© Copyright 2004 by the Wyoming Department of Employment, Research & Planning

Industry Variation in the Percent of Jobs with Insufficient Work Tenure to Qualify for Health Benefits

by: Mark Harris, Ph.D., Sociologist

The provision of health benefits is a concern for employees and employers. Wyoming employers cite employee turnover as a major reason for not providing health benefits (Cowan, 2004). This report shows, within North American Industry Classification System (NAICS) industries, the number of jobs that have insufficient tenure to qualify for health benefits. Results indicate substantial industry variation.

The provision of health benefits is a major concern for employees and employers. Nationwide, employers are the single largest provider of private health benefits (Buchmueller, 2000). A recent survey of Wyoming employers reveals the high cost of health insurance as the number one reason employers report for not providing health benefits (Cowan, 2004). Employee turnover is another major reason Wyoming employers report for not providing health insurance. Employees that do not remain with a firm for sufficient duration cannot qualify for health insurance. Based upon results from the Wyoming Benefits Survey (first quarter 2003), three months of tenure is the average duration of employment required by Wyoming employers to qualify for health benefits. The purpose of this report is to show by industry, on an annual average basis, the percentage of Wyoming Unemployment Insurance (UI) covered jobs that have insufficient duration to qualify for health benefits. Results indicate substantial industry variation.

Data and Methods

For this study, Wyoming Wage Records was used to determine the number of jobs that are ineligible for health benefits in a given quarter. Each wage record contains the social security number of an individual employee, a sum of the wages paid to the individual employee during a single quarter, a unique identifying number for the employer that paid the wages (i.e., the Unemployment Insurance or UI number), and an assigned North American Industry Classification System (U.S. Census Bureau, n.d.) code of the employer. A single person will have multiple wage records in a reference quarter if they worked for more than one employer during that quarter. 

In this study, employees are determined to be ineligible for health benefits from a given employer if they have a wage record in the reference quarter but do not have a wage record with the same employer in the prior or subsequent quarter. When this occurs, the maximum an employee may have worked with the same employer in this nine-month window is three months (this assumes they started on the first day of the reference quarter and quit on the last day of the reference quarter), but the duration of employment will often be less. Persons who have a wage record in the reference quarter and the previous or subsequent quarter or both can have a maximum of nine months of employment with the same employer (for a complete definition of tenure see Glover, 2003). Our classification produces a conservative estimate of the number of employees with no more than three months of continuous employment.

Results

Based upon our methodology, 26,217 average annual jobs or 9.4 percent of the total average annual jobs (280,102) have insufficient tenure to qualify for health benefits in 2002 (see Table). The rate of ineligible jobs varies from a high of 22.4 percent in Administrative & Support & Waste Services to a low of 1.7 percent in Utilities. A number of NAICS industries have more than 10 percent of jobs not meeting the average tenure requirement (three months or one quarter) to qualify for health benefits. They include Administrative & Support & Waste Services; Construction; Accommodation & Food Services; Arts, Entertainment, & Recreation; and Agriculture, Forestry, Fishing, & Hunting. Collectively, these five NAICS industries account for 29.6 percent of total average annual Wyoming jobs in 2002 (see Percent of Total Jobs in Table). 

Discussion

The way in which some firms choose to utilize labor or the economic realities of a particular market niche (e.g., a seasonal demand for labor tied to weather patterns) likely necessitates high employee turnover. High turnover creates a situation in which the provision of health insurance is impractical because the “administrative costs of employees joining and leaving plans would be out of control” (Fuhrmans, n.d.). No literature is available that identifies the level at which turnover becomes problematic for the provision of health insurance. Whether an annual average rate at or above 10 percent is problematic for the provision of health benefits is unknown.

For Wyoming, many of the employment patterns in the firms making up the five NAICS industries with the highest annual average rates of ineligible jobs are significantly impacted by seasonal factors (e.g., construction projects, tourism). Growth in these industries will increase the number of workers that have insufficient tenure to qualify for employer-provided health benefits.

References

Buchmueller, T.C., (2000, March). The business case for employer-provided health benefits: A review of the relevant literature. California HealthCare Foundation. Retrieved April 14, 2004, from http://web.gsm.uci.edu/~tbuchmu/Papers/BusinessCaseReport.pdf 

Cowan, C. (2004). Untitled. Manuscript in preparation. 

Fuhrmans, V. (n.d.). Even at giant companies many lack health benefits. The Wall Street Journal: Executive Career Site. Retrieved April 14, 2004, from http://www.careerjournal.com/hrcenter/articles/20031113-fuhrmans.html 

Glover, T. (2003). Wage records; operational definitions of wage groups, tenure and experience, and job holder classifications. Retrieved May 4, 2004, from http://doe.state.wy.us/lmi/w_r_research/BLSdocument_simple.pdf 

U.S. Census Bureau (n.d.). 2002 NAICS codes and titles. Retrieved May 5, 2004, from http://www.census.gov/epcd/naics02/naicod02.htm 

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