Compensation and Working Conditions Summer 2000 17

Private Sector Employee Benefits

ANN C. FOSTER

Private Sector Employee

Benefits, 1996-97

In 1996-97, a majority of private industry workers received paid holidays and vacations, life insurance, and

medical care coverage. Few of these workers had paid

family leave or were eligible for supplemental unemployment benefits, long-term care insurance, or childcare

assistance.

Ann C. Foster is an economist in the

Division of Compensation Data Analysis

and Planning, Bureau of Labor Statistics.

Telephone: (202) 691-6199

E-mail: Foster_A@bls.gov

This article is based on data from

the 1996 Employee Benefits

Survey (EBS) of small private

establishments (those with fewer than

100 employees) and the 1997 EBS of

medium and large private establishments (those with 100 employees or

more). These surveys cover 100 million employees (78 million full time

and 22 million part time) in the private sector. Employee Benefits Surveys are conducted by the Bureau of

Labor Statistics to obtain information

on the incidence and characteristics of

employer-provided benefits.1

This article first describes benefits

and coverage provided to all private

industry employees. It then examines

differences by employment status (full

and part time) and establishment size,

both of which have been found to have

an impact on employer-provided

benefits.

Types of benefits and coverage

The EBS provides detailed information about paid leave, disability, medical and dental care, life insurance, and

retirement benefits. This section gives

a brief description of the prevalence

and details of these benefits, as well

as the prevalence of Internal Revenue

Code Section 125 plans and other selected benefits.2 The prevalence of

each benefit is denoted by the percent

of current employees who participate

in, or are eligible for, the benefit. Participants in insurance and retirement

benefits, shown in tables 1-3, have met

minimum length of service requirements and paid any required employee

share of the benefit cost. Eligible

workers in the remaining benefits programs include all employees in occupations that have been offered the

benefit.3

Paid leave. In 1996-97, paid leave

plans with the greatest proportion of

private sector workers participating

were vacations (79 percent) and holidays (73 percent); the lowest were paid

family leave (2 percent) and paid personal leave (15 percent). (See table

1.) In 1991-92, participation was 82

percent for vacations, 77 percent for

holidays and 14 percent for paid personal leave.4

The average number of paid vacation days increased with an employee’s

length of service, ranging from 8.7

days after 1 year of service to 17.5 days

after 20 years of service. (See table 2.)

Forty-four percent of all workers
18 Compensation and Working Conditions Summer 2000

TABLE 1. Percent of private sector employees participating1 in selected benefits, 1996-97

Paid leave

Holidays .................................................................... 73 85 29 66 81

Vacations .................................................................. 79 91 35 72 87

Personal leave .......................................................... 15 17 6 12 18

Funeral leave ............................................................ 56 66 22 42 73

Jury duty leave .......................................................... 63 73 28 50 79

Military leave ............................................................. 27 32 7 14 41

Sick leave ................................................................. 44 53 13 40 50

Family leave .............................................................. 22122

Unpaid family leave ........................................................ 62 70 35 42 87

Short-term disability ....................................................... 31 36 15 25 39

Long-term disability insurance ........................................ 26 32 2 17 37

Medical care ................................................................... 57 70 11 49 58

Dental care ..................................................................... 37 45 8 24 52

Life insurance ................................................................. 61 74 11 48 76

Retirement plans ............................................................ 53 62 20 37 71

Defined benefit pension ............................................ 27 32 8 12 45

Defined contribution .................................................. 40 47 15 31 51

Savings and thrift ................................................. 26 31 7 18 34

