school vacation periods enrollment at several cen­
ters is much lower because families make other arrangements
for their children. To bring overall enrollment closer to capac­
ity, some of the companies permit or plan to permit enrollment
of children of nonemployees.
Days and hours of operation.—Mr. Apparel and Skyland
Textile operate their programs 5% days a week. The other
companies operate 5 days a week, but occasionally Tyson
Foods operates 5% days a week and Curlee Clothing, 6 days.
All centers are open at least 8 hours a day. Six companies
operate their centers 10 or more hours daily.
Staffing.—Staffing patterns vary considerably, but all cen­
ters have at least three employees. Several companies obtain
the part-time services of social workers and health personnel,
such as nurses, pediatricians, and psychiatrists, from public
agencies. KLH, Skyland, Mr. Apparel, and Tyson Foods each
have a director, and Avco has two codirectors. Several pro­
grams emphasize the career development of subprofessionals.
Skyland Textile has actively sought training opportunities
for staff members and was responsible for the establishment
of a 72-hour course in child development at Western Piedmont
Community College.
Fees.—Seven of the centers charge fees. Curlee Clothing
does not charge fees, and Tioga Sportswear charges only 75
cents a day per child for the hot lunch.
KLH, Mr. Apparel, and Vanderbilt Shirt charge consider­
ably higher fees for children of nonemployees than for children
of employees. Avco does not make this distinction.
The lowest fee was $1 a day per child in the program of
Tyson Foods, but since September 1970 the charge is $1.50 a
day. The highest fee is $37.50 a week per child.
10

COMPANIES OPERATING DAY CARE CENTERS*
Company and location

Number of
women employees

Date center
established

Facility

Eligible participants

Ages of
children

Capacity

Number enrolled

Avco Economic Systems
Corp., Roxbury Printing
and Publishing Div.,
Dorchester, Mass.

25-30. (Total em­
ployees, 115.)

June 24, 1969

Plant’s second floor (plant machinery
in basement and on first floor).
T-shaped room, partitioned into four
classrooms. Floor space is about 2,500
square feet.

Children of employees;
children of nonemployees
within Roxbury-Dorchester community. Non­
employees’ children
predominate; 21 percent
are from families re­
ceiving public assistance.

3 mos.-6 yrs.

65 children

Curlee Clothing Co.,
Mayfield, Ky.

560. (Total em­
ployees, 625.)

About 1936

Two-story house adjacent to plant.

Children of employees.

2-6 yrs. (Un­
til 1965, age
limit was 12
yrs.)

45 children

40-45 (Approximately 100
children up to 1965, when
school-age children were no
longer accepted in order to
reduce enrollment, as re­
quired for State licensing.)

KLH Research &
Development Corp.,
Cambridge, Mass.

300. (Layoffs have
reduced number.)

July 22, 1968

Renovated cold storage warehouse
adjacent to plant. Renovations ex­
ceeded cost of $40,000. Floor space is
10,000 square feet. Contains three
classrooms, kitchen, large common
room used as indoor play area and
lunchroom, two toilet areas, health
room, and offices. Building leased for
$12,000 a year plus utilities.

Children of employees
and nonemployees, in­
cluding those from fam­
ilies receiving public
assistance.

2%-6 yrs.

60 children

Mr. Apparel, Inc.,
High Point, N.C.

460. (Total em­
ployees, 500.)

Nov. 1968

Separate building opposite plant.
Renovated two old homes; glass en­
closed on two sides and connected to
large room; three large rooms, three
bathrooms, kitchen, and office.

Children of employees
and, if space permits,
children of nonemploy­
ees. (Only one nonem­
ployee child currently
enrolled.)

2-6 yrs.

Sky land Textile Co.,
Morganton, N.C.

750 in three plants
in Morganton.
(About 200 have
children eligible for
participation.)

July 7, 1969

Separate building adjacent to plant.
Floor space is 6,400 square feet.
Eight classrooms (bathroom in each
classroom), isolation room, kitchen
and storage space. Construction cost
$98,350.

Children and grandchil­
dren of employees of the
three plants in Morgan­
ton. Children of nonem­
ployees eligible as of
August 1970.

Tioga Sportswear Div.,
Arnav Industries, Inc.,
Fall River, Mass.

135. (Total em­
ployees, 175.)

July 6, 1962

Rented church school building across
from plant.

Tyson Foods, Inc.,
Springdale, Ark.

50 percent of work
force. (Total em­
ployees, 2,200.)

May 18, 1970

Vanderbilt Shirt Factory,
Asheville, N.C.

306. (60 have chil­
dren eligible for
participation.) (Total
employees, 340.)

Winter Garden Freezing
Co., Bells, Tenn.

About 60 percent of
total employees at
all plants. (No
estimate on total
number of employees
due to seasonal
nature of industry.)

46

Days and hours
of operation

Staff1

Estimated
operating costs a

Company subsidies

6 employees (2 codirectors,
4 teachers) ; volunteers from
nearby colleges. Emphasis
on career development of
subprofessionals. State De­
partment of Public Health
provides social worker,
nurse, pediatrician, and psy­
chiatrist periodically.

$15 a week per child for
first 2 children in fam­
ily; $10 a week for
third child. Fees are the
same for children of
employees and nonem­
ployees.

$40-$50 a week per
child.

Entire initial cost; 44 per­
cent of operating cost,
space, utilities, custodial
services. (Use of company
cafeteria reduces food ex­
pense to 90^ a day per
child, including breakfast,
lunch, and snacks.)

6 days a week;
occasionally 6 days.
7:30 a.m.-5:30 p.m.

4 employees, including 2
part-time workers.

No fees.

