Assuming all workers in an
occupation are offered the benefit if
at least one worker in that occupa-
tion is covered by the benefit, the
same problem exists with “employee
offered” statistics that exists with
“establishments offering” statistics.
That is, it is possible that no
sampled occupations are offered a
benefit, yet an unsampled occupation
is offered the benefit. Thus, the
employee offered statistics are a
lower bound statistic—no fewer than
this percent of workers are offered
the benefit.

An additional problem with the
use of EBS data for employee offered
statistics must also be addressed.
Based on EBS methods, the number
of workers participating is recorded
for each benefit plan for all selected
occupations. In some cases, partici-
pation may be recorded as zero for a
selected occupation. This can mean
either that the occupation was not
offered the benefit, or that the
occupation was offered the benefit
but no workers chose to participate.
There is no way to distinguish
between these two cases. This
problem is of particular concern
when estimating employee offered
statistics for benefits that tend to be
offered only to workers in certain
occupations or for establishments
that tend to offer different benefits to
different occupations.

There are two ways to consider
data on employees offered benefits:
either all employees in all occupa-
tions are offered the benefit if any
employee in any occupation partici-
pated in the benefit (assumption A)
or all employees in a selected
occupation are offered the benefit
only if an employee in that occupa-

tion participated in the benefit
(assumption B).

The following example illustrates
the differences between the assump-
tions. The table below shows the
four occupations sampled in a
department store, the employment in
each occupation, and the number of
those employees participating in the
store’s health care plan.

Under assumption A, 100 percent
of the workers are offered health care
benefits—the assumption being that
the 12 guards were offered but
choose not to participate in the plan.
Assumption B yields an 84 percent
offer rate (64/76), and assumes the
guards were not offered the plan.

Which assumption to use is not
always clear, but variations by type
of establishment and type of benefit
provide some indication of the effect
of the assumptions. For example,
the differences between assumptions
A and B in the public sector tend to
be small; this suggests that public
sector establishments tend to offer
the same benefits to workers in all
occupational groups. (See table 5.)
Data on the percent of workers in
selected occupational groups who
Participate in benefit plans support
this—for most benefits, there is little
or no difference in the percent of
workers in different occupational
groups participating.'°

Observed differences between
assumptions A and B often relate to
features inherent in a particular
benefit. For example, the largest
differences can be seen in health care
benefits and defined contribution
plans. In each of these cases, the
requirement that an employee
contribute toward plan funding may
serve to lower plan participation.

Thus, it may appear as if no workers
are offered the benefit in a particular
occupation, when in fact the employ-
ees are offered the plan but none
participate. Such a situation would
lower the percent of participating
employees under assumption B.

Regardless of which assumption
is used, employees in large establish-
ments are offered benefits more
frequently than are their counter-
parts in small establishments. (See
table 6.) Public sector employees are
offered health care, life insurance,
and defined benefit plans more
frequently than those in the private
sector. In contrast, sickness and
accident insurance and defined
contribution plans are offered more
frequently to private sector than to
public sector workers,

Survey improvements

Although this journey into the
inner-workings of EBS data does not
provide any rules on the proper data
to use for benefit analysis, it does
focus on the difficulties that exist in
presenting benefit count data, and
the limitations of each type of count.
Beginning with the 1995 survey,
questions on establishment offerings
of health care and retirement
benefits were asked specifically of
those establishments in which none
of the employees in the selected
occupations participate in a health
care and/or retirement plan. Thus,
future statistics on employers
offering health care and retirement
will no longer be the lower bound;
they will be true estimates of the
percent of establishments offering
such benefits. Data on employees
offered benefits are more difficult to
obtain, and may represent a signifi-
cant increase in data collection
Tesources and survey respondent
burden. More research is needed on
collection methods to obtain these
data,

Further research is also needed
into some of the data presented here.
For example, the number of workers
in a selected occupation may affect
some of the results. Selected
occupations in smaller establish-

