5
EMPLOYEE BENEFITS IN VARIOUS INDUSTRIES
3
22
6
Contents 4
QI: Employee benefits have gotten a lot of publicity since Treasury One wa8s
Table 4
EBRI
released in November. How many workers actually have employee benefits?
L
TO produce reliable estimates of the effects of alternative limits on employee
Table 2
Table I
administratively complicated if their Tablecurrent-l 5 aw treatment were to be
TABL TableE 31
insurance such as that proposed by the Tabladministration, e 8 employees with incomes
therefore tax health insurance heavily at lower income levels while leaving it
This is probably due to the fact that health insurance premiums, which make up
the upper earning 1/3 of workers contribute an average of 6.46 percent
continued.
benefits, it would be necessary to have data on the value of employee benefit
below $I0,000 would pay almost seven times as large a share of income in added
virtually AI: Out untouched of approximat ately higher88 income million levels. non-agricultural employees in 1983: Pa_e
the largest portion of health and welfare plan contributions, do not vary by
packages at various income BENEFITS levels. AS A SHSuch ARE OF dataTOTAL areCOMPENSATION not available. a Instead,
taxes on health insurance WAGES as AND PROJECTED employees SALARIES, 401(k) TAX with ABENEFITS, CAP ND incomes IREVENUES RAs _Dabove EMPLOYMENT $I00,000. Employees
EMPLOYER BENEFIT OUTLAYS PER EMPLOYEE,
income. In contrast, IRA _Ok_HLYretirement ANCCNTF)?L_]O_ D SPOUS $ ALprograms, TOIRA STATE pART r_L_I"[EICIwhich PAT H_kLTH ION 3_SU aim F_I kW N C£to 1pL 982 _Streplace 3903 A_D 3984 a share of
over 50k average would be $3,230
Table 3: Percentage Of V,'o,'kers With Heallh Insurance Coverage, 19S3
estimates of the effects of alternative tax caps have to rely on benefits
would The Treasury's be taxed tax according proposalto as various submitted BY INDUSTRY, factors in having November 1983 little 1984 would or nothing have capped to do
A Floor on Nontaxable Benefits
AND EQUAL-REVENUE BY INDUSTRY, LEVELS1983 OFaA TAX FLOOR
preretirement Health QI: EmpInsur loyeeanincome, cbenefits e--162NO are NA mha illion Gvgenerally RI eCUgotten LTUpers RALbased oans WAGE lotat A on o Nfa Dll income-related pSuALA bli ages cRY ity Wwi Ot R sin h KERS cepri formulas. mary or se 1condary;
83 percent contributed less than this amount
[?_LOIT_ CO%'_KAC£ O_LY £t:PLOY_r A)_D TA_3L¥ COV£RAC_
provided Industry to the average worker in Mandated various industries. Voluntary IfTotal employee benefits
with income or ability to pay.
tax-exempt employer payments for health insurance. This proposal would have
Rank S_ate PerPriva cen_'a_e te WRank krs Slat Tote 401(k)Percentage Cont Avg Rank To S_at_ t IRA ___C ee ont Percentage Avg
Treasury One was released in November. How many workers
82 million workers PERCENTA with GE primar DISTRIBU y Tor ION secondar WITHINy;EARNaING ndS 62GROUP million S workers with
Cost To _-.p)e_ee Cost To Slate Cost To Kmp)c_'ee COst TO State !
vary little within industries, the effect on the average worker in an industry
I
penalized firms in high-cost Average areas Average or with Annual high-cost work forces. The revised
ALTERNATIVE WAYS TO SET LIMITS )_S.__ON .,_._.]1987 BENEFIT 2_S_. 3GROWTH _S) 19883984 39831989 )9S4 1990 )gO) )984 1
Asacan tuall alternative y have emplo toyeeaAverage cap benefits? beyond which Legally benefits would Pensions be taxable, Health it has been
AND CUMULATIVE DISTRIBUTION ACROSS EARNINGS GROUPS
primary coverage
Q8: How many employers "match" the employee 401(k) contribution?