$1,500 total monthly
operating cost.

Entire cost.

60

5 days a week.
6:45 a.m.-5:30 p.m.

Director, 5 teachers, 10
teachers’ aides, administra­
tive assistant. Community
agencies provide public
health nurse, pediatrician,
and psychiatrist.

For employees’ children
fee is $10 a week per
child. Balance of $27.60
is paid by company. Fee
for children of nonem­
ployees is $37.50 a week
per child.

Total operating bud­
get for fiscal year
1969 was $117,244.
Principal source of
funds was a Chil­
dren’s Bureau grant
of $112,118. The
Children's Bureau
grant for fiscal year
1970 was $147,782.

20 percent of operating
cost; services-in-kind esti­
mated at $6,000.

40 children

36

5% days a week.
7 a.m.-4:30 p.m.

4 employees, including a
registered nurse who serves
as director and 2 teachers.

$8 a week per child for
employees’ children; $16
a week for nonemploy­
ees’ children.

Not available.

Entire initial cost of
$15,000; estimated one-half
of operating cost; general
services.

2-6 yrs.

118 children

84 (Fewer in summer
months.)

5% days a week.
6:30 a.m.-5 p.m.

10 employees, including a
director and 7 teachers.
Plans are to add another
teacher.

For employees’ children
the weekly fees are
$11.50 for 1 child; $18,
2 children; $24, 3 chil­
dren. For nonemployees’
children the fee is $14
a week per child.

$55,000 total operat­
ing cost a year. (Ex­
pect operating cost
to be met through
fees, with attainment
of full capacity and
modification of fees.

Entire initial cost of
$114,895; estimated 35
percent of operating cost;
secretarial and maintenance
services. Subsidy for first
year was $32,000.

Children of employees.

3-5 yrs.

50 children

30-40

5 days a week.
7:45 a.m.-4:30 p.m.

3 employees, including a
former schoolteacher, and
a consultant.

75^ a day per child for
hot lunch.

$18,000-$20,000 total
annual operating
cost.

Entire cost except daily hot
lunch.

Separate building between the two
main plants. Square building with
classroom portion in L-shape, sur­
rounding kitchen, dispensary, and
office. Three partitioned classrooms;
floor space is 3,072 square feet.
Fenced play yard is 100 by 74 feet.
Construction cost about $36,000.

Children of employees.

2-6 yrs.

50 children
(Plans are to
increase ca­
pacity to 100
children.)

43

5 days a week;
occasionally 5% days.
6:15 a.m.-6:30 p.m.

6 employees (1 director, 1
teacher, 4 teachers’ aides).

$1 a day per child. (Was
increased to $1.50 a day
per child in Sept. 1970.)

Not available.

Entire initial cost; 80 per­
cent of operating cost.
(With increase in fees to
$1.50 a day per child, expect
to meet one-half of operat­
ing cost.)

Aug. 11, 1969

Attached to side of plant. Movable
partitions divide one large room;
fenced play yard is 80 by 65 feet.
Construction cost $56,000.

Children of working
mothers, with preference
to children of Vanderbilt
employees.

2-6 yrs. (Li­
censed to serve
children 18
mos.-12 yrs.)

49 children

41 (Fewer in summer
months.)

5 days a week.
7:30 a.m.-5:30 p.m.

5 employees, including a
director and 3 teachers.

For employees’ children
the weekly fees are $13
for 1 child; $22, 2 chil­
dren; $29, 3 children.
For nonemployees’ chil­
dren the weekly fees are
$17 for 1 child; $26, 2
children; $34, 3 children.

$17.50 a week per
child.

Entire initial cost; differ­
ence between fees and oper­
ating cost; general services.

Sept. 1967

Two former residences less than a
quarter mile from plant. Separate
nursery and kindergarten programs
but plans are to combine them.

Preference to children of
employees and, if space
permits, children of
nonemployees.

3-6 yrs.

50 children

50

5 days a week.
7:45 a.m.-5:16 p.m.

4 employees plus teachers’
aides in each program. Use
“homeroom mothers” (usu­
ally mothers of children en­
rolled) on field trips.

Weekly fees are $10 for
1 child; $18, 2 children;
$25, 3 children.

$750 a year per
child.

Entire initial cost of
$25,000; difference between
fees and operating cost;
food cost (company proc­
esses vegetables).

5 days a week.
7:30 a.m.-6 p.m.

* Since the preparation of this bulletin was begun, the Women's Bureau has learned of two additional companies which operate day care centers. Their programs are summarized on pages 13 and 14. Data are as of July 1970 unless otherwise noted.
1 Cooks and housekeeping staff, where specifically listed by company, are not enumerated on chart.
a Because of the relatively short operating spans of most programs and difficulties in determining costs, figures must be viewed as rough outlines rather than as definitive statements on costs.

