Recent Developments in Employer-Provided Benefits*
by: Guy Tauer, Workforce Analyst, State of Oregon Employment Department

"With near-record low unemployment rates, many employers are attempting to recruit and retain their workforce with more generous and creative benefit options."

R ecently a number of employers have become more creative and generous with the benefits that they offer to workers. With the national unemployment rate dropping to 3.9 percent, worker recruitment, retention and turnover are important issues. As noted in the most recent Beige Book, published by the Federal Reserve Board in May of 2000, “Many Districts noted that lack of available workers continues to hamper overall economic growth; and reports of employers bonuses, assistance in finding child care and health benefits were more widespread.”

Recent data show employers are offering more benefits to attract and retain workers. A March 1999 study by the U.S. Department of Labor, Employer Cost for Employee Compensation, found that 28.0 percent of total compensation costs for employers in the private sector and in state and local government are for benefit costs. Nontraditional benefits such as employee assistance plans, dependant care, flexible time and other family-friendly programs are popular with employers because they can be provided at relatively low cost.

Part-time workers are also seeing an increase in their benefits. Vacation days or holidays are the most common benefits granted to part-time workers due to the fact that it is fairly simple to prorate the number of hours given based on the number of hours worked. However, employers are now offering more part-time workers major benefits such as medical/dental coverage and flexible schedules. Other firms have recently been offering benefits such as tuition reimbursement to part-time employees. Reasons cited for this shift include employers wanting to reduce the high turnover rates among service sector employment without raising wages.

A comparison between firm size and benefits indicates that large firms offer more benefits to both full- and part-time employees than small firms. The benefit coverage rates for life insurance, defined benefit pension plans and unpaid family leave were much lower for small firms than medium or large firm employees. Small firms cite several reasons for not offering a retirement plan, including revenue uncertainty; workers being seasonal or part-time or having high turnover; employees preferring wages and/or other benefits; and plans costing too much to set up and administer.

Employer-provided benefits continue to be of great importance, both to employers who pay for them and to employees who receive them. There are many factors that help explain why the incidence of some benefits appears to be slipping while other benefits continue to increase in popularity. As more research is done in this area, employers will become increasingly aware of which benefits are the most cost effective to provide, and which are the most sought after by the work force. Employees will generally receive the most comprehensive benefits from larger employers, and if they are employed full-time. With near-record low unemployment rates, many employers are attempting to recruit and retain their workforce with more generous and creative benefit options. Until the labor pool supply begins to outpace demand, workers will continue to reap the “benefits” of the current economic conditions.

* Reprinted with permission from the July 2000 issue of Oregon Labor Trends, a monthly publication produced by the Oregon Department of Employment. Edited for Wyoming Labor Force Trends by Krista R. Shinkle, Research & Planning, Wyoming Department of Employment.

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