] Nevada 66.4 Jg _qsconsln 60.g 34 Alaska 55.0
0
is Agric a ulture, good measure of the effects on the industry as a whole. If they vary
If the tax cap resulted Annual instead Annual in leaner Employer health Total insurance plans, Full-Time its
version proposed instead that the first several dollars per month of employer
suggested that a taxable Wages "floor" and could Requirbe ed set above Thriftwhich and benefits and would be
Total 711,565(100%) $1.2 bil $1,710 $1.2 bil $1,642
Appendix II
_).bJm_ 0 0 25.00 94.32 65.00 _7.00 75.00 94.32 'i
2 DeJaware 66.0 19 California 60.6 35 Kansas .55.0
forestry, fisheries 7 5 12
considerably, regressivity as dataa revenue on the average source could worker beprovide reduced only or eliminated. a rough measure Evidence of theon
health insurance A]a=ka premiums Wages($I0 and 0 for0Benefit indiv )65. iduals, 70 Outlays )04.57 $25 for O Benefits families) O 365as .70be 304. Equivalent included $7"
nontaxable. Such a floor would tax all health-insurance recipients, not just
Industry Salaries Payments Profit-Sharing Welfare
Limits Q2: Tre onasur benefit y One growth proposedcould a caPercentaKe pbeonset theasamount Distribution a dollar of health figure WithinorEarnings as a percent Groups 1 of
AS: Life Insur 84 per ancce ent --72(Hewitt million Survpersons ey)
0 0 205.08 234.84 0 0 205.08 234.84
industry Mining 3 ILlinoiseffects. 65.8 20 Kentucky 6 60.0II 36 AJabam 17 a 5 t/-8
the likelihood of such an effect is mixed. Research currently in progress
Salaries Percent of Employees
in taxable income This proposal would% avoid of penalizing isolated% Cgroups ontri- and
those compensation. with costly Either plans. method,Such in turn, a floor could would set be onea limit more on reliable all benefits means of or
Tax 1ins -2u0, ran Ca0p00 ceRevenue that cEstimates ould 161,6be 89(23%) pro a/ vided tax free. $.2 bilThe Reagan $1,227package $.2 bil $1,320
Arl,ona 1.O0 ).O0 55.56 67.90 _0.90 6].44 )04.74 178.34 :i
Appendix I
Construction 8 7 14
4 New York 65.6 21 Rhode Tsland 60.0 37 Utah 53.6
under contract to the Department of Health and Human Services suggests that a
Industry Mandatory Voluntary Compensation (in millions)
Manufacturing could would set instead separate Arkanspread sas limits $20,93 theon 8 tax )?v .38arious penalty 20.84$2,124 benefits. 4).broadly. 00 48.00 $1,267 It 33,06 would, 44.24 however, 4].00$2,046 48.00 lea : ve
raising(inrevenue billionsthrough ) employee $benefits 4.6 than $ 8.0a tax cap. $ 9.8 Employees $11.9 would be
20 rep,l000-25 aces ,00 this 0 "cap"89,with 780(1wh 3%) at Emp hasloby- een .referred 0e6mployed to as652 Elaigi "floor." ble for .14 buting of1,530
Dis Q9:ability The Insuran Reagan cep-- ac5k1agemillion would tighten the loan and eliminate hardship
The value of benefits per worker varies considerably 62.32 70across .28 4).00industries. 48.00"
Man capufaof cturing the size proposed by the administration 6 13would result 20 in a large
3 Pennsylvania 64.5 U.S. Arc-rage .59.7 38 Washington 32.8
Pemployers ublic Utilities and employees25,3free 47 to bargain 2,030 ever-richer 2,39benefit 9 packages 2,047if they t
able to avoid tax under a taxmerit cap by negotiating with IRA more Spousal cost-effective IRA EliEihleplans
25,000-30,000 91,755(13%) .09 1,537 .16 1,780
withdr How doawal the peffe rovisions cts of of these 401(k) proposals plans. differ? How many plans have these provisions?
C_3_forn_a ).38 9.)9 ?).DO ?6.00 20.08 30.97 )68.00 3B5.00 !