11

Fees

sag

Conclusions on value of programs.—Companies reported a
number of positive findings in the operation of their day care
programs. Almost all reported that recruitment of personnel
is markedly improved and absenteeism and labor turnover
are reduced. For example, Mr. Apparel reported only one case
of labor turnover among employees who utilized the day care
program. Vanderbilt Shirt and Tyson Foods felt that because
they offer child care services they have been able to attract
more steady and dependable workers. In their reactions, Avco
and Skyland Textile emphasized the increase in productivity
of employees who are using the services. Companies also re­
ported that the program improved employer-employee rela­
tions. Several of the companies plan to expand their program
or establish additional programs in other plant locations.
ADDITIONAL CENTERS OPERATED BY COMPANIES
Control Data Corp.—This company operates a child care
center in conjunction with its Northside Manufacturing Facil­
ity, which is located in an economically depressed area of
inner-city Minneapolis. The center was opened in August 1970
in a former school building one block from the plant.
The capacity of the center is about 100, and as of the end
of November, enrollment was approximately 15. It is antici­
pated that future growth will be substantial since Control
Data plans to emphasize hiring women heads of households
from the economically depressed neighborhood. The center is
open 5 days a week from 6:30 a.m. to 5:30 p.m. Staff includes
two professional teachers and some paraprofessionals, and is
supplemented by experienced educational consultants. The
center is designed to provide social, educational, and physical
development of the children.
Parents pay on a sliding scale based on their ability to pay.
Fees range from $5 a week to the full cost depending upon
net family income. The company subsidizes all additional
costs. (Information on the total cost of operation was not made
available.)
Day care was deemed a necessary service in order to attract
and retain the large number of female heads of households
who characterize the community. Employee turnover and ab­
senteeism during the first 18 months of Control Data’s opera­
13

tion in this community had been high, and research indicated
that inadequate child care was a significant contributing
factor.
Bro-Dart Industries.—This company provides to libraries
a variety of products, such as books, equipment, and library
supplies, as well as extensive professional services, including
cataloging. About 70 percent of the 1,500 employees in the
company’s three plants in Williamsport, Pa., are women.
In early 1970 the company opened a child care development
center for both its employees’ children and children in the
community. The center is in a former residence a few blocks
from the main plant. Children from 3 to 6 years are accepted,
and school-age children are admitted in the summer months.
Capacity of the center is 44; as of early December, six children
of employees and 10 community children were enrolled.
The center is open 5 days a week from 6:30 a.m. to 5:30
p.m. The center director is assisted by a supervisor and an
aide for each group. A firm fee schedule has not been de­
veloped yet.
CENTERS INVOLVING UNIONS
Baltimore Regional Joint Board, Amalgamated Clothing
Workers of America,9—This board and the 70 employers in
its area of jurisdiction have spearheaded the day care move­
ment. Their first center, with a capacity of 240 children, was
opened in September 1968 in Verona, Va. The second center,
opened the latter part of 1969 in Baltimore, can accommodate
300 children. The Chambersburg, Pa., center, with a capacity
of 300, opened in September 1970, and the Hanover, Pa., cen­
ter, with a capacity of 80, opened in October 1970.
The Baltimore center is open 12 hours a day, from 6 a.m. to
6 p.m. The other centers are open 10 hours a day, inasmuch
as they are located near the parents’ places of work. All cen­
ters are open 5 days a week.
Each center is staffed with specialists in the areas of teach­
ing, health care, and dietary planning and preparation. A
health clinic is a key part of each center. Every child gets a
preenrollment physical examination and immunizations at no
The centers are described in “The Facts: the Problem: the Solution” and
“Venture in Child Care.” Baltimore Regional Joint Board, Amalgamated
Clothing Workers of America, AFL-CIO, Baltimore, Md.

14

charge, and a daily health check by a full-time registered
nurse. The centers offer educational, social, nutritional, and
health services.
_ The program is designed primarily to guide the children
into many opportunities for physical, mental, and emotional
development as a foundation for formal education. The ulti­
mate goal is to serve more than 2,000 preschoolers in the geo­
graphical jurisdiction of the Baltimore Regional Joint Board.
The working mother or, in some cases, the father, who is
the prime user, pays a token fee of $5 a week per child. Cen­
ters are financed by employer contributions to a jointly man­
aged special fund for the creation and operation of these
facilities.
Chicago Joint Board, Amalgamated Clothing Workers of
America.10—The Amalgamated Child Day Care and Health
Center was opened in Chicago as a pilot project in March 1970.
Enrollment is restricted to 3-, 4-, and 5-year-old children of
union members. The center’s capacity is 75, and enrollment
in mid-October 1970 was 50. It is open 5 days a week from
6 a.m. to 5 p.m. The staff includes a director; teachers; assist­
ant teachers; a secretary, who also serves as an aide; a volun­
teer who serves as a teacher aide; a part-time psychiatric
social worker; pediatricians; and a dentist.
The center is designed to give the children maximum oppor­
tunities for intellectual, social, emotional, and physical growth.
As part of the regular program, children receive complete
physical and dental examinations and followup treatment.
There are no fees. The center is financed by the Amalga­
mated Social Benefits Association fund which is employer
contributed and union administered. Cost per child is esti­
mated to be $2,000 annually.11
The board plans several more centers in the Chicago area
to be located near the large factories in which their members
work.
United Federation of Teachers.—An early childhood pro­
gram is part of the United Federation of Teachers contract
10 The center is described in “The Union and the Day Care Center.” The
Amalgamated Child Day Care and Health Center, Amalgamated Social
Benefits Association, Chicago, 111.
11 Later information in an article in the January 1971 issue of Child
Welfare gives the cost as $2,800 a year.