Deferred profit sharing ......................................... 11 13 6 10 12

Employee stock ownership .................................. 23114

Money purchase pension .................................... 56237

Employment status Establishment size

All (number of workers)

employees

Full time Part time Fewer than

100 100 or more

Benefit

2

2

3

4

1

 Only current employees are counted as participants. Participants in insurance and retirement benefits have met minimum length of service requirements and paid any required

employee share of the benefit cost. Participants in all other

benefits include all employees in occupations offered the benefit.2

 The Employee Benefits Survey (EBS) definition of paid

sick leave and short-term disability (previously called sickness

and accident insurance) changed in 1995. Paid sick leave now

includes only plans that specify either a maximum number of

days per year or unlimited days. Short-term disability now includes all insured, self-insured, and State-mandated plans available on a per disability basis, as well as unfunded per-disability

plans previously reported as sick leave. Sickness and accident insurance, reported in years prior to the 1995 EBS, included only insured, self-insured, and State-mandated plans

providing per-disability benefits at less than full pay. 3 Includes defined benefit pension plans and defined contribution retirement plans. The total is less than the sum of the

individual items because some employees participated in both

types of plans. 4 The total is less than the sum of the individual items because some employees participated in more than one type of

plan.

Holidays .......................................................................... 8.3 8.5 6.8 7.5 9.1

Vacation days by minimum length of service

 requirement (in years)

1 ................................................................................. 8.7 8.9 6.7 7.9 9.5

10 ............................................................................... 15.0 15.4 11.3 13.4 16.6

15 ............................................................................... 16.5 16.9 12.5 14.4 18.5

20 ............................................................................... 17.5 17.9 13.1 14.9 19.9

Personal leave ................................................................. 3.3 3.3 2.8 3.0 3.4

Funeral leave ................................................................... 3.4 3.5 2.5 2.9 3.7

Military leave ................................................................... 14.4 14.6 10.4 11.7 15.2

TABLE 2. Average1

 days per year provided to participants in selected paid leave plans, 1996-97

Benefit

All

participating

employees

Employment status Establishment size

(number of workers)

Full time Part time2 Fewer than

100 100 or more

3

1 The average shown is for covered workers only. 2

 Leave provisions for part-time employees usually are prorated based on their work schedules. 3

 Funeral leave averages are per occurrence.
 Compensation and Working Conditions Summer 2000 19

Private Sector Employee Benefits

participated in paid sick leave plans

that provide employees with a number of fully paid days per year to cover

absences due to illness or injury.5

Disability. Short-term disability

(STD) benefits provide for salary replacement, most often partial, for a 6-

to 12-month period. Thirty-one percent of all employees participated in

short-term disability plans.

Long-term disability (LTD) benefits, in which 26 percent of all workers participated, replace a portion of

an employee’s salary, but for a longer

period than STD. LTD benefits are

generally paid until the disability ends

or until retirement.

Medical and dental care. In 1996-

97, 57 percent of all employees were

covered by a medical care plan, compared with 65 percent in 1991-92.

Among workers with coverage, 39

percent were in plans with fully employer-paid individual coverage, while

22 percent were in plans with fully

employer-paid family coverage. (See

table 3.) In 1991-92, these proportions

were 51 percent and 29 percent, respectively. Thirty-seven percent of all

employees had dental care coverage,

compared with 43 percent in 1991-

92.6

Life insurance. A substantial majority (61 percent) of all workers had life

insurance coverage in 1996-97. The

amount provided was often a flat

amount or a multiple of the employee’s

earnings. For most covered employees (84 percent), benefits were entirely

employer financed. In 1991-92, however, 67 percent of all private sector

workers had life insurance coverage.

The proportion of covered workers

with fully employer-paid coverage was

the same in both periods.7

Retirement. In 1996-97, 53 percent

of all workers were covered by at least

one retirement plan, similar to the 54

percent reported in 1991-92. The types

of retirement plans in which covered

workers participated, however, differed in the two periods. Defined benefit pension plans, which use predetermined formulas to calculate retirement benefits, were available to 27

percent of all workers in 1996-97,

compared with 34 percent in 1991-92.

In both periods, almost all (96 percent)

of those covered were in plans that

were entirely employer financed.

