This research article provides more detailed information to our consumers on the total cost of labor. Beyond conducting an annual wage survey(1), Research & Planning has expanded its research to include a pilot study of employee benefits. This information assists employers and employees in determining whether or not they are providing and receiving competitive compensation (wages and benefits). We thank all employers who participated in this survey and helped us make it a success.
Variations in the benefits that employees receive depend on employment occupational category, industry and firm size. Managerial and professional employees are more likely to receive benefits, as are employees in Public Administration and Mining. Large companies are also more likely to provide benefits to their employees.
Benefits can be a large part of an employees compensation package, therefore wage information alone does not give an employee the full picture of the value of their total compensation. It also makes it difficult to make meaningful comparisons between different jobs since wages alone do not give the whole picture. Receiving a smaller wage may very well be offset by a better benefits package.
Significant changes have also occurred in the type of benefits offered to employees, due to demographic changes. The rise of women in the workforce led to an increase in child day care benefits. The needs of unmarried employees differ from their colleagues with a spouse and children, and have led to cafeteria style benefits packages.
This survey looks at the kind of benefits employees can expect to receive in different industries and among companies varying size.
Section IV: Review of Literature
Before designing the survey, we reviewed literature on the subject to determine methodological and technical considerations. One source of information was the Bureau of Labor Statistic's (BLS) Website which includes their Employee Benefits Survey. This site gave a survey history, description, the scope and method of the survey and a list of other publications related to the topic. Some of the publications reviewed were "Do Employers/Employees still need Employee Benefits?" edited by Dallas L. Salisbury(2). According to that publication it is not clear if more generous benefits help attract or retain employees, but the absence of benefits may repulse employees. Benefits are an important part of an employee's compensation. The kind of benefits desired vary from employee to employee depending on family status and life style. Another article was "A Closer Look at the Employment Cost Index" by C. Alan Garner in The Federal Reserve Bank of Kansas City Economic Review(3) , which mentioned that in the 1980s and the 1990s the growth rate of benefits costs exceeded the growth rate of wages and salaries over most of this period.
Research & Planning also compared benefits surveys conducted by other states to learn from their mistakes and successes. After preparing our own survey form, we shared it with other states to get their input and to make the effort more efficient and productive.
Section V: Developing the Survey
While working on designing the survey form, the desired results were kept in mind. The results needed to be comparable to the wage survey so that benefits could be added to wages. This would give us the total compensation and allow us to stratify the results by Industry, Region and Employment Size Class. The ten Industries are: Agriculture; Mining; Construction; Manufacturing; Transportation, Communications, & Public Utilities (TCPU); Wholesale Trade; Retail Trade; Finance, Insurance, & Real Estate (FIRE); Services and Public Administration. Employment Size Class refers to the number of employees a company has (Table 1). We divided the State into 5 Regions: Northwest, Northeast, Southwest, Central and Southeast (Map). Last, we divided the results into three occupational groups, which are Managerial and Professional; Clerical and Technical; and Production, Maintenance and Service. These are broad occupational categories used by the Occupational Employment Survey (OES) to categorize approximately 500 occupations. Dividing the benefits survey by those specific occupations was not a consideration since we wanted to keep the survey simple and not to overburden employers. In keeping the survey simple, a higher response rate was expected. Besides the survey form, a cover letter, instruction sheet, a sample of the results of the wage survey and a return envelope were included. We had an initial mailing, a reminder postcard and a second mailing. From the survey form a Database for entry of the collected data was developed.
Section VI: Drawing the Sample
Once the survey was designed we were ready to select our sample of 1,500 companies. The sample was pulled from the first Quarterly Unemployment Insurance (QUI) employer database in 1998. This database contains the data reported by employers on a quarterly basis for unemployment insurance purposes. The QUI for the second quarter 1998 was appended to the first quarter to include those employers who may have had staff in the first quarter but did not report until the second quarter. Companies that reported zero employees for all three months were also deleted. This left us with 16,122 companies. The following fields were added to the database: Average Employment, Class Size (Table 1), Industry by major division and Region. We then selected the minimum number of companies with 1-4 employees so that there was a 95 percent confidence that the statewide estimates would be within 5 percent of the true value. This corresponded to a sample size of n=385, which was randomly selected from the population of companies with 1-4 employees. A random sample was selected from companies with 5-250 employees and the companies were stratified by Region, Class Size and Industry. The sample size was n=992. Lastly, 100 percent of companies with 250 or more employees were taken because of the small number of companies falling into this category. That sample size was n=123.
Section VII: Problems Encountered
After we received our responses and started analyzing them, it became apparent that some questions were misunderstood or too simplified to get an accurate answer. These questions will have to be rephrased to obtain better data in the future.
One of the problems encountered was that employees categorized in the table on the first page did not match the answers on the following pages. For example, employers would state they did not have managerial and professional employees but then filled out the columns pertaining to managerial and professional employees on the next page.