15

with the New York City Board of Education.12 The program
is designed to provide care and education to children of teach­
ers returning to teach in poverty area schools and to children
of residents in the community. At least 50 percent of the chil­
dren must be from families whose income falls below the
poverty line as defined for eligibility of public assistance or
free lunches. Up to 50 percent can be children of mothers
returning to teach in schools in poverty areas. (In early 1970
these children constituted less than 10 percent of the enroll­
ment.) Enrollment in the early part of 1970 was 285 3- and
4-year-olds in 14 centers. The funds come from city tax levies,
and the annual cost per child is $2,632, not including costs
for administrative or supervisory personnel or for space.
The Department of Health sets standards and provides
medical personnel for these programs. There is active parent
and community participation.
Joint labor-management trust funds.—A 1969 amendment
to the Labor-Management Relations Act of 1947 (TaftHartley Act) permits employer contributions to joint labormanagement trust funds for the establishment of child care
centers for preschool and school-age dependents. The amend­
ment provides that the establishment of such trust funds is
entirely voluntary—that no employer or labor organization
is required to bargain on the creation of such funds.
CENTERS OPERATED BY HOSPITALS
The health care industry has been a forerunner in the pro­
vision of child care services. Since World War II, hospitals
have taken the lead in establishing day care centers for the
children of their employees.
To gather information on the extent of child care facilities
operated by hospitals in their effort to recruit and retain
personnel, and to learn how useful these services might be in
helping to meet anticipated health personnel needs, the
Women’s Bureau conducted a questionnaire survey in 1968.
The questionnaire was sent to about 3,000 hospitals with 100
beds or more and a few smaller hospitals known to operate
day care centers.
Of the nearly 2,000 hospitals that responded, 98 were oper­
12 This program is described in “The Children Are Waiting.” Human
Resources Administration, New York, N.Y. July 1970.

16

ating child care facilities for use of their personnel.13 In addi­
tion, nearly 500 hospitals were either considering or indicated
an interest in such a program, 22 had plans to start one, and
12 were making surveys to determine the extent of personnel
interest. The 98 centers were located in 35 States. There were
50 in the South, 27 in the North Central area, 11 in the North­
east, and nine in the West. The location of one hospital was
not shown.
Nine of the centers were established between 1945 and 1955,
and 87 were established in the subsequent 13 years. Two hos­
pitals did not report the date their centers were established.
The centers had accommodations for nearly 3,700 children.
Almost half enrolled school-age as well as preschool-age chil­
dren. About one-third of the enrollees were less than 3 years
old. More than half of the centers were open 7 days a week,
and about half operated between 9 and 16 hours a day. One
center was open 24 hours a day. While all but six hospitals
charged fees, most subsidized their centers.
Hospitals indicated that providing adequate child care facil­
ities for their health personnel was beneficial to both employers
and employees. They reported that these services had been
helpful in recruiting and retaining needed nursing personnel,
resident doctors, and other health workers. Other advantages
included the availability of some personnel for full-time in­
stead of part-time work or for overtime, the facilitation of
shift rotation, and a reduction in absenteeism. Many users
had stated that knowing that their children were well taken
care of and could be checked on when necessary was a fringe
benefit they would not exchange for a job transfer that offered
a promotion but no day care.
CENTERS FOR CHILDREN OF FEDERAL EMPLOYEES
Recently several agencies of the Federal Government be­
came involved in day care services. Two give substantial finan­
cial support to day care centers for employees’ children; a
third provides space for a center operated by employee organi­
zations.
Department of Labor.—A center for preschool children of
Labor Department employees was opened in October 1968 in
13 A full report of the survey is given in “Child Care Services Provided
by Hospitals.” Bull. 295. Women’s Bureau, Wage and Labor Standards Ad­
ministration, U.S. Department of Labor. 1970.

17

a renovated portion of the first floor of a Government office
building a few blocks from the Department of Labor head­
quarters. It is open 5 days a week from 7:30 a.m. to 5:45 p.m.
In the first year of operation, minimum age for the 30 au­
thorized enrollees was 2y2 years. Half of the enrollees were
children of new employees who would not have been able to
accept employment if low-cost child care were not available,
and half were children of other employees at various grade
levels. Fees ranged from $1 a week for families with annual
incomes of less than $4,000 to $25 a week for those with in­
comes of more than $15,000.
For the second year of the program the authorized enroll­
ment was increased to 60, minimum age of the children was
lowered to 19 months, and the maximum fee was raised to
$30 a week for those with incomes of more than $17,000.
Annual cost per child at the Department’s center is about
$1,900. A nonprofit organization operates the center as an
experimental, demonstration, and pilot project under authority
of title I of the Manpower Development and Training Act. It
has been allocated funds for a third year.
The center aims to foster the development of the child in­
tellectually, physically, emotionally, and socially. There is
active parent participation.
Department of Agriculture.—In May 1968 a day care center
with a capacity of 19 children was opened at the Plant In­
dustry Station, Research Center, Beltsville, Md. It is operated
under the sponsorship of two employee organizations—Plant
Industry Station Employees’ Association and Agricultural
Research Employees’ Association. Parents pay the operating
costs through fixed daily and weekly fees. Children receive
preschool training and health care, as well as a meal and
snacks. A nurse from the Department’s health unit is avail­
able. The hours of operation—7:30 a.m. to 5 p.m.—are geared
to employees’ working hours.
Department of Health, Education, and Welfare.—This cen­
ter for employees’ children, opened in February 1971, receives
substantial financial support through an experimental and
demonstration grant. A child care training program for
AFDC mothers is included. The center has a capacity of 60
children 2 to 5 years old. It is open 5 days a week from 7:30
a.m. to 6 p.m. Parents pay on a sliding scale from $1 to $30
a week per child.
18

ALTERNATIVE ROLES FOR INDUSTRY
INVOLVEMENT

Direct establishment and operation of day care centers is
just one way some businesses may participate in day care. For
others, alternative patterns of involvement may be more feas­
ible in view of the nature of their work force, locale, financial
structure, employee benefits, expertise, and other factors. Some
of these roles are described here.
LEADERSHIP-CATALYST ROLE IN THE COMMUNITY
Businesses can serve as leaders in presenting the need for
day care facilities to members of the community and as cata­
lysts in establishing them. In the process, business resources
such as organizational ability, imagination, training capacity,
and administrative know-how can be applied. Executive talent
can be used, for example, in arranging mortgages, negotiating
contracts, and procuring materials. One notable example of
such leadership resulted from the initial efforts of a company
in Benton Harbor, Mich.
The Twin Cities Area Child Care Centers, Inc., was created
as a result of a meeting led by the Whirlpool Corp. and a
group of businessmen representing about 25 industries in the
Benton Harbor-St. Joseph, Mich., area.14 They formed the Area
Resources Improvement Council in 1967 to carry out a wide
range of community improvements. After the need for day
care centers was determined, a committee was set up to estab­
14 For more information, see "Twin Cities Area Child Care Centers, Inc.”
Twin Cities Area Child Care Centers, Inc., Benton Harbor, Mich.

