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As companies look to trim costs, one particularly pricey benefit--work-site day care--appears to be weathering the storm. Although some companies closed on-site day-care centers this year (Honeywell International, for example, closed one), these are isolated instances. A survey by human-resources consultancy Hewitt Associates reveals that 12 percent of large employers currently provide on-site day care. That's up a notch from 11 percent in 1998.


One reason: according to the U.S. Census, women with children under the age of six are one of the fastest-growing segments of the workforce, and companies are trying to find ways to court them. "Infant and toddler care is at a premium--there is a lack of supply," notes David Lissy, CEO of Bright Horizons Family Solutions, which provides work-site day care for corporations. The company opened 10 new centers and closed 2 in the first quarter of 2002.


Hewitt consultant Jon Van Cleve says that although few existing work-site child-care centers are closing, companies are being cautious about opening new ones. "On-site centers are certainly the most costly option," he says. "That can be a multi-million-dollar investment the first year, and some employers are shying away from that right now."


Other, less-costly alternatives are still popular, however. J.P. Morgan Chase offers flexible-spending accounts where employees can sock away pretax money for child care. The company also has 15 backup child-care centers--which provide parents with emergency child care free of charge when their usual arrangements fail--and plans to open 2 more this year. "Based on the cost of absenteeism alone, the centers pay for their operations in the first year," says Joy Bunson, senior vice president of human resources.


Better yet, backup centers can provide more bang for the buck than a full-time center. "With a backup center for 50 kids, we can serve 1,800 to 2,000 families a year," says Bunson.

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