Compensation and Working Conditions June 1996 14



Table 3. Percent of establishments offering and percent of employees participating in selected benefits, private Industry by size of
establishment,’ 1992-03

m Establishments offering Employees participating
‘Small Large ‘Small Large
19 42 23 40
"1 Ky 18 cK
48 90 56 73
17 64 26 ad
7 86 51 80
24 80 38 72
10 46 18 51
19 64 28 45
7 3 1 2
4 8 4 7
10 4 13 Kd
1 3 1 5
3 15 6 24
2t 61 Ko 6
2 13 4 20
‘Medium and large establishments are those employing 100 or more
workers. Small establishments are those employing fewer than 100 work-
ers.
‘Table 4. Percent of establishments offering and percent of employees participating in
selected benefits, State and local government, 1992
Benefit Establishments offering | Employees participating

Sickness and accident insurance
Long-term disability insurance
Health care benefits
Dental care benefits.

Severance pay ....

Long-term care insurance.
Recreation facilities .....
Job-related education assistance .
Non-job-related education assistance

Baw Sva2BsSBBB
SBsSS rv oBsBERSB2

17 Compensation and Working Conditions June 1996



certain benefits in smaller and larger
establishments is less dramatic as
indicated below.

In small establishments, the
percent of employees participating
was greater than the percent of
establishments offering benefits for
nearly every benefit studied. This
pattern maybe due to the number of
workers employed in those establish-
ments. It is likely that among smal}
establishments, the larger ones offer
certain benefits more frequently than
do smaller ones; thus, a small
proportion of small establishments
offering a benefit can employee a
larger proportion of workers.”
Among larger establishments, the
percent of establishments offering
benefits is nearly always greater than
the percent of employees participat-
ing, suggesting that not all workers
in establishments offering benefits
are participating. This phenomenon
is discussed below. Because there
are a small number of larger
establishments to begin with, it is
more likely that those offering
benefits employ a proportion of
employees roughly equal to the
proportion of establishments. Thus,
the percent of larger establishments
offering benefits and the percent of
employees in larger establishments
participating in benefits tends to be
similar.

The private sector data vary
widely between percent of establish-
ments offering benefits and percent
of employees participating in
benefits. However, the public sector
data vary little because public sector
benefits tend to be offered uniformly
to all employees and, in fact, across
all establishments. Thus, the
percent of public sector establish-
ments offering certain benefits and
the percent of public sector employ-
ees participating in those benefits is

Defined benef ..
Dental benefits ..

Percent of Percent of
establishments establishments
OViering benef, offering benefit
regardless of atheastio

type of work fui-time workers

" 13
19 2

similar. (See table 4.)

Differences in benefit incidence
statistics can arise due to the
distribution of full-time and part-
time employment in certain types of
establishments, While full-time
workers are offered benefits more
frequently than part-time workers,
part-time employment has little
effect on the percent of establish-
ments offering benefits. This is
because it is rare for an establish-
ment to offer benefits to part-time
employees without also offering
them to full-time employees, as
shown by the data for private sector
employees indicated above.

Another reason for differences
between the percent of establish-
ments offering benefits and the
percent of employees participating in
them is restrictions on benefits
coverage. Such restrictions may
include offering benefits only to
certain classes of workers, such as
white-collar workers. As with part-
time employment, any restrictions on
coverage would result in an estab-
lishment being counted as offering a
benefit yet not all workers counted as
participating in the benefit. Simi-
larly, eligibility requirements may
limit the percent of workers actually
participating in the plan, as may
other enrollment requirements, such
as required employee contributions
to the plan. For example, EBS data
indicate that more than half of all
health care participants are required
to contribute toward the cost of their
coverage. Another possible reason

Percent of Percent of employees
nie fori heli
Small Large Large
Health care 8 90 56 73
Retirement 24 80 3B 4

13 Compensation and Working Conditions June 1996

for differences between offerings and
acceptances may be the voluntary
nature of certain benefit plans,
especially defined contribution
Tetirement plans. While an em-
ployer may offer such benefits as an
incentive for employees to save for
retirement, employees simply may
choose not to participate.

In all likelihood, some combina-
tion of these factors is actually
driving the difference between
employer offerings and employee
acceptances. However, more
research on establishment behavior
is needed to draw further conclu-
sions.