19

lish a community day care center. Whirlpool did not put cash
into the program. It did, however, assign responsibility for
establishment of the center to a group vice president and used
the expertise of several company departments—research, law,
personnel, insurance, real estate, display, printing, and public
relations. Funds for land purchase, construction, equipment,
and instructional materials were provided by private contri­
butions. Much of the equipment at the center was donated dir­
ectly by business firms and individuals.
The first Twin Cities area child care center (three more
are planned) opened in September 1969. There are 80 children
aged 2% to 6 years enrolled. The center accepts any child in
the community who needs day care, regardless of where par­
ents are employed. The fees are $5.70 a day per child, although
the cost is higher. For those who cannot meet the charge, the
fee is paid from a scholarship fund and from funds available
under title IV-B of the Social Security Act.
FINANCIAL DONATIONS
Some companies express leadership through financial dona­
tions toward a specific project. For example, Pepsico, Inc.,
awarded a grant of $25,000 to the Day Care Council of West­
chester County, N.Y., to help expand existing day care opera­
tions. This was a direct service to a community. Allocations
were made to a day care center run by a nonprofit voluntary
agency to enable it to convert its 3-hour-day service to a full
day care program. An allocation was made also to the Portchester Citizens Anti-Poverty Association to open a second
center.
ASSISTING EMPLOYEES TO FIND DAY CARE
The Illinois Bell Telephone Co. has chosen another method
for involvement in day care. Employees in need of child care
assistance are encouraged to contact one of the company’s
three day care personal representatives. Parents are inter­
viewed to determine the particular day care arrangement re­
quired. Using this information, the staff attempts to adapt
existing facilities or create new ones to fill the need.
The company’s main thrust toward creating new facilities
has been to encourage and assist local citizens to apply for the
20

State foster day care license.15 In the first 4 months of the
program, which was initiated in April 1970, more than 75
women applied for a license and more than 30 company em­
ployees placed their children in the homes. In the first 5
months of the program, 115 employees applied for assistance.
Illinois Bell maintains information on the day care facilities
within Chicago and consults with the suppliers of the service.
OTHER TYPES OF INDUSTRY INVOLVEMENT
There are other ways in which industry may become in­
volved in child care arrangements. Two of these are granting
vouchers to employees for such services and contracting with
a day care agency to provide the service.
Vouchers.—Employers may grant vouchers to employees
valid for any day care service the employee might elect for
the full or partial cost of the service. Although some companies
have this under consideration, the Bureau does not know if
any employer has initiated the system.
Joint contracts.—In some communities several businesses
are joining to contract for day care services because each
employs a relatively small number of women workers who
need such services. Under a contractual arrangement, the
employer can reserve a specified number of slots for the chil­
dren of his employees in a center. The employer agrees to sup­
plement the fee paid by the employee for the child care service.
*3 Foster day care is care in a home child care facility. Specifically, the
Illinois Child Care Act defines “foster family home” as “a facility for child
care in a place of residence of a family, person or persons, who receive no
more than four children, unless of common parentage, who are not related
to such person or persons, for the purpose of providing family care and
training for such children.”

21

COSTS OF ESTABLISHING AND OPERATING
DAY CARE CENTERS

CAPITAL OUTLAYS
Constructing or renovating a day care center involves more
than a token outlay. Among the factors to be considered are
location, land acquisition, type of facility, construction ma­
terials, requirements imposed by licensing authorities, and
extent and quality of component units and fixtures such as
kitchens and bathrooms.
Costs of renovating facilities depend upon the type and
condition of the existing structure. Experience has shown that
church facilities require relatively small renovation costs be­
cause they already have many of the features of day care
centers, such as kitchens and bathrooms.
In gathering data on industry day care programs, the
Women’s Bureau did not ask companies to provide informa­
tion about their capital outlays, although some offered this
information. One company reported that costs of renovating
a cold storage warehouse to accommodate 60 children exceeded
$40,000. Three companies which built day care centers listed
construction costs as $98,350, $56,000, and $36,000 with ca­
pacities of 118, 49, and 50 children, respectively.
The Department of Labor’s experimental day care center,
with a capacity of 60 children, initially required $33,500 to
renovate a building formerly used for storage and without
most of the features necessary for a day care center.
Over the past few years various sources have been consulted
and the consensus estimate for total capital outlay has been
approximately $2,000 per child. In some areas costs are much
higher.
22

OPERATING COSTS
Companies were asked to indicate operating costs. The seven
companies responding gave information in a variety of ways,
such as weekly or annual cost per child, total monthly or an­
nual operating costs, and total annual operating budget. The
two weekly costs per child given differed considerably—$40
to $50 for Avco but only $17.50 for Vanderbilt Shirt. Curlee
Clothing listed its total monthly operating cost, based on an
enrollment of 40 to 45 children, as $1,500. Of the companies
giving annual operating costs, Winter Garden Freezing
showed $750 per child; Skyland Textile estimated its costs as
$55,000 for an enrollment of 84; and Tioga Sportswear’s costs
were $18,000 to $20,000 for an enrollment of 30 to 40 children.
KLH reported its total operating budget for fiscal year 1969
as $117,244 for an enrollment of 60 children.
Nationwide, day care operating costs vary considerably with
arrangements and the areas being served. Costs also depend
upon levels of standards as they relate to the emphases given
to child development, with custodial and developmental aspects
on opposite ends of the continuum. A range of $1,000 to $2,800
or more annually per child has been reported.
Table 3, composed largely from the Head Start experience,
indicates cost variations by type and quality of day care ar­
rangements in 1967.
Table 3.—Cost of Day Care, by Standard
Standard
Type
Group day care
(Generally used
for 3- to 5-yearolds.)
Before and after
school and summer
care. (Generally
used for 6- to 13year-olds.)

