THE GROWTH OF EMPLOYEE BENEFITS
Wage and price control during the wars, unions negotiations, cost effectiveness of benefits, employer and government impetus had been the strongest reasons behind the historical growth of benefit packages (Newman et al., 2017). From the macro to the micro factors, today’s benefit packages are still being shaped by the effects of governments, unions, employers, and some cost issues. While the local, state, and federal governments mandate some of benefits, unions keep continue to negotiate for benefits packages of employees. In addition, employers use benefits as a tool in order to improve performance, satisfaction, and productivity in organizations because benefits still provide cost effectiveness for the employers due to being group based and taxable free.
Negotiating for benefit packages is one of the main advantages of union membership because the main purpose of labor unions is defined as giving employees the power to negotiate even for benefits (UWUA, 2020). Therefore, it can be accepted that since the war and ruling act years, the impacts of unions on benefit plans continue. Utilities, management, information, finance and insurance, manufacturing, mining, quarrying, and oil and gas extraction, wholesale trade, technical, professional, scientific services, transformation, and warehousing are the top industries with the best benefit packages. It can be observed that the best benefit packages are still available in industries with strong union representation because collective bargaining power provides employees to be offered such benefits (Satter, 2018). Government mandating of employee benefits is another issue that still shapes the growth of benefit packages and mandating benefits does improve benefit provision (Mitchell, 1990). Hence, government is accepted as having an important role in the growth of benefits such as retirement security, unemployment insurance, and social security (Newman et al., 2017).
In order to build an effective competition, employers tend to use benefits packages because of pragmatic concerns and reasons. Miller (2019) emphasized that employers know the importance of benefit packages and boost benefits to win and keep top talent in the labor markets. It is a necessity to recruit and retain highly qualified and high-potential employees in a competitive labor market. Benefits are about 30% of employer cost of compensation in the U.S., and most of the benefits are not taxable. However, it is necessary for the employers to calculate the value of benefits for making an effective cost decision (Meyer, 2018). In addition to the mentioned factors which are effective on the growth of benefits packages, there are current reasons for declines in the size of benefit packages. According to SHRM’s annual survey, while there are more than 60 benefits on the rise, some benefits are on the decline currently such as preventive programs, short-term disability insurance, incentive bonus plan, onsite health screening programs etc.
Possible presenting reasons for declines in the size of benefit packages can be related with cost and effectiveness of benefits and employees’ needs and expectations. If the effectiveness of a benefit is getting lower and its cost is increasing, it is inevitable for a company to stop it. Employers struggle to cut costs and become more productive in a globalized world. On the other side, the costs of many benefits are growing much faster than predicted. For example, healthcare benefit costs tripled in last 2 decades in the U.S. Therefore, healthcare plans are being shifted to health maintenance organizations to save money. Despite effectiveness and cost of benefits, employers want to change employees’ behaviors such as encouraging them to be healthier with wellness programs (Semuels, 2013).
By the way of conclusion, employer and employee-side factors such as costs and needs may affect the possible decline of benefits. According to Newman and his colleagues (2017) employers evaluate the compensation costs, relative costs, what competitors offer, the role of benefits on employees, and legal requirements in order to prepare an appropriate benefits package. These are the determining issues on benefits packages which may cause decline on the size of benefits packages.
References
Meyer, Cynthia (2018), How Much Are Your Benefits Really Worth, Forbes, https://www.forbes.com/sites/financialfinesse/2018/09/24/how-much-are-your-benefits-really-worth/#54a860ac7879
Miller, Stephen (2019), Employers Boost Benefits to Win and Keep Top Talent, SHRM, https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/employers-boost-benefits-to-win-and-keep-talent.aspx
Mitchell, Olivia (1990), The Effects of Mandating Benefits Packages, NBER Working Paper №3260, https://www.nber.org/papers/w3260
Newman, J. M., Gerhart, B., & Milkovich, G. T. (2017). Compensation. McGraw-Hill Higher Education.
Satter, Marlene (2018), 10 industries with the best benefits packages, Benefits Pro, https://www.benefitspro.com/2018/04/04/10-industries-with-the-best-benefits-packages/?slreturn=20200216155319
Semuels, Alana (2013), The numbers behind the decline in workplace benefits, Los Angeles Times, https://www.latimes.com/business/la-xpm-2013-apr-07-la-fi-mo-numbers-decline-workplace-benefits-20130407-story.html
UWUA (2020), What are the Benefits of Being a Union Worker, UWUA, https://uwua.net/what-are-the-benefits-of-being-a-union-worker/