Defined contribution retirement

plans, which specify employer and

employee contributions, but not the

level of future benefits, were available

to 40 percent of all workers in 1996-

97, compared with 35 percent in 1991-

92. In both periods, savings and thrift

plans and deferred profit-sharing plans

were the most prevalent defined contribution plans.8

Section 125 plans. Section 125 of the

Internal Revenue Code governs flexible benefits plans, flexible spending

(reimbursement) accounts, and premium conversion plans.9 In 1996-97,

Section 125 plans were available to 31

percent of all workers. (See table 4.)

Section 125 flexible benefits plans,

often called cafeteria plans, were available to 7 percent of all employees.10

Flexible benefits plans allow employees to determine how their employers’

contributions will be allocated among

the benefits offered. Employees often

are able to purchase additional benefits on a salary reduction basis.11

Other benefits. The EBS provides

information on the percent of workers

eligible for a number of benefits as

shown in table 4. Of these benefits,

job-related education assistance, such

as reimbursing a secretary for taking

a word processing course, was available to the greatest proportion (45 percent) of all workers in 1996-97.12

Two employer-subsidized health

improvement benefits—employee assistance programs and wellness programs—were available to 33 percent

and 19 percent, respectively, of all

workers. Employee assistance programs generally provide counseling

and referral services for acute conditions, such as alcohol and drug abuse

and emotional and financial problems,

that might affect job performance.

Wellness programs, which include

physical fitness, smoking cessation,

stress management and weight loss

programs, emphasize prevention of

problems that can lead to poor health.

Few workers were eligible for supplemental unemployment benefits (2 percent), long-term care insurance (4 percent), and childcare assistance (5

percent).

Employment status

Part-time employees13 were less apt to

participate in employer-provided benefits than were full-time employees.

(See table 1.) Paid vacations and holidays were among the most prevalent

benefits available to part-time workers. When these benefits were available, fewer days, on average, were provided to part-time workers than to

full-time workers. In addition, time

off was generally prorated based on the

part-time worker’s schedule. Parttime employees with paid holidays

averaged 6.8 days per year, compared

with 8.5 for full-time employees. For

part-time employees with vacation

benefits, the average days available

ranged from 6.7 after 1 year of service

to 13.1 after 20 years of service. For

full-time employees, these figures were

8.9 and 17.9 days, respectively.

Part-time employees were less apt

to participate in insurance benefit

plans than were full-time employees.

For example, 70 percent of full-time

employees participated in a medical

care plan, compared with 11 percent

of part-time employees. Forty-five

percent of full-time employees participated in a dental care plan, compared with 8 percent of part-time

employees.

Part-time employees were also less

likely to participate in retirement

plans. For example, defined benefit

plan participation was 32 percent for

full-time and 8 percent for part-time

employees; for defined contribution

plans, these figures were 47 percent

and 15 percent, respectively.

Lower participation among parttime workers may result from their not

having been offered the benefit. For

insurance and retirement benefits,
20 Compensation and Working Conditions Summer 2000

TABLE 3. Percent of private sector participants in selected benefits by source of financing, 1996-97

Short-term disability coverage .............. 100 100 100 100 100

Wholly employer financed .......... 73 75 46 66 78

Partly employer financed ........... 23 21 40 26 20

Not determinable ....................... 5 4 14 9 2

Long-term disability insurance .............. 100 100 100 100 100

Wholly employer financed.......... 79 79 64 81 78

Partly employer financed ........... 19 19 33 17 20

Not determinable ....................... 22322

Medical care:

Employee coverage ........................ 100 100 100 100 100

Wholly employer financed.......... 39 39 43 48 33

Partly employer financed ........... 61 61 57 52 67

Not determinable ....................... (1) (1) (1) _(1)

Family coverage .............................. 100 100 100 100 100

Wholly employer financed.......... 22 22 34 25 22

Partly employer financed ........... 77 78 65 74 78

Not determinable ....................... (1) (1) (1) 1(1)

Life insurance ....................................... 100 100 100 100 100

Wholly employer financed.......... 84 84 85 81 86

Partly employer financed ........... 15 15 12 17 13

Not determinable ....................... 11221

Defined benefit pension ........................ 100 100 100 100 100

Wholly employer financed.......... 96 95 98 97 95

Partly employer financed ........... 44234

Benefit

All

participating

employees

Employment status Establishment size

(number of workers)

Full time Part time Fewer than 100 100 or more

1

 Less than 0.5 percent.