Estimating the percent of
employees offered benefits

Using EBS data to determine the
percent of employees who are offered
benefits is even less precise, In this
case, the examination is not only
whether any worker in the establish-
ment participates in a particular
benefit plan but also whether any
worker within a sampled occupation
participates in the benefit plan.
Sampling procedures are designed to
select homogeneous groups of
employees, and the occupations
sampled are the most detailed job
level recognized by the establish-
ment. Further, once a job has been
sampled, only workers sharing the
following three characteristics are
selected: Permanent employees on
either full-time or part-time work
schedules, union or nonunion status,
and pay based on hours worked or
on an incentive system. Using these
criteria, it is reasonable to assume.
that all employees in the sampled
occupation are treated similarly, that
is, they are all offered the same
benefits and are subject to the same
eligibility restrictions.


ments are likely to have fewer
workers, and perhaps less likely to
have nonparticipants. Part-time
workers also need further study.
Although these workers may have
little effect on the percent of estab-

1 Counting “employers” requires a careful
teview of definitions. The data presented here re-
fer toestablishments, that is single physical loca-
tions that produce goods or services. An estab-
lishment is not necessarily a firm; it may be a
branch plant, for example, or a warehouse. AS
another example, each outlet of a large retailer is
considered an establishment. Because of this defi-
nition, it is difficult to interpret what the number
of employers providing a benefit really means. In
this research, employer-offering statistics are given
as the percentoffering out of all employers.

2 While employers are allowed to offer cer-
tain types of benefit plans only to some workers,
nondiscrimination provisions of the Internal Rev-
enue Code do exist that attempt to ensure that all
‘employees are treated in a similar manner.

3 Additional discussion of counting employ-
ees for benefit statistics may be found in Janet L.
Norwood, “Measuring the Cost and Incidence of
Employee Benefits,” Monthly Labor Review,
August 1988, pp. 3-8.

lishments offered benefits, they have
a large effect on the percent of
employees offered benefits, and
cause gaps between statistics on
benefit offerings and benefit partici-
pation. Finally, further research is

— ENDNOTES —

+ Some benefits data are also available from
the Current Population Survey, a monthly survey
of households. ‘These data provide information
on the availability of benefits by individual char-
acteristics, such as sex and race, but do not pro-
vide the benefit detail available through the EBS
establishment survey.

3 Data from the Employee Benefits Survey have
been used to estimate the percent of establishments
offering choices of health care benefits and the per-
cent of workers with such choices. See, forexample,
Michael Bucci and Robert B. Grant, “Health In-
surance: Employer Offerings and Employee Choice
in Small Private Establishments,” Compensation
and Working Conditions, August 1994, pp. 1-3.

* For additional information on weighting pro-
cedures used in the Employee Benefits Survey, see
Employee Benefits in Medium and Large Private
Establishments, 1993, Bulletin 2456, Bureau of
Labor Statistics, November 1994.

"In Tables 1, 3, and 4, an establishment was
counted as offering a particular type of benefit if

15 Compensation and Working Conditions June 1996

needed on establishment size and its
relation to both occupation size and
part-time employment. Future
research into benefit offering and
Participation will need to control for
many of these variables.

at least one employee in a sampled occupation
participated in a benefit plan.

* In this discussion, large establishments
are those employing 100 workers or more. Io
Employee Benefits Survey publications, these
establishments are referred to as “medium and
Jarge.”

* Data from the Employee Benefits Survey
Support the idea that larger small establishments
offer benefits more frequently than do smaller ones.
For example, in 1992, 22 percent of full-time em-
ployees in small establishments participated in a
defined benefit pension plan. However, only 12
percent of full-time employees in small indepen-
dent businesses, those establishments not part of
Jarger firms, participated in such pension plans.
In contrast, about half the full-time workers ia
‘small establishments that were part of larger firms
participated in defined benefit pension plans,

% See Employee Benefits in State and Local
Governments, 1992, Bulletin 2444, Bureau of
Labor Statistics, July 1994.