Another problem showed up with the amount of sick leave employees received. The survey asked how many days of sick leave employees received per year. Many companies had complicated sick leave policies, such as employees earning so many hours of sick leave for so many hours worked . One company offered 60 to 80 percent of pay based on years of service. These policies also applied to other leave.
Some companies made the comment that they distinguish between permanent and temporary employees, as well as between full and part-time in their benefits policies.
On the question of how long employees have to work for the company to receive the above-mentioned benefits, we had several employers give ranges because some benefits were given at different times than others.
Under the question "Does your company offer any other benefits not mentioned above" , the most common answers were personal leave days, jury duty pay, bereavement leave, uniforms, shoe allowance, Christmas bonus, tool allowance, and 401K. Responses such as company car, a ski pass, union dues and time off for volunteer work were the more unusual benefits.
The question about the costs of benefits as a percent of wages paid caused many problems. The majority of employers checked the "don't know" box or left the table blank. Some checked several boxes in one column. Others had the benefits costs figured as an hourly amount.
The response rate by industries ranged from 54 to 76 percent with an overall response rate of 62 percent. In the analysis, we weighted the replies by the response rates to account for nonrespondents. We also eliminated missing values, since many employers left columns blank because they had no employees in that category. This is a problem that often occurs in small states that are dominated by small companies such as Wyoming.
At this time we are unable to publish data about the costs of benefits to employers. Over half of employers who returned the survey provided no response or were uncertain about the cost of benefits to their company. Some confusion may have been due to the way the question was asked. Another explanation is that survey respondents may not have access to the data necessary to answer the question. The person in a company that pays the benefits bills may not be the one writing the pay checks. Neither one may have access to the others record or the income statement of the company, which would also contain this data. More importantly no person may have been assigned the responsibility to complete survey forms.
Companies most often offered health insurance, life insurance, a retirement plan, a dental plan and employee discounts. Paid paternity and maternity leave as well as child day care were offered by far fewer companies than the top five benefits. For example, 60.5 percent of companies offered health insurance to clerical and technical employees but only 4 percent offered child day care to clerical and technical employees (Table 2).
The analysis of benefits paid by companies in different industries reveals that an employer in either Public Administration or Mining is more likely to provide benefits than an employer in Agriculture or Retail Trade (Table 3). For example, 95.8 percent of companies in Public Administration and 85.7 percent of companies in Mining offered health insurance benefits to their production, maintenance and service employees (Table 3). On the other hand only 37.2 percent of companies in Retail Trade and 47.9 percent of companies in Agriculture offered health insurance benefits to their production, maintenance and service employees (Table 3).
Another way to distinguish between the frequency of benefits offered is by employee occupational category. Managerial and professional employees are more likely to receive benefits than clerical and technical or production, maintenance and service employees. For example, 51.8 percent of companies offered managerial and professional employees life insurance, but only 49.1 percent of companies offered life insurance to clerical and technical and 46.1 percent to production, maintenance and service employees (Table 2). In most cases, the analysis did show that if an employer had employees in all three employee occupational categories they all received the same benefits. The difference lies mostly in the fact that not all companies had employees in all three categories.
Companies offer more paid leave to their managerial and professional employees than clerical and technical or production, maintenance and service employees. For example, the average number of days for paid holidays were 5.5 days for managerial and professional, 5.1 days for clerical and technical, and 4.3 for production, maintenance and service employees (Table 4). Managerial and professional employees had to be with the company on average 2.5 months to receive this benefit. Clerical and technical employees averaged 2.4 months and production, maintenance and service employees 2.6 months (Table 5).
A look at benefits and firm size shows a significant correlation between the two. The larger the company the more likely it offers benefits (Table 6). Companies with 100 or more employees (Table 6) all offered health insurance, and all companies with 250 or more employees offered life insurance (Table 6). By contrast, only 41.8 percent, 33.9 percent and 27.8 percent of companies with 1-4 employees offered health insurance benefits to their managerial and professional, clerical and technical or production, maintenance and service employees respectively (Table 6).
We determined that companies are more likely to provide benefits to managerial and professional employees than to clerical and technical or production, maintenance and service employees. Production, maintenance and service employees are the least likely to receive benefits. The larger the company, the more benefits are offered. There is also a relationship between benefits and the different industries. A higher percentage of companies in Public Administration and Mining offer benefits than other industries. Exceptions include companies which offer profit sharing and employee discounts depending on the nature of the business. Agriculture offers by far the fewest benefits followed by Retail Trade and Construction.
Overall, this pilot survey was a success, and we plan to continue this survey in the future on a quarterly basis after some revisions. Research & Planning also plans to further coordinate its efforts with neighboring states, such as South Dakota and Nebraska, which are currently working on their own benefits surveys.
1. Deana Hauf, Wyoming Wage Survey.
2. Dallas L. Salisbury, Do Employers/Employees Still Need Employee Benefits? (Employee Benefit Research Institute 1998).
3. C. Alan Garner, " A Closer Look at the Employment Cost Index," Federal Reserve Bank of Kansas City Economic Review 83, no. 3 (1998): 63-78.
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