NOTE: Because of rounding, sums of individual items may

not equal totals. Dash indicates no employees in this

category.

TABLE 4. Percent of private sector employees eligible1 for selected benefits, 1996-97

Section 125 plans ............................................................ 31 37 8 18 46

Flexible benefits plans ................................................. 7 8 2 3 11

Severance pay................................................................. 21 25 5 11 32

Supplemental unemployment benefits ............................. 2 2 (3

) (3) 4

Childcare assistance ....................................................... 55429

Long-term care insurance ............................................... 44117

Employee assistance programs ...................................... 33 37 18 13 57

Wellness programs .......................................................... 19 22 10 7 33

Job-related travel accident insurance .............................. 23 27 9 10 38

Nonproduction bonuses ................................................... 39 43 23 39 38

Job-related education assistance .................................... 45 52 20 32 61

Nonjob-related education assistance .............................. 11 13 3 4 18

Establishment size

(number of workers) All Employment status

eligible

employees Full time Part time Fewer than

100

100 or more

Benefit

2

1

 Eligible employees have the benefit available to them,

whether or not they actually take advantage of it.

2

 Includes all plans under Internal Revenue Code Section 125. 3

 Less than 0.5 percent.
 Compensation and Working Conditions Summer 2000 21

Private Sector Employee Benefits

however, lower participation also may

stem, among other reasons, from the

fact that the lower pay of part-time

workers would make them less able to

pay for their share of an employer-provided benefit, causing them to decline

coverage.

It should be noted that multiple regression analysis of data from the 1994

Employer Costs for Employee Compensation Survey found that part-time

workers in the same establishment and

occupation had lower wage rates and

lower employer outlays for benefits

than their full-time counterparts.14 A

nationwide survey of employers by the

W.E. Upjohn Institute for Employment

Research also found that employers

were more likely to provide benefits

to full-time workers than to part-time

workers.15

Establishment size

Table 1 provides benefit plan participation information for employees in

small establishments (fewer than 100

employees) and medium and large establishments (100 employees or more).

For example, in small establishments,

only 12 percent of workers participated

in a defined benefit pension plan, and

31 percent participated in a defined

contribution retirement plan in 1996-

97. In larger establishments, these

proportions were 45 percent and 51

percent, respectively.16

Leave plans for employees in small

establishments were less generous than

those for employees in larger establishments. (See table 2.) In 1996-97, employees in establishments with fewer

than 100 workers were provided an

average of 7.5 paid holidays a year,

compared with 9.1 for their counterparts in larger establishments. Vacation days for employees in small establishments ranged from an average

of 7.9 after 1 year of service to 14.9

after 20 years of service. For employees in larger establishments, these averages were 9.5 and 19.9, respectively.

Except for nonproduction bonuses,

employees in small establishments

were less likely to have access to the

benefits shown in table 4 than were

employees in larger establishments.

For example, job-related education

assistance was available to 61 percent

of employees in establishments with

100 workers or more, compared with

32 percent of workers in smaller establishments.

Research using data from the BLS

Jacksonville, FL, Construction Industry Test Survey found that, as establishment size increased, so did the

percent of employees with access to

and participation in insurance and

paid sick leave plans.17 Data from the

BLS Employer Costs for Employee

Compensation Survey also show that

in private industry, employers’ outlays

for benefits, both in dollar amounts

and as a percent of total compensation,

increase with establishment size.18

Conclusions

In 1996-97, a majority of private industry workers received paid holidays

and vacations, life insurance, and

medical care coverage. Few of these

workers had paid family leave or were

eligible for supplemental unemployment benefits, long-term care insurance, or childcare assistance. Benefit

availability differed by employment

status (full and part time) and by establishment size. Part-time employees

were less apt to participate in, or have

access to, the benefits examined.19

Benefit participation among workers in small establishments was lower

than that among their counterparts in

larger establishments. Part of the difference may be because small employers have been found to be less apt than

larger employers to offer benefits.