According decrease to in Department employer ofexpenditures, Commerce databut on the other entire.work studies force, suggest thethat average the
General Transportation Considerations 8 I0 18
Agriculture, Department stores 11,701 1,122 31a 618
with 6so New chose, their 3_seand yemployers would 6z serve or /.3 byprimarily 22 reducing Georgiatocoverage raise revenues. 59.6 for certain 39 Colorado benefits. If a52.4 tax
Dental 30,000/-5 Visi 0,0o0n-- 0 3020million 4,946(29%) .5 2,358 .36 1,730
24.06_'. 24,26 7),00 76.00 bO.SB 53.79 )£e.O0 )BS.O0 1
Employee Benefit Research Institute Table 7
reduction would "¢o]oradbe o much smaller. 22.38 "32.00 _2.]2 53_1_ 237.01 )2_.00 42.32 $3.]2'i
U.S Communication . worker received $2,031 in voluntary5 or discretionary 20 25employer benefit
Trade (wholesale
7 floor forestry, Ohiowere fisheries implemented, 6#.I$Ii,014 however, 23 Oregontaxes 878 could59.3 646 only 40 be avoided Florid1a2% by dropping 5]. 1.5 8
Equal-Revenue over 50,000 Tax 111, Floo663(22 r %) .3 2,261 .23 2,020
Q3: Does the availability and cost of health insurance vary 2
Total AP: Lo Nonfar an provisions mEmployees are in 35 88,214 percent 14,9 and72hardship 2,988 provisions in1,787 18 percent
Connecticut Employee O " Benefit "O GGExpenditures .BB 79.98 4).22 20.01 93.68 86.68 ':
contributions Public Utilities in 1983 (Table I). Industry6 totals ranged I; from22 $646 per worker
NON-AG HAGE CONCLUSIONS & SALARY 1983 401K CONTRIBUTION AMOUNTS
and other retail) 17,095 1,501 727 1,047
•Mining 8 coverage A cap Connect on ientirely. cut benefits l:<]a_aze that 63 Some .129,97 was employees 3 24 set 0 Nhigh ewO2would Hampsh ,104 enough _6probably i .0r 8e to3,951 6.59.1 4affect .32 do 0so, t/relatively l but Minn 0 for 17 esot )37 a .9few the .2 remainder employees 258.18 5].2 :0.9 i
(monthly contribution) $25 $42 $52 $63
(bHyewitt state?Survey).
Dependent (O00's) Care--2 million
in Banks agriculture and other and $926 in retail 14.46 ]6.92trade--about 56.08 64.32half 34.76or less 40.74 of 137the .92 national 358.)0 ,
_._olesale A dollar cap trade would limit the income replacement 6 potential 7 of14benefits that are
the tax floor would be even more regressive than the tax cap since more
Co 9 nstru Masc sachus tion etts " 63.021,968 25 Idaho1,924 1.680 5g.9 42 New14 Mexico 51. 3.7 1
could increase incentives to employers to contain benefit costs, as employers
401K USERSI ToEal
T)orSda )3.28 )5,)0 _9.88 65.20 48.46 55.64 75.06 322.80
average--to Re keyed financi tail to atlrade the in- $7,342 employee's per worker income in level, communication, 7such as life 6onand _ more disability 13than three insurance and
Manufacturing employees Proposals would that would be affected. limit 22,170theAcurrent-law tax 1,713 floor, tax particularly 3,649 treatment of if it employee 20 were set benefits 17.8 at a
J0andNoemployees rth Carolina Georwould gia 63 probably .0 26 )0,00try Soutnot )3h .)0 Ca to roli 5let na ),)0 benefit 55 6.28. 0 7 30,O0 costs it3 _9 Iowa ,30approach 93.90 the )0).6$ limit. 49 I .7
QI0 Q4:: HAr owe much such is provi spent sionson i hemaplth ortaninsurance? t to encourage 401(k) plan participation? 4
$I Group -4,999Legal--2 million 100.0% 6.7% _/ _/
Questions and Answers
H_al£ )5.99 .15.$8 35.90 35.90 49;)4 72.46 49.14 49.34 :
one-half and retirement times the and national savings plans. average. Depending The loweron an theindustry's level of the average cap and annual the