Table 5. Percent of employees offered selected benefits, by method of calculating estimates, private industry and State and local
government, 1992-93

=
i

5
i

ateSIZReBRe -|

BSRSRAISER Lf

oBSSSILL LG |
ar SBIBER8B -|
a-~OPBRQLEN -|

o8BSRRSRER LE

13

: A, all employees in the establishment — employees in an occupation are counted as offered a benefit only ifan
are counted as offered a benefit if any employee in any occupation in employee in that occupation participated in the benefit.
the establishment participated in the benefit. Under Assumption B, all

Table 6. Percent of employees offered selected benefits, by method of calculating estimates and size of establishment, private
Industry, 1992-93

‘Small establishments

|

“SBBS2SIRB |
CoBRRRRBa8 -|

SLASBLNLSS -|
ORBRABLSRS -|

NOTE: Under Assumption A, all employees in the establishment —_ employees in an occupation are counted as offered a benefit only if
are counted as offered a benefit if any employee in any occupation in —_an employee in that occupation participated in the benefit.
the establishment participated in the benefit. Under Assumption B, all pa

Compensation and Working Conditions June 1996 18



Counting the
Incidence of
Employee

Benefits sy wane WIATROWSKI

ince 1979, the Bureau of Labor Statistics’ Employee Benefits Survey (EBS) has

provided data on the percent of employees covered by employer-provided benefit

plans. For instance, in 1992-93, 67 percent of employees in private sector estab-
lishments and State and local governments were covered by a health care plan. These
data indicate the percent of workers currently participating in selected benefits, but do
not indicate how frequently benefits are offered. Data on the percent of establishments
offering selected benefits, and the percent of employees offered them can be estimated
from survey data on plan participation.

This article examines the process
of deriving estimates (from the
Bureau’s Employee Benefits Survey)
of “establishments offering” and
“employees offered” benefits. It also
explores some of the difficulties
associated with the process, and
provides, for the first time, data from
the survey on employee benefits
offerings. These data include
information, for example, on the
percent of private sector and State
and local government establishments
that offered a health care plan to at
least some of their employees.

There are a variety of ways to
describe the association between
workers and employer-provided
benefits. From the employer’s point
of view, data may be captured on the
number or percent of employers who
offer health care benefits.' Such

William J. Wiatrowski is an economist in the
Division of Compensation and Data Estimation,
Bureau of Labor Statistics, Telephone (202) 606-
6255.

Measures may provide an indication
of “access” to health care benefits,
that is, the availability of benefits.
However, just because an establish-
ment offers a benefit doesn’t
guarantee that all employees are
covered, or even that all employees
are eligible for coverage. The
benefit plan may be limited to
certain classes of workers, such as
full-time, union, or nonunion,? the
plan may impose requirements,
typically based on length of service,
before coverage is granted; or
employees may opt not to participate
in a plan, possibly due to a required
contribution or coverage from
another source.

Counting the number or percent
of employees and their benefits
association provides an alternative
view. In this case, there are a variety
of possible measures, each more
limiting than the previous one.
Access to a benefit may be similar to
the establishment measure, that is,

the number or percent of employees
working for an employer that offers
health care benefits to some or all
employees. Again, the limitations
on coverage cited above may apply.
Perhaps a better measure of em-
ployee access would be the number
or percent of workers who are
offered coverage, for example, all
full-time workers or all nonunion
workers. To continue refining the
calculation, the count may include
only those workers currently eligible
for coverage, having met all
requirements. In this case, the count
would be limited not just to a
specific category of workers, but to
those employees in that category
who have met certain conditions,
such as completing a specified
length of service. Finally, the count
may be limited to just those workers
actually covered, meaning that they
have met all eligibility requirements,
such as length of service, and have
completed any other action required

Compensation and Working Conditions June 1996 10



Table 1. Percent of establishments offering selected benefits, private Industry and State and local government,
1992-83

Benefit All Private Public
2 20 2
12 12 23
51 49 96
20 19 J
4 38 78
28 26 3
13 n a1
2 20 15
8 8 3
4 4 12
W 10 a
1 1 T
3 3 8
2 2
3 3 n
‘Table 2. Employment by size of establishment, private industry, 1992
Establishments Employment
Establishment size
Number Percent Number Percent
6,277,417 100 87,458,218 100
6,148,458. 98 48,243,576 55
3,664,934 58 5,950,478 7
1,147,960 18 7,564,035, 9
705,954 nt 9,494,997 "1
468,757 8 14,190,050 16
160,863 3 11,044,016 13
128,959 2 39,214,642 “4

Compensation and Working Conditions June 1996 16



for coverage, such as agreeing to
make periodic contributions. This
final calculation is the “coverage”
estimate currently used in the
Employee Benefits Survey.’

