9. Per Cent of Companies Paying

Fringe Benefits

PAYMENTS FOR Old-Age and Survivors Insurance were reported by almost all of the companies surveyed (Table 14), the exceptions being chiefly municipal public utilities. Ninety-nine per cent of the companies reported Federal and 97% reported state payments for Unemployment Compensation taxes. Vacation payments were reported by 97% of the companies, including 97% of those in manufacturing, and 96% of those in nonmanufacturing. Holiday payments were reported by 95% of the firms, including 98% of those engaged in manufacturing, and 91% of those in nonmanufacturing.

Paid sick leave was reported by 49% of the firms,

including 32% of the manufacturing companies, and 82% of those in nonmanufacturing. Profit-sharing payments were reported by 14% of the firms, including 42% of the wholesale and retail trade firms, and by only 3% of the public utilities.

Average costs of fringe payments for companies reporting such payments are shown in Table 15. Payments for separation or termination pay allowances, discounts on goods and services, paid rest periods, paid sick leave, and other benefits paid by a relatively small percentage of companies, differ significantly in this table from the all-company averages shown in Table 6.

TABLE 14. Per Cent of Companies Paying Fringe Benefits, 1957

22

22

TABLE 15. Average Fringe Costs for Companies Paying Fringe Benefits, 1957

1. Legally required payments (employer's share only):

a. Old-Age and Survivors Insurance.

b. Unemployment Compensation:

(1) 0.3% tax to Federal Government. (2) State tax (net).

c. Workmen's compensation (including estimated cost for self-insured).

d. Railroad Retirement Tax, Railroad Unemployment Insurance, state sickness benefits insurance, etc.......

2. Pension and other agreed-upon payments (employer's share only):

a. Pension-plan premiums and pension payments not cov-
ered by insurance-type plan (net).

b. Life insurance premiums, death benefits, sickness, acci-
dent and medical-care insurance premiums, hospitali-
zation insurance, etc. (net).

c. Contributions to privately financed unemployment
benefit funds.

d. Separation or termination pay allowances.

e. Discounts on goods and services purchased from com-
pany by employees...

f. Miscellaneous payments (free meals, compensation pay-
ments in excess of legal requirements, payments to
needy employees, tuition refunds, savings and stock
purchase plans, etc.).

3. Paid rest periods, lunch periods, wash-up time, travel time,
clothes-change time, get-ready time, etc...

4. Payments for time not worked:

Includes coal mining, warehousing and laundries. **No companies reporting this payment.

10. Employee Payroll Deductions for Fringe Benefits

DEDUCTIONS FROM employee pay for fringe benefits totaled 3.8%, as shown in Table 16, including 2.1% for Old-Age and Survivors Insurance, 0.1% for Railroad Retirement and state sickness benefits insurance taxes, 0.5% for pension plan premiums and contributions, and 1.1% for life, sickness, accident, surgical, medical care, and hospitalization insurance. These deductions averaged 8.3¢ per payroll hour, or $171

per year per employee.

Deductions were 5.6% of payroll for the petroleum industry, but only 2.8% for the rubber and leather products industry. As cents per payroll hour they ranged from 16.0¢ for the petroleum industry, to 4.1¢ for hotels. As dollars per year per employee the range was from $338 for the petroleum industry to $90 for hotels.

TABLE 16. Employee Payroll Deductions for Fringe Benefits, 1957

11. Wage and Payroll Data

HOURLY AND ANNUAL EARNINGS data, together with some payroll items often considered fringe benefits, are shown in Table 17.

Highest hourly earnings of $2.864 were reported by the petroleum industry. Lowest were hotels paying $1.194 per hour. On an annual basis the highest paying industry was again petroleum with $6044 per full-time employee, and the lowest was again hotels paying $2642.

The average payroll of all companies surveyed was composed of 93.9% payments for straight time, 2.8% premium pay for overtime, 0.4% holiday premium pay, 0.5% shift differential, 1.8% earned incentive or production bonus, and 0.6% for other items, chiefly cost-of-living payments.

In this study, if employees receive regular pay for holidays, but do not work on these days, such payments are reported as fringe benefits in the other tables of this survey (item 4-b of Tables 4, 6, 7, 8, etc.). If the employee works on holidays and receives $2.00 per hour for straight-time work and $3.00 per hour for holiday work, for each hour of holiday work $2.00 would be reported as straight time and $1.00 as holiday premium pay in Table 17.

Payroll data in Table 17 are shown as per cent of payroll and cents per hour, but can be converted to dollars per year per employee by using as multipliers the annual wage figures given in the last column of the table.

What Are Fringe Benefits?

There are wide differences of opinion regarding just what constitutes fringe benefits, and how they should be computed. Some do not consider workmen's compensation, suggestion awards, and other items as fringe benefits. Others regard shift differentials, overtime premium pay, and other payroll items as fringe benefits. Some do not regard total payroll as the correct base in computing fringe benefits, but would use straight-time pay for time actually worked.

Three methods for computing fringe benefits are illustrated in Chart 2. In this study fringe benefits were shown as 21.8% of payroll, with fringe benefits averaging $981 per year per employee, and total payroll averaging $4500. However, if the computation base is changed to "straight-time pay for time worked," or $3810, the $981 in fringe benefits averages 25.7%.

If overtime and holiday premium pay, shift differential, production bonus, and other miscellaneous payroll items, are considered fringe benefits, the benefits total $1256, and compared with the straight-time pay for time worked of $3810, the fringe benefits percentage becomes 33.0%.

Differences of opinion regarding what constitutes fringe benefits and how they should be computed indicate the need for a generally accepted definition of fringe benefits, and for a uniform method of comparing fringe benefits with employee compensation.