Fattempt isituations nance, insuran £o strike ce, a17,641 compromise between 1,438 federal 1,282revenue needs1,04and 7 the
relatively low level, would not encourage employers and employees to seek more
I1Transport By Tennessee the asame tion token, 62.7 however, 24,292 27 it Texas is2,385 possible 3,067 that 57.5 such 44 a Nebraska cap18 would become 49.2 2.6 a
SOURCE: Q6: Do yo U.Su. have Department a betterofbrthe eakdown Treasury; on howand dualtheIRAEmployee and 401(Benefit k) use vResear aries chby
$5,000-9,999 I00.0 8.1 100.0% _/
_,ho O 0 73.]O 73.)0 66.74 66.74 72.)O 73.30
HAGE & SALARY EARNERS (PRIVATE ONLY)
wages provisions, real est andatesalaries, if any, fortheindexing lower it alsofor 6the inflation, value Ii such of its a cap1benefit 7could reduce package.the
Insurance desirability of maintaining 19,089 incentives 1,473 for employer 1,315 provision 1,533 of income
Ctarget cost-efficient ommuni incomce. ation forInstitute. employees _)lJnoJscoverage, in 27,647 firms and O with could O1,91 lower 5 instead 67.10 benefits. 7,342 95.56 encourage 79.44 If 76.44 ithe25 bec alth a ?4°me )0 care a 82._target, 6 1.3 cost ;
Educational Assistance--5 million
AI0: Qb: The A RHeeawgiatt n pack survey age would shows also no change significthe ant taxvariation provisions infor participation 4 or
J2 Hawaii 62.4 28 ,Mississippi 57.1 45 _ryoming /4g.7
134.20 )29.62. 74.10 62.$6
Agriculture, Services retail trade, I and services 6 are the lowest-paid 7 13 sectors of the
incentive for employers, particularly in smaller firms, to establish new plans
Hospitals 18,034 1,375 ]52 1,163
Pincreases security ublic Utilities and if employees risk protection 28,5 sought 70 benefits. richer2,123 coverage As a 6,319 result to compensate , such proposals for 22 the taxes present paid 0.8 a
then total benefit costs would probably grow considerably before stabilizing
amounts contributed based upon plan provisions.
IRA and so-called 401(k) programs that allow workers to set aside
J3$10,0 Mar00- yland 14,999 62.1 29 Maine 100.0 10.7 56.8 46 100.0 Arkansas 36.1% 48.3
_o_Jana 1._8 1._8 _E.64 62.88 36.66 36.66 )29.63 350.32
I ANNUALIZEO AMOUNT DEDUCTED FOR 401K
Regarding
Government 4 12 16
economy; these sectors also provide the lowest benefits per worker.
below that offer the floor. income replacement, since the value of the benefits at higher
Wholesale Miscell at moretheabalanced neo level utrade s of policy the cap. 22,912 22,687 alternative 1,than 71,890 08 proposals 1,897 1,501 that would 14 elimin 1,591 ate 5.0 tax
7cv_ 2_.64 )9.60 66.00 7].32 )_0.02 )38.?6 66.00 GO.14
a/ Based on a Tm oEa onthly l I tax exemption limit of $70 for individual coverage and
J4 A6: funds IndianaYe pre-t s. ax Tab until le 61.4 6they preswithdraw ents 30 Vermont that them.infor Howmati ma 56. ony n. 8 people D47 ual have Okla usehoma is very mu 4ch 5.1 a
$1 Cafet 5,00e0ri -1a9,999 or Section 125 plans--EBRl 100.0 estimat 17.2e is 5 milli 100.0on--ECFC e49.1 stimate 5.4
Communication and public utilities, in turn, are two of the highest-paying
income levels Xzncould _,_ be very 0small.0 Under L£.TDa dollar 84.28 I]2cap, .64 federal 329.71 66 revenue .70 84.7| losses
Retail preferences functiotrade n of for income. certain 12,914 employee 1,0 benefits 50 altogether. 926 Pro13 posals aimed12.5at
millio$n175 for family coverage.