An example of each of these
employee counts may be helpful to
illustrate the various concepts.
Consider an establishment that offers
health care benefits to full-time
workers who have completed 3
months of service and agree to pay

20 percent of the premium.
Employees in the establishment 200
Full time 180

Greater than 3 months service 170
‘Agree to pay premium 140

The following statements about
the employees and their health care
benefits can be made:

© 100 percent (200/200) of
the workers are employed in
an establishment that offers
health care benefits to at least
some of its workers;

* 90 percent (180/200) of the
workers are offered health care
benefits;

* 85 percent (170/200) of the
workers are currently eligible
for health care benefits;

© 70 percent (140/200) of the
workers are currently covered
by their employer’s health care
benefits.

Conditional calculations may be
made, as well, For example:

© 94 percent (170/180) of the

workers offered health care
benefits are currently eligible
for those benefits;

* 78 percent (140/180) of the
workers offered health care
benefits are currently covered
by those benefits;

© 82 percent (140/170) of the
workers currently eligible for
health care benefits are
actually covered by those
benefits.

All these numbers indicate that
there are many ways of looking at
the relations of employee to benefits.
As debates over benefit topics, such
as health care and retirement, occur
in the policy arena and elsewhere, it
is not uncommon for differing sets of
statistics to be used, As illustrated
above, different sets of statistics may
all be correct, although they may
mean different things. The discus-
sion below will examine new data on
employees, employers, and benefit
access, and compare these new data
to existing data on benefit coverage.

The Employee Benefits Survey

Data on employees and their
benefits are available from the
Employee Benefits Survey, an
annual sample survey of private
establishments and State and local
governments.’ The survey reports
data on the number and percent of
workers participating in a variety of
benefit plans. Participating employ-
ees are defined as those who are
currently covered by the benefit plan,
that is, workers who have met all
eligibility requirements and com-
pleted any other action required for
coverage (such as paying their share
of premiums). Participating employ-
ees are the same as covered employ-
ees described above.

Data on employees participating
in benefit plans provide information
to answer a number of policy
questions, such as:

*© What changes have occurred
in coverage by different types
of retirement plans?

* Has family leave coverage
changed over time?

* Are a greater percent of
workers covered by traditional

11 Compensation and Working Conditions June 1996

fee-for-service health care
plans or by health maintenance
organizations?

EBS data are used frequently to
answer these types of questions and
others. The detailed provision
information collected by EBS allows
even more in-depth analysis of
worker coverage, such as compari-
sons of the percent of workers
covered by different levels of health
care deductibles, different defined
benefit pension formulas, or different
numbers of paid holidays.

Where EBS data have not been
used as extensively is in the exami-
nation of access to and eligibility for
benefits. At the present time, data
on these topics are not specifically
asked during survey collection.
However, some data on these issues
can be derived from existing EBS
data, with certain limitations,* The
following section discusses the
derivation of establishment estimates
from EBS and is followed by a
section on employee access esti-
mates.

Estimating the percent of
establishments offering
benefits

As noted, the EBS is a sample
survey of establishments. Each
establishment is assigned a weight
based on its probability of selection
in the sample; these weights, when
applied to the data, yield estimates
for all establishments.® Thus, if it
were known that a sample establish-
ment offered a benefit to some or all
of its employees, the weighting
scheme could be used to estimate the
number and percent of all establish-
ments that offered that benefit.
Unfortunately, establishments are
not asked during the data collection
interview whether they provide
specific benefits to some or all of
their employees. Furthermore, the
current data collection procedures do
not make the answer to this question
obvious.