Minimum

Acceptable

Desirable

$1,245

$1,862

$2,320

310

653

653

SUBSIDIES
All of the nine companies reported that they subsidized part
or all of the operating costs of their child care facilities. To
be realistic, companies planning such facilities should expect to
subsidize them at least in part.
23

TAX ALLOWANCES AND EXEMPTIONS
FOR DAY CARE

ALLOWANCES FOR BUSINESSES
For those businesses which provide day care services and
those which plan to start such operations for their employees’
children, it is of considerable importance to clarify the matter
of possible tax deductions.
The Internal Revenue Service (IRS) has furnished some
general guides in determining whether expenses relating to
certain types of industry day care involvement are deductible.
Specific rulings, however, can be issued only when all details
for each situation are made available to the IRS.
1. In responding to the query regarding entitlement of busi­
nesses to tax deductions as “ordinary and necessary” business
expenses for the establishment and operation of day care pro­
grams for children of employees, the IRS advised that to be
deductible as a trade or business expense, under section 162
of the Internal Revenue Code, an expenditure must be both
ordinary and necessary in relation to the taxpayer’s business.
Section 1.162-10 of the Income Tax Regulations allows as an
ordinary and necessary business expense amounts paid or
accrued by a business for recreational, welfare, or similar
benefits, designed to attract employees and promote greater
efficiency among its employees.
The IRS indicated that it would appear that the establish­
ment of day care programs is designed to effectuate these
purposes and, under these circumstances, would be considered
deductible business expenses.
2. Where a company establishes and operates a day care
program as a gratuitous benefit for children of its employees,
24

the IRS pointed out that section 162 of the code permits deduc­
tions for all ordinary and necessary expenses incurred in a
taxpayer’s trade or business. The determination of whether
a given expense meets the “ordinary and necessary” test must
be made on the basis of all of the facts and circumstances
presented in that case. Where it can be shown that expenses
incurred by a business in connection with the day care of
children of its employees are incurred to increase employee
morale and productivity, and to reduce employee turnover,
such expenses would be incurred in the conduct of the em­
ployer’s trade or business and, thus, would be deductible under
section 162 of the code.
Where the day care centers are established for children of
nonemployees, the question of deductibility must also be deter­
mined on the basis of all of the facts and circumstances of the
case. In those cases where it can be demonstrated that the
expenditures incurred in connection therewith will produce
business benefits commensurate with the expenditures, such
expenditures are deductible under section 162 of the code.
3. Where businesses make contributions to organizations
for the establishment and operation of day care programs, the
IRS noted that section 170 of the code provides for the deducti­
bility of charitable contributions made to organizations de­
scribed in that section.
In the absence of a binding obligation on the part of the
charitable organizations involved to perform services for the
taxpayer, contributions or gifts made by businesses to or for
the use of qualifying foundations and public and private agen­
cies to establish and operate day care programs, which are
within their charitable purposes, are deductible as charitable
contributions in the manner and to the extent provided by
section 170 of the code. The term “contributions or gifts” in­
cludes gifts of money or property. To the extent that unreim­
bursed expenditures for services rendered to such organiza­
tions are not business expenses, they may be charitable con­
tributions.
4. Public Law 91-86 amended the Labor-Management Re­
lations Act to permit employer contributions to joint trust
funds for establishment of child care centers for dependents
of employees. The view of the IRS regarding tax deductions
for such purposes is that the standards and criteria for deter­
25

mining the entitlement of a taxpayer to a deduction, as indi­
cated in the first two answers, are equally applicable to contri­
butions to trust funds established under Public Law 91-86.
Thus, while an employer may be precluded from exercising
control over amounts deposited with a trust established under
Public Law 91-86, this factor will not change the character
or determine the deductibility of contributions to the trust.
ALLOWANCES FOR USERS
Of special importance to the user of day care services offered
by his employer is whether such benefits are taxable.
In responding to specific questions, the IRS stated that:
1. Section 61 (a) of the Internal Revenue Code states, in
part, that, except as otherwise provided, gross income includes
all income from whatever source derived, including but not
limited to compensation for services.
Section 1.61-2(d) (1) of the Income Tax Regulations pro­
vides that if services are paid for other than in money, the fair
market value of the property or services taken in payment
must be included in income.
One of the unique problems in applying section 61 of the
code is determining whether an employer has provided an em­
ployee with a benefit which should be equated with gross in­
come when the employee has been relieved of a personal ex­
pense which he would otherwise incur if the employer had not
provided the service at a reduced rate or free of charge. In­
herent in such a determination is the question of value of the
service. The IRS further indicated that it is impossible to
generalize to any degree of certainty on questions of this
nature.
However, to the extent that general principles can be estab­
lished, where an employer provides a service without cost to
the employee that would have to be purchased from a purveyor
of this service, the employee is required to include the value
of the service in his gross income. If a good faith attempt is
made to value the service based on comparable fees for such
service or the financial capability of the employee to provide
the service on his own behalf, the IRS stated that it will gen­
erally not question the determination made in this regard.
However, where the employee is charged a nominal amount
for the service provided by the employer, the IRS will consider
26