QbII oth : anHowIRAmaannd y a401(k) 401(k) pl plan? ans are there and how many people participate in
$20,000-24,999 100.0 19.9 100.0 62.5
J5 Virginia 61.2 UNDER 31 Loui $325siana$325-699 56.7$700-119 4g9 South $1200 Dakota -1999 $2000-3 45.9 999 $4000-5999 $6000+ IIA
_en_vcky 0 0 46.)0 <9.00 69.26 .23.£6 46.10 <9.00
sectors All industries and also provide the highest benefits. 8 9 16
RECENT PROPOSALS
would All themindustries ? only grow as benefit $20,704coverage grew. $1,859 $1,340 $1,736
Fin limiting ance, insuran the growth ce, of tax-preferred employee benefits could, however, have a
Benefits vary by industry, and they would vary even more if all industries
Lc_Is_=n_ 26.92 _9.52 P£.92 39.52 £3.04 _0.96 63.04 90.98
]6 Michigan 61.0 32 Arizona " _S6.1 49 North Dakota 41.2
The Reagan Tax Reform Package
_ne O O _E._O 67.08 42.28 48.58 )04.04 319.66
real estate 20,725 1,472 2,827 17 5.3
were numberstaffed of unintended by the sameadvtype erse ofall work ocational force. and The distributional concept of a capconseq on eumences. ployee
401(k Q6: )Doplans--EBRl you have a estim betterI atebreakdown is 19 milli on ohow n dual IRA and 401(k) 6
$25,000-29,999 i00.0 28.6 I00.0 50.5
17 _resI VL-ginia 6].0 33 M,issouri 56.1 50 Montana 37.6
_r]')_d 5.68 )0.20 $3.]0 57.08 )6.20 29,08 )4b.64 )64.8_
ToEal ............... The share of compensation 1,886,819 provided 69,931 as volun 488 ta ,4r7y4 employee 250,329benefits 550,a 8lso 22 varies 278,169 30,696 56,_41 161,95_
Percent of Compensation Limits on Benefit Contributions
Three Firms specific with large proposals numbers toof include older workers some part and ofcovered employer workers contributions with low for or
Ser benefits vices implies that 1a7,2dollar 20 of1,196 spending on 1,431 benefits has13the same 17.2 value
All: EBRI's May 1983 CPS 6.1sur _ ve 1ly .)2 indic 55.a 3t 6ed 63.4. 00 8 million 17.86 32,80workers 360.80 were )85.92 offered
use varies by income?
$30,000-49,999 I00.0 38.7 I00.0 66.6
PercenE ............. 100.00 3.71 25.89 13.27 29.19 14.74 1.63 2.99 8.5_
widely. Voluntary benefits provided range from 5 percent of total
_eisaChU&et%l i).56 )0.19 £9.03 eS.O) 24,00 2),3B )43.04 )78.46
SOUR benefits SourCcE: e: inEBRI EBR taxable I ccal alccuincome ulations lationshave based based beenonraised oU.S. n U.S. Dep before arCthamber ment Congress. ofofCommer Commerce, ce, BureEmplo au yee
Government regardless moderate incomes of how,could where, 20,263 be among and onthose whom 962 Tabadversely lit e 6is2,985 spent. affected. Because C16 overage benefit gaps16.2 costs are
_EARNIHGS
plans 3.withHealth 39.31 percent Care Cost particContainment: ipating in them. A tax Therefloor has been is potentially significant
$Retirement 50,000 and plan over participants affe I00.0 cted by 59. distribution 2 I0rul 0.0e changes--40 77.4 million
K_c_]san 8.45 )0.38 76.02 93.42 23.66 29.07 2]2.90 263.62
May 29, 1985
compensation in agriculture and 6 percent in retail trade to 17 percent in
DONT KNON A percent ...... ageBenefits ofcap Economi on 75,52 c1983 benefi 0Anal (Washing tyssis, wo5u,ld 1tSur 6o0n,place veyD.of C.: a 2Current 3,less 21984), 89 stringent Bus table iness, 2,568. 2limi Jul ty on1984. 19,the 472 ability 23,270 - - 1,567
currently largest among low-income workers; some tax cap proposals could
differ across industries, geographic locations, and even employees, the same
new inflationary, plan creation _nesotsin a ce since it is th Osimple at time, O to offset and 63.20 employers workers' 69.50 ?._4report greater 8.50 thtax a 33t 0.04 partici liability )46.00 pation by
(some Q7: Hin ow more much than do employees one plan)with _Ol(k) plans actually contribute? 7
P_rc_nE ........ 100.001 6.851 30.92 3.40 25.851 30.89 - - 2.0(
public utilities and 20 percent in communication (Table 2).
to design benefits _!_s_s(_p_ with a specified 0 0 income 2E.BO replacement