Some workers willing to pay for benefits they won't use

October 30, 2001

University Park, Pa. - Employees may be willing to help fund employment benefits that they will never use, in much the same way as citizens are willing to help fund environmental resources such as national parks that they will never visit, according to a team of labor studies researchers. "Our survey suggests that teachers are indeed willing to pay to help create a fairer environment for individuals confronting elevated family demands," says Dr. Robert Drago, Penn State professor of labor studies and women's studies.

The researchers applied a method that addresses the value of environmental goods. These goods are often undervalued because they provide benefits to both users and nonusers. The researchers argue that, like a natural treasure, valued both by visitors who see it and by those who simply appreciate that it is there, work family policies would be undervalued if only those who used them paid for them.

"We thought that employees who expect to benefit directly from a work/family policy would place the highest monetary value on the policy and employees who do not expect any direct benefit would place a lesser, but still positive value on the policy," says Drago.

The researchers explored seven different work/family policies asking in each case if workers would be willing to fund the policy with a weekly payroll deduction. To establish the range of deductions that teachers were willing to pay, the teachers were randomly assigned one of three amounts for each policy. The policies were:
- establishment of a referral service to help teachers find childcare;
- free childcare at or near the school for teachers' children;
- free school-provided after school care for teachers' children;
- a referral service to help teachers find care for older or disabled family members;
- professional counseling for teachers and families on personal issues;
- paid family care leave of up to one week per year; and
- a paid six-week childbirth leave.

Not unexpectedly, workers were willing to pay for most of the policies that they might actually use, although the least valuable policies appear to be referral for childcare and counseling for families. The researchers, however, find the data on referral for childcare unreliable. Workers were also willing to pay, although not as much, for policies that they would likely never use.

"Analysis of child-related work/family policies suggests there are indeed distinct use and need values driving willingness to pay," the researchers reported in the October issue of Industrial and Labor Relations Review. "Teachers more likely to use after-school care for their children exhibited a willingness to pay at over twice the level of those less likely to use the benefit. However, even the teachers with low or no probability of using such policies exhibited a positive willingness to pay for after-school care and paid childbirth leave."

Surprisingly, the willingness to pay for paid childbirth leave is significantly higher - 50 cents per week higher - for teachers with a low probability of using the benefit. The researchers suggest that past experience with childbirth may lead some to place a higher value on this policy, but they caution that more research is needed to confirm this.

The researchers looked at grade school teachers from two East Coast cities and two Midwestern cities, with the smallest city having a population of just under one-half million and the largest being one of the top five cities in the nation. Schools were chosen from both high-poverty areas and from low-poverty areas, but not from average areas. In all, 46 schools participated. Because the number of male grade school teachers is small, all male teachers in each chosen school were included and then female teachers were randomly chosen from regular classrooms to fill a sample of up to 17 teachers. Special education teachers were not included in the sample.

"The percentage of parents in the Time, Work and Family project (from which our data is taken) is nine percentage points below the national average, a statistically significant difference," says Drago. "We suspect this low figure is due to response bias, with relatively fewer parents willing to add to their already demanding schedules by agreeing to participate in the project."
The Time, Work and Family project was funded by the Alfred P. Sloan Foundation. The research team consisted of Drago, David Costanza, associate professor of administrative sciences and psychology, Tanya Brubaker, graduate student and Naomi Harris, graduate student, George Washington University; Robert Caplan, program research administrator, Beach Cities Health District, California; Darnell Cloud, Russell Kashian and T. Lynn Riggs, former graduate students in Economics, University of Wisconsin-Milwaukee.

Penn State

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