Another part of the difference may be

the fact that small employers who offer benefits may not defray as much of

the cost as larger employers, so that

their employees may decline coverage

because of the size of their share of

the benefit cost.20

1

 For more information, see Employee Benefits in Small Private Establishments, 1996, Bulletin 2507 (Bureau of Labor Statistics, 1999); and

Employee Benefits in Medium and Large Private

Establishments, 1997, Bulletin 2517 (Bureau of

Labor Statistics, 1999). The EBS also provides

information for State and local government employees. The most recent information may be

found in Employee Benefits in State and Local

Governments, 1994, Bulletin 2477 (Bureau of

Labor Statistics, 1996), but data for 1998 will be

published in late spring 2000. In 1999, the BLS

began integrating the EBS into the National Compensation Survey (NCS) Program. For more information, see Allan P. Blostin, “An Overview of

the EBS and NCS,” Compensation and Working

Conditions, Spring 1999, pp. 2-5. 2

 Section 125 of the Internal Revenue Code

governs flexible benefits plans, flexible spending

(reimbursement) accounts, and premium conversion plans.

3

 Because the EBS data in this article are estimates derived from a sample of usable occupation quotes selected from responding establishments, the data are subject to sampling errors.

These errors are the differences that can arise between results derived from a sample and those

computed from all observations in the population

being studied. Because standard errors were not

calculated for EBS data, the results presented in

this article should be interpreted with caution. For

more information on the reliability of EBS estimates, see Employee Benefits in Small Private

Establishments, 1996 or Employee Benefits in

Medium and Large Private Establishments,

1997. 4

 Information on family leave benefits is not

available for 1991-92. However, EBS data show

that in 1991-92, 2 percent of private sector workers participated in paid maternity leave plans and

1 percent participated in paid paternity leave plans.

For additional information on paid leave, medical

and dental care benefits, life insurance benefits,

and retirement plans, see Ann C. Foster, “Employee Benefits in the United States, 1991-92,”

Compensation and Working Conditions, July

1994, pp. 1-6. 5

 The EBS definition of paid sick leave and

short-term disability (previously called sickness

and accident insurance) changed in 1995. Paid

sick leave now includes only plans that either

specify a maximum number of days per year or

unlimited days. Short-term disability now includes

all insured, self-insured, and State-mandated plans

available on a per-disability basis, as well as unfunded per-disability plans previously reported as

sick leave. Sickness and accident insurance, reported in years prior to the 1995 EBS, included

only insured, self-insured, and State-mandated

plans providing per-disability benefits at less than

full pay. For more information, see Employee

Benefits in Medium and Large Private Establishments, 1997.
22 Compensation and Working Conditions Summer 2000

6

 More detailed information on dental care

coverage may be found in Ann C. Foster, “Dental

Care Benefits, 1995,” Compensation and Working Conditions, Summer 1998, pp. 45-49. 7

 More detailed information on life insurance

benefits may be found in Ann C. Foster, “Life Insurance,” Compensation and Working Conditions, Winter 1997, pp. 47-50. 8

 For more information on defined contribution plans, see Ann C. Foster, “Defined Contribution Retirement Plans Becoming More Prevalent,”

Compensation and Working Conditions, June

1996, pp. 42-44. More information on defined

contribution plans in 1991-92 may be found in

Foster, “Employee Benefits in the United States,

1991-92.” 9

 Flexible spending accounts help employees

pay for expenses, such as childcare and medical

care deductibles, not covered by other benefit

plans. Accounts may be financed with employer

funds, employee pretax funds, or both. Premium

conversion plans are established solely for medical care plan participants to pay their share of plan

premiums with pretax dollars. For more information, see Ann C. Foster, “Employee Contributions

for Medical Care Coverage,” Compensation and

Working Conditions, September 1996, pp. 51-53. 10 Technically, a cafeteria plan is an employee

benefit plan that offers an employee certain choices

in accordance with IRC Section 125. The term

cafeteria plan often is used interchangeably with

flexible benefits plan. However, a flexible benefits plan does not necessarily need to be a Section 125 (tax advantaged) cafeteria plan, but a

cafeteria plan is a type of flexible benefits plan.