such factors as the income level of the employee and the value
of the service to the employee; that is, whether the employee
would normally incur a lower or higher expense if he pur­
chased the service from other sources. If the facts indicate that
the employee has, in effect, been given an opportunity to secure
the service at a bargain rate because of the employer’s general
policies of providing facilities for the goodwill and content­
ment of his or her employees, the IRS will normally not require
the employee to include an amount in gross income.
2. These principles would be equally applicable whether the
child care facilities were available to employees only or to
nonemployees on a limited basis. Also, the criteria would not
change basically if the employer contributed to a trust fund
for the purpose of establishment of child care centers for the
children of his employees.
3. If most of the children receiving the benefits of the child
care centers were those of nonemployees, IRS would probably
treat the centers as community service projects of the sponsor­
ing corporations. The requirement for admission, priorities,
and other conditions would have to be considered to ascertain
whether the free or subsidized services are of a compensatory
nature to the parents involved. If the center were operated
similar to a public library or public recreation facility, the
IRS would not require a taxpayer to include an amount in
gross income as a result of using the facility. The same ap­
proach would apply to a community-oriented day care program
to which the employer contributed. Assuming that the program
was controlled by the community and the employer was not
entitled to any special quotas or voice in the operation because
of his contribution, the latter arrangement probably presents
the clearest example whereby the taxpayer would not realize
income when he availed himself of the child care services.
If participants in a program have gross income to report
under a specific arrangement, they may be entitled to certain
income tax relief under section 214 of the code.
Section 214 of the code provides generally for a deduction
for child care expenses to the extent of $600 for one child or
a maximum deduction of $900 for more than one child under
age 13 by a woman who is gainfully employed. However, the
deduction may be limited to a lesser amount if the woman is
married and the combined income of her and her husband
exceeds $6,000.
27

EXEMPTIONS FOR NONPROFIT ORGANIZATIONS
Where a nonprofit organization has been formed by an in­
dustrial company to operate a day care center for children of
needy working parents who have no means to provide care for
their children during the day, and the organization opens
enrollment to members of the community rather than restrict­
ing it to employees of the company, the organization may
obtain an exemption under 501 (c) (3) of the code. This section
provides for the exemption of organizations organized and
operated exclusively for charitable or educational purposes.
Even though an organization considers itself within the scope
of this Revenue ruling, it must (in order to establish exemp­
tion under section 501 (c) (3) of the code) file an application
on Form 1023, Exemption Application, with the District Di­
rector of Internal Revenue for the internal revenue district in
which is located the principal place of business or principal
office of the organization.

28

HISTORICAL DEVELOPMENTS IN INDUSTRY
DAY CARE PROGRAMS

Few publications have been issued describing the develop­
ment of industry-sponsored day care programs. There is no
one source for authoritative information. It appears that the
involvement of industry, with the exception of the health in­
dustry, was minimal before World War II.
In 1854 the Nursery and Child’s Hospital in New York City
permitted employed mothers who had been patients in the
hospital to leave their children under the care of nurses. Simi­
lar programs were initiated in 1858 in Troy, N.Y., and in 1863
in Philadelphia.16
PRE-WORLD WAR II PERIOD
Clothing plant.—A men’s clothing plant in the South started
the first industry-operated day care facility which has come
to the attention of the Women’s Bureau. The company oper­
ated its center for about 50 years before closing it in June
1970. A number of persons currently associated with the com­
pany were beneficiaries of the services during their childhood.
The program in this southern plant was conceived when
management discovered that many of its employees’ children
were sleeping on rag piles within the workplace because of
lack of day care. The center was restricted to employees’ chil­
dren, and for a number of years enrollment in excess of 100
was reported. In addition to the care of preschool children,
after-school care for children 6 to 12 years old was, at one
time, provided.18
18U.S. Department of Labor, Women’s Bureau: “Employed Mothers and
Child Care.” Bull. 246. 1953.

29

With the exception of a 30-cent charge for lunch, assessed
in the last 2 years of the center’s operation, the company as­
sumed all costs of the program. During the summer school
vacation, teenage children of employees served as volunteers.
When the center closed, an estimated two-thirds of the com­
pany’s 1,300 employees were women. However, several factors
contributed to the company’s decision to end the program.
State regulations with respect to floor space required a sig­
nificant reduction in the enrollment (from 48 to 15 children),
with the change to a new day care facility—a residential
building—across from the plant. An employee morale problem
was feared if selection was made of a small number of children
from the total wishing to avail themselves of the services. Fur­
ther, other day care centers had been established within the
community.
Curlee Clothing Co.—This company, located in Mayfield,
Ky., has operated a day care center for more than 30 years.
The center may have started with the company’s formation in
1929, although records cannot confirm this. This center is still
in operation.17 18
John H. Swisher & Son, Inc.ls—Cigar manufacturers with
headquarters in Jacksonville, Fla., this company dedicated its
“King Edward Nursery” on September 26, 1939. The program
operated until 1965.
The program’s establishment followed a company review of
employee benefits. It was concluded that parents of preschool
children were carrying an “unnecessary burden of worry and
strain.” The intention, as expressed by Carl S. Swisher, com­
pany president and general manager, was to provide a “mod­
ern, sanitary center, devoted to improving the health of the
youngsters in an atmosphere conducive to their mental well­
being and their greater happiness.” The approximate initial
cost of the center was $50,000.
During the war years, 75 children were accommodated in
the center which, with its fenced-in roof playground, occupied
21,000 square feet of floor space. The program was restricted
to employees’ children 14 months to 6 years of age, and chil­
dren were accepted for either of two shifts for 5 days a week.
17 This company’s program is discussed in the chapter beginning on page 8.
18 “Personnel Problem Is Solved by New Industrial Nursery.” In Institu­
tions Magazine, vol. 13, no. 2, August 1943.

