Benefits Are Being Pecked To DeathEric Schine
The economy is growing. Corporate profits are up. Wages are beginning to rise a bit. So why are so many Americans feeling so pinched?
The answer may lie less in paychecks than in pension plans and health insurance. As employers struggle to stay competitive, they're chipping away at benefits as never before. "A lot of companies simply no longer want to pay benefits," says Paul H. Tobias, chairman of the Cincinnati-based National Employee Rights Institute.
Consider paid holidays. Fifteen years ago, virtually every medium and large private U.S. employer offered at least one paid holiday per year. Today, that has slipped to only about 90%, according to the Employee Benefit Research Institute. In 1980, 95% of such employers offered some kind of health insurance; now, just 80% do so (chart).
Much of the backsliding stems from the enormous change in work patterns and types of employment growth over the past few decades. With more workers changing jobs more often, say consultants, pension vesting and vacation time based on seniority isn't growing as fast as in more stable times. More important, the surge in service-sector jobs such as retailing means that many new jobs offer comparatively scant benefits.
As ever, benefits figure prominently in labor negotiations. When 32,500 workers struck Boeing Co. for 47 days starting Oct. 6, deep proposed cuts in health benefits were among their top grievances. Says union leader Bill Johnson: "Why should a Boeing worker lose $914 a year to health cuts when the company has made $6.6 billion since 1990?" Under terms of a proposed settlement, workers and their families still would be forced to shoulder a hefty increase in deductibles.
Unions are likely to feel more pain as employers shift to workers more of the tab for escalating health-care costs. Owens-Corning Fiberglas Corp. is reducing the cash cost of its retirement benefits by 20%. How? It will cut its match of employee contributions to 35 cents per dollar from 50 cents, then add a variable sum based on profit-sharing. The company also is moving to a cafeteria plan that limits the value of benefits but allows workers to select between more health coverage, say, and more vacation days.
Such innovations are applauded by many experts for giving employees more options to tailor benefits to their needs. But others worry that such "cafeteria plans" offer less even though "employees feel they are getting more because they can choose," says Fred Getz, Chicago manager for Robert Half International, an employment agency.
CHANGING LANDSCAPE. The growing class of low-wage service workers may be hard-pressed to pay for what benefits are available. At Wal-Mart Stores Inc., only 41% of its workforce actually got health insurance through the company in 1993. Those who do pay at least a $60-a-month family-plan premium, with a $1,000 deductible. "If Wal-Mart isn't providing decent benefits, how can you expect smaller retailers to do better?" says Greg Denier, a spokesperson for the 1.4 million member United Food & Commercial Workers Union. Wal-Mart says it hasn't raised premiums in three years. "We provide great benefits," says a spokesman.
Certainly, some large corporations are expanding benefits. Mattel Inc. recently added full vision care to a list of perks that includes a state-of-the-art health club at corporate headquarters. Harris Corp. in Melbourne, Fla., now offers free mammograms and has dropped co-payments in half, to $75, for such expensive procedures as magnetic resonance imaging.
Critics, however, point out that such large corporations are where domestic employment growth is most sluggish. And smaller companies typically have less generous benefits--or none at all. Indeed, it could be that the great American benefits package is becoming as outdated as the free Thanksgiving turkey.