Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, March 17, 1991 TAG: 9103140039
SECTION: BUSINESS PAGE: E-2 EDITION: METRO
SOURCE: BY FRANK SWOBODA THE WASHINGTON POST
DATELINE: LENGTH: Medium
But corporate size isn't the only factor in determining the level of benefits workers can expect from their employers. What the company produces also has a major bearing on the kinds of benefits it provides.
Labor Department economists Thomas Burke and John Morton, writing in the current issue of the Monthly Labor Review, said a study of benefit statistics collected by the government shows that while "a majority of U.S. workers receive paid leave, insurance and retirement benefits from their employers, the incidence and characteristics of these benefits vary significantly by industry group and size of establishment."
The study is based on the results of the 1988 Employee Benefits Survey conducted by the Bureau of Labor Statistics. The 1988 study was the first to include all industries in the private economy, and to have uniform minimum size of 100 employees. In previous years the survey did not include companies with fewer than 250 employees.
The study covered the benefits received by 31 million full-time workers. Survey results are, for the most part, limited to benefits that are paid at least in part by the employer.
Key findings of the study in the critical and expensive area of health and pension benefits show:
Goods-producing and larger companies are more likely to provide medical coverage than smaller firms and companies in the service sector.
Nearly three-quarters of all full-time workers in goods-producing industries and those employed by larger companies are covered by defined benefit pension plans that promise a certain level of benefits regardless of cost. But less than half the workers in service industries and those working for smaller firms receive such benefits.
There was a wide variation in benefits coverage within the size and industrial groupings. The biggest disparity was among employers in the service sector.
For example, employers in the service sector include public utilities such as the telephone, gas and electric and transportation companies as well as employers in retail trade. "Employees in the first group traditionally have more generous benefits than those in the second group," the authors wrote.
Among public utilities, the cost of non-mandated benefits was an average of $4.71 for every hour worked, the highest in the nation, including the basic manufacturing industries. But the service sector also includes retail trade, which has an average per-hour benefit cost of $1.04, by far the lowest of all industries.
The per-hour cost of benefits not mandated by government also varies in the manufacturing sector, where basic industries tend to be unionized and generally have defined benefit plans. For manufacturers of durable goods surveyed by the Labor Department, the average benefit cost per hour is $4.38, while manufacturers of non-durable goods average $3.29 per hour for benefit costs.
"We find the benefits get very thin in the small firms," Morton said. In the health care area in particular, Morton said, the health insurance industry does not provide the kind of coverage that many small firms can afford.
The survey results reported on by Burke and Morton do not show the shift that has taken place from defined benefit plans to defined contribution plans for employee benefits. This shift has been taking place throughout the 1980s, particularly among non-union firms, as a way to stabilize rapidly rising benefit costs, particularly in the health care area where costs recently have been rising an average of 20 percent or more a year.
"We have noticed that a lot of companies have shifted from defined benefit to defined contribution plans, if for no other reason than blue-collar manufacturing work is down," Morton said.
By shifting to defined contribution benefit plans employers have been able to stabilize their costs by paying a specific amount of money each year that employees can use to buy benefit coverage, often offered by the employer at a group rate. Or the employee can pocket the money and take a risk of going uncovered by insurance benefits such as health and pension.
Morton said the Labor Department has recently begun to notice pressure from some of the very benefit consultants who were pushing defined contribution plans in the 1980s back toward defined benefit plans. He said department studies show that if workers have access to benefit money, particularly at the lower end of the wage scales, they spend it.
As a result, Morton said, many benefit consultants are beginning to worry that these workers will end up with no health and pension coverage.
by CNB