Employee benefits are a key component of any compensation package in California. Participants provided responses to health care benefits and retirement packages, along with information on part-time employees, holidays, paid time off, wellness and elder care benefits.
The findings from the 2007 CalChamber Employer Benefits Survey illustrate the challenge California employers confront in their attempts to create mutual loyalty through the provision of meaningful employee benefits, while simultaneously managing health care costs. In the past several years, there has been a marked increase in the number and types of benefits offered employees, with a corresponding rise in employee cost-sharing for health care. Identifying and maintaining a balance between employee needs and employer cost-efficiency goals is, and will continue to be, a constant challenge.
Expanded Benefits and Employee-Focused Programs
Employers are increasingly recognizing the importance of contributing to the well-being of employees throughout their tenure with the organization, and creating an appealing, flexible work environment to help employees manage the sometimes conflicting demands of work and family. Since 1997, more California employers provide or conduct the following:
- Provide employee handbooks (up 12 percentage points to 92 percent in 2007)
- Conduct employee orientations (up 15 percentage points to 86 percent in 2007)
- Conduct performance appraisals (up eight percentage points to 89 percent in 2007)
- Offer child care assistance (up 25 percentage points to 53 percent in 2007)
- Offer elder care assistance (35% in 2007 — not measured in 1997)
- Offer employee assistance programs (up seven percentage points to 41 percent in 2007)
- Allow telecommuting (up 14 percentage points to 29 percent in 2007)
- Offer alternative work schedules (up 28 percentage points to 41 percent in 2007)
- Offer an expanded list of holiday and floating holidays (for example, Martin Luther King Day up 10 percentage points to 29 percent in 2007)
- Offer more team-building activities and casual work environments (for example, employer-sponsored parties, outings, casual dress any time, and job-related tuition reimbursement)
Employer support of certain types of health care coverage and wellness programs has also expanded. Since 1997, more employers provide the following:
- Pay at least some portion of employee dental coverage (up 11 percentage points to 81 percent in 2007)
- Pay at least some portion of employees' vision coverage (up 24 percentage points to 54 percent in 2007)
- Offer employee wellness programs (29 percent in 2007 — not measured in 1997)
Similarly, the proportion of employers paying at least some portion of dependents' coverage has increased for dental (up eight percentage points to 53 percent in 2007) and vision insurance (up 17 percentage points to 39 percent in 2007).
The proportion of employers paying at least some portion of employees' or dependents' medical and life insurance has not changed, however, and are 97 percent and 69 percent, respectively, for employees in 2007, and 60 percent and 12 percent, respectively, for dependents in 2007.
Rising Health Care Costs and Cost Management Activities
Despite a decline in the national rate of growth of health care costs, California employers report an increase in the per-employee cost of health care compared to 2006. They further report a variety of changes or intended changes in their health care programs in an effort to manage escalating costs.
- The percentage of employers paying more than $5,000 per employee has risen from 27 percent in 2006 to 38 percent in 2007, a 40-percent increase. In 2007, 21 percent of employers paid more than $7,000 per employee.
- Twenty-three percent of employers are considering raising their employees' portion of the premium payment. Thirty-seven percent of large (100+ employees) are considering such an increase.
- Twenty-six percent and 22 percent of employers offer Health Savings Accounts or High Deductible Health Benefits.
- Seventy-eight percent of employers offer a 401(k) plan, up from 56 percent in 1997. Today, only five percent of California employers offer a pension program, many fewer than in 1997 (23 percent).
- Overall, only five percent of employers offer retiree health care benefits. Seven percent of employers with 100 or more employees offer retiree health care benefits, and among employers with 250 or more employees, 10 percent do. This is considerably lower than nationally reported penetration levels among employers with 200 or more employees (33 percent).
Factors Influencing Employee Benefits Management
Size of the Organization
The number of employees working in an organization influences the number and types of employee benefits and management activities undertaken by the employer. Smaller, and especially micro-organizations (one-10 employees), perform fewer employee support activities such as employee handbooks, orientations and harassment training, for example, than larger employers. The very small micro-employers are also less likely to pay any portion of health care coverage for their employees or to offer any type of retirement program. Employers with 11-49 employees in some cases operate similarly to micro-organizations and in other cases appear to be more similar to larger employers. More than larger organizations, smaller employers offer a more flexible and casual environment as evidenced by the more frequent allowance of alternative work schedules and casual dress.
Once an organization reaches 50 employees, many of the activities related to managing employees (e.g., hiring, training, appraisals, etc.) are in place and relatively few differences emerge as the employer adds employees. Yet, as the size of an organization increases, the time and resources required to manage employee benefits and activities grow exponentially due to both the greater number of employees and the increased number of activities and programs performed.
Industry
Although few differences emerge between employers from different industries in terms of health insurance coverage for employees, dependents or part-time employees, some differences do emerge in terms of health care costs and planned changes.
- Employers representing manufacturing and scientific/technical industries report some of the highest levels of per-employee costs for health care, while retail/wholesale trade and agriculture/resources industries tend to have slightly lower costs.
- Employers in the retail/wholesale sector report a greater intent than most other employers to raise their employees' premium portion. Employers in scientific/technical are least likely to be considering this change.
Some other types of benefits vary by the industry in which the employer competes. For example, there is a tendency for more employers in finance/insurance/information services to offer child care and employee assistance programs than many other industry employers. And they, along with scientific/technical, are more likely to offer both alternative work schedules and telecommuting.