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...nearly 30 percent of employers' total compensation costs in March 2005. The value of many employee benefits--such as paid sick leave or health insurance--can be greater than their monetary worth.
But which jobs are more likely to offer benefits? What types of benefits are available? What percent of workers receive benefits? This article addresses these and other questions with data from the BLS National Compensation Survey of establishments.
The first section of the article gives a brief retrospective of employee benefits and then moves forward to highlight their current value and cost. The second section describes the benefits that employers are legally required to provide to their employees. The third section explains some of the most common types of benefits available and provides data on the percent of employees who have access to these benefits. The last section offers suggestions for finding additional resources.
Benefits: Their history, value, and cost
A century ago, employer-provided benefits, such as paid time off or medical insurance, were uncommon. Today, by contrast, these and other benefits are often an important part of how workers are compensated. The box on page 20 illustrates how far employee benefits have come since the early 1900s.
Benefits continue to evolve. For example, many employers offer an increasing array of options that provide workers with greater flexibility in balancing work with other facets of life. Family-friendly policies (such as telecommuting) and career-related benefits (such as educational assistance) are just a few of the offerings from contemporary employers.
But providing higher levels of benefits comes at a price. Over the past decade, the change in benefits costs has outpaced the change in the cost of wages and salaries. (See chart 1.) This is attributable, in part, to the increased cost of healthcare benefits. In March 2005, the average employer in private industry spent just over $7 on benefits and about $17 on wages and salaries for every hour an employee worked. (See chart 2.)
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Additionally, benefits are not evenly spread among the workforce: some workers are more likely than others to have access to benefits. Full-time workers, for example, have greater access to benefits than do part-time workers, and workers in large establishments usually have greater access to benefits than do those in small establishments. Workers who belong to a labor union also are more likely to be offered benefits than those who are in jobs in which workers are not unionized. Moreover, having access to a benefit does not necessarily mean that workers choose to receive that benefit, ft simply means that the employer makes the benefit available.
Availability of, and spending on, benefits also varies by occupation. In March 2005, employers spent the least amount on benefits for service workers and the most on benefits for management, business, and financial workers. (See chart 3 on page 16.)
Legally required benefits
If you've ever earned a paycheck, you've probably noticed that some of your money is taken out for things other than taxes. Where does this money go?
Some of these deductions go toward paying for legally required benefits. For example, both employers and employees must contribute to two mandatory social insurance programs: Social Security and Medicare. Social Security, the largest component of legally required benefits, helps provide financial support to workers and their families when workers retire, die, or become disabled. Medicare provides healthcare assistance to older workers and to people with long-term disabilities.
Contributions to these programs are split evenly between employees and employers. The employees' portion is taken directly from their paychecks in the form of a tax, often referred to and noted on pay stubs as FICA (Federal insurance Contributions Act) or OASDI (old age, survivors, and disability insurance) for Social Security deductions and as MHI (Medicare hospital insurance) for Medicare deductions. Employers' and employees' contributions are deposited to a financial institution and then transferred to the Internal Revenue...
NOTE: All illustrations and photos
have been removed from this article.
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