30

Monthly operating costs were estimated at $1,800, with more
than five-sixths subsidized by the company. Under the assump­
tion that parents would prefer to make a contribution, a fee
of $2 a week was assessed for each child.
By offering child care services, the company was able to
retain personnel although tight labor conditions were preva­
lent during wartime. In an early assessment of the program,
Mr. Swisher stated:
The benefits to the individual employee and to the
management have been most satisfying in terms of
mutual relationship and also there have been unfore­
seen and immediate gains in higher efficiency, lower
costs, and greater productivity.
Those associated with the program reported that a followup
of participating children revealed that their school adjustment
was significantly better than that of their nonparticipating
counterparts.
As the program evolved, an enrollment of 150 children was
reached. Company subsidies for the program varied between
$45,000 and $60,000 a year. The company terminated the pro­
gram because a limited number of employees in one factory
were benefiting from the service.
WORLD WAR II PERIOD
Industries were particularly dependent upon the recruit­
ment of large numbers of women workers as men were being
drawn from civilian employment into the military service.
Married women constituted the country’s greatest labor re­
serve. More than 3 million married women entered the labor
force from 1940 to 1944.
Lanham Act.—For a 2%-year-period during the war, Fed­
eral funds were made available to the States under the Com­
munity Facilities Act, commonly referred to as the Lanham
Act, to provide day care for the children of women workers in
defense industries. Approximately $52 million were allotted
to the States before the program was terminated in February
1946. The peak utilization of the program was reached in July
1944 when an enrollment of over 129,000 children was re­
ported. It has been estimated that 550,000 to 600,000 children
received care at some time under this program. About 60 per­
cent of the children receiving services were of preschool age.
31

Employers testified that the program had great value in re­
ducing absenteeism and turnover in their plants.
However, these centers for preschool and after-school care
were not industry sponsored; more than 95 percent of them
were operated by educational agencies.19 Fees were on a sliding
scale based on family income.
Kaiser Shipbuilding Corp.20—Public programs for day care
were supplemented by a few child care programs of defense
plants. The most extensive wartime day care operation of a
company was that of the Kaiser Shipbuilding Corp., a prede­
cessor of Kaiser Industries Corp. Kaiser maintained two day
care centers in Portland, Oreg.—at the Swan Island Shipyard
and the Oregon Shipbuilding Corp.—from November 1943 to
September 1945. The centers were managed as a department
within the corporation.
Funds for constructing and equipping these centers were
provided by the U.S. Maritime Commission. The centers, lo­
cated at the shipyard entrances, were open 7 days a week, 24
hours a day, 364 days a year. The day and swing shifts had
large enrollments, but the night shift involved small numbers
of children. Children enrolled were 18 months to 6 years of
age. School-age children were admitted on weekends and school
holidays. Within the first year of operation, the centers en­
rolled more than a thousand children. The centers served more
than 4,000 children during their operation.
At each center, staff consisted of a director, teachers and
assistant teachers, nurses, social workers, and nutritionists.
Children received breakfast and lunch and, as a result of
studies concerning needs of working mothers, a special home
food service program was inaugurated. While not utilized
widely, this service allowed a mother to pick up a take-home
dinner from the center kitchens at the end of a work shift.
The company’s net costs were $2.37 a day per child; 84 per­
cent of expenditures went for staff. Fees were set at $5 a week
for the first child and $3.75 for each additional child in a fam­
ily. Inasmuch as the contractual arrangement with the Fed­
eral Government was on a cost-plus-fixed-fee basis and the
centers were considered business expenses, the Federal Gov­
ernment was subsidizing the centers.
19 See footnote 16 on page 29.
20 KLH Child Development Center, Inc., Cambridge, Mass.: “A Proposal
To Establish a Work-Related Child Development Center.” May 1967.

32

POST-WORLD WAR II PERIOD
A Women’s Bureau publication reports that there were 17
industrial nursery schools in operation in 1950, but the indi­
vidual company names were not provided.®1
In addition to the previously discussed centers operating in
the sixties, an industry-sponsored day care center was started
in July 1965 by Rochester Clothes, Inc., of New Bedford, Mass.
An estimated 80 percent of the company’s 250 employees were
women.
The program for employees’ children 3 to 6 years of age was
completely subsidized by the company. It received enthusiastic
endorsement from management because employee absenteeism
dropped from 10 to 15 percent down to 3 percent with the
establishment of the program.
Adjacent to the plant and operating from 7:30 a.m. to 4:15
p.m., the center was licensed for 100 children, but enrollment
never exceeded 48. Operating costs were estimated at $8 to
$10 a week per child. In a followup of children who had been
in the program, management found that school adjustment
was facilitated by the preschool experience.
The company was sold in late 1968, and the new ownership
discontinued the program in March 1970 when the facility
leasing commitment expired.
21 See footnote 16 on page 29.

U.S. GOVERNMENT PRINTING OFFICE:

33

1971 O-----419-843

U.S. DEPARTMENT OF LABOR
WORKPLACE STANDARDS ADMINISTRATION
WOMEN'S BUREAU

WASHINGTON, D.C. 20210
Postage and Fees Paid
U.S. DEPARTMENT OF LABOR

OFFICIAL BUSINESS
Penalty for private use, $300

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