EBS data are collected for a
probability sample of occupations



within each sampled establishment.
Depending upon the employment of
the establishment, four to eight
occupations are selected with a
probability proportional to the
number of employees in that
occupation in the establishment,
The sampled occupations are then
weighted to represent all employees
in the establishment, just as estab-
lishments are weighted to represent
all establishments in the universe.
This method produces reliable
estimates across all establishments in
the universe (such as all private
industry) but may not produce
accurate estimates for individual
establishments. Within an establish-
ment, it is possible that the occupa-
tions sampled do not receive particu-
Jar benefits, while occupations not
sampled do receive those benefits.

All survey data are obtained for
the sampled occupations only. The
survey does not currently ask for
information about unsampled
occupations or about the establish-
ment as a whole. Because questions
on establishment benefit offerings
are not asked directly, estimates of
establishment benefit offerings must
be derived from data collected on the
sampled occupations within the
establishment. If any one employee
in any occupation participates in a
benefit plan, it can be safely assumed
that the establishment offers that
benefit plan. For the establishment
estimates, such an establishment is
counted as a “yes.”

But what of those establishments
in which no selected occupation has
employees that participate in the
benefit? With no data to indicate
that some employees might be
offered the benefit, the establishment
must be counted as a “no.” Because
of this constraint, the estimates of
establishments offering benefit plans
may be lower than if the question
were specifically asked. The
estimates of establishment offerings
should be considered “lower bounds,”
that is, the estimates are no lower than
the numbers presented, but may in
fact be higher. (See the box )

Estimating the percent of
establishments offering
benefits

In a sampled establishment
with 200 employees, the
following eight occupations
might be selected for data
collection:

Occupation = —— Number

of employees

Accountant 10
Engineer 10
Secretary 10
Foreman 10
Financial manager 10
Clerk 10
Machinist 30
Janitor 10

None of these employees is
offered sickness and accident
insurance, Instead, all are
covered by the establishment's
sick leaveplan. However,
there are also 20 truckdrivers
in the establishment, although
that occupation was not
selected for data collection.
The truckdrivers are repre-
sented by a labor union and
Teceive, instead of the
establishment’s sick leave
plan, a sickness and accident
insurance plan sponsored by
the union but funded by the
establishment. In this case,
the establishment would be
counted as not offering
sickness and accident insur-
ance when in fact such a plan
is offered to some workers.

With these limitations in mind,
data were derived for the percent of
Private industry and State and local
government establishments offering
selected benefit plans in 1992-937
(See table 1.) The analysis was
limited to certain insurance and
retirement benefits, as well as a few
supplemental benefits. Not surpris-
ingly, the most prevalent benefits
offered by establishments were

health care, life insurance, and
retirement plans.

There are marked differences
between the percent of establishments
offering benefits and the percent of
employees participating in benefits.
For example, 51 percent of establish-
ments offer health care benefits to
their employees while 67 percent of
employees participate. Similarly, 28
Percent of establishments offer
retirement benefits to their employces
while 58 percent participate. Depend-
ing upon the types of establishments
or workers observed, the percent of
establishments offering benefits may
be greater or less than the percent of
employees participating. There may
be a number of explanations for this
Phenomenon: Establishment size
variations between public and private
sector establishments, variations
between full-time and part-time
workers, and barriers that keep
employees from obtaining coverage
even though their establishment offers
coverage.

Establishment size can affect the
relationship between employer
offering of and employee participation
in benefit plans because, in the private
sector, there are many more “small”
establishments (those with fewer than
100 workers) than larger establish-
ments, but the number of workers is
split fairly evenly between smaller and
larger establishments.’ In 1992, 98
percent of all private sector establish-
ments employed fewer than 100
workers, but only 55 percent of
Private sector workers were employed
in these small establishments, (See
table 2.) These contrasting statistics
result in an average employment of 8
workers in smaller establishments
compared with an average employ-
ment of 304 workers in larger
establishments.

Establishment size differences can
influence statistics based on establish-
ment counts. The data indicate that,
in general, a greater percent of larger
establishments than smaller establish-
ments offer certain benefits. (See
table 3.) Yet, the difference between
the percent of workers Participating in

Compensation and Working Conditions June 1996 12