For more information, see Fundamentals of Employee Benefit Programs, 5th ed., (Washington,

Employee Benefit Research Institute, 1997). 11 Plans that use salary reduction enable employees to use pretax dollars to fund certain benefits. When an employee agrees to a salary reduction, the reduction amount is not part of the

employee’s taxable income. More information on

the use of salary reduction to fund flexible benefits plans may be found in Fundamentals of

Employee Benefit Programs. For more information on flexible benefits plans in medium and large

private establishments, see Joseph R. Meisenheimer and William J. Wiatrowski, “Flexible

Benefits Plans: Employees Who Have a Choice,”

Monthly Labor Review, December 1989, pp. 17-

23. 12 Education assistance refers to allowances

provided to employees for full or partial payment

for tuition, books, and other related expenses. Information is collected on the availability of allowances for education leading to: 1) Particular

knowledge or skills that are job-related; or 2) general knowledge that is nonjob-related. 13 Employees are classified as full time or part

time according to the practices of surveyed establishments. Part-time employees are typically

scheduled to work fewer hours than are full-time

employees in the same work activity. 14 For more information, see Michael K.

Lettau, “Compensation in part-time jobs versus

full-time jobs: What if the job is the same?” Economics Letters, vol. 56, 1997, pp.101-06. 15 See Susan N. Houseman, Temporary, Parttime, and Contract Employment in the United

States: A Report on the W.E. Upjohn Institute’s

Employer Survey on Flexible Staffing Policies.

Report prepared for the U.S. Department of Labor, Office of the Assistant Secretary for Policy,

1997. 16 Research using data from the Small Business Administration 1991 SBA Retirement Plan

Survey, a nationally representative sample of almost 600 firms, found that, holding other factors

constant, small firms were less apt to offer pension benefits than were larger firms. For more information, see Jules H. Lichtenstein, “Factors Affecting Pension and Health Benefits Availability

in Small and Large Business,” Benefits Quarterly,

first-quarter, 1998, pp. 55-61. 17 For more information, see Ann C. Foster,

“Insurance Benefits in the Jacksonville, Florida

Construction Industry,” Compensation and Working Conditions, Fall 1999, pp. 19-25. 18 In March 1999, for example, employers’

outlays for paid leave benefits averaged 83 cents

per hour (5.1 percent of total compensation) in

establishments with fewer than 100 workers and

$1.58 per hour (7.2 percent of total compensation) in establishments with 100 workers or more.

For more information, see Employer Costs for

Employee Compensation-March 1999, USDL

99-173 (Bureau of Labor Statistics, June 24,

1999). 19 One exception was nonproduction bonuses.

In 1996-97, similar proportions of full- and parttime workers (38 percent and 39 percent, respectively) were eligible for nonproduction bonuses.

In 1991-92, 41 percent of full-time and 27 percent of part-time employees had access to the benefit.20 Findings of a nationwide household survey

show that, between 1987 and 1996, access to

employer-provided health insurance increased

among employees in firms with fewer than 100

workers. The participation rate among employees with access, however, declined over this period. Although participation among workers with

access also declined among those working in firms

with more than 100 workers, unpublished data

from the study show that the greatest proportion

(81 percent) of those declining coverage were

employed in smaller establishments. For more

information, see Philip S. Cooper and Barbara S.

Schone, “More Offers, Fewer Takers for Employment-based Health Insurance: 1987 and 1997,”

Health Affairs, November/December 1997, pp.

142-48.