Family-related benefits in the workplace (EXCERPT), Monthly Labor Review Online, Mar. 1990

Family-related benefits in the workplace

William J. Wiatrowski

One of the more striking developments in personnel administration over the past 75 years have been the growing complexity of employee compensation. Limited at the outbreak of World War I largely to straight-time pay for hours worked, compensation now includes a variety of employer-financed benefits, such as health and life insurance, retirement income, and paid time off. Although the details of each vary widely, these benefits are today standard components of the compensation package, and workers generally have come to expect them.

Because family members are often primary recipients of many employee benefits, it is appropriate to trace the evolution of benefit plans in this 75th anniversary issue of the Monthly Labor Review, which focuses on changes in the family from 1915 to 1990. While no consistent series of data exists over this period, the Review has reported on benefits throughout its history. Those reports form the basis for much of this retrospective.

One function of employee benefits is to protect workers and their families from financial burdens. Health care plans help soften the impact of medical expenses and, perhaps, encourage workers and their dependents to seek care that might otherwise be forgone. Retirement income plans allow older employees to stop working and maintain certain living standards. Similarly, disability benefits provide income to those unable to work, and survivor benefits protect against loss of earnings resulting from the death of a spouse or other relative.

Employers provide benefits to their employees for a variety of reasons. One theory suggests that employers have a legitimate "concern for the welfare of their employees" beyond any economic motive, and this "paternalism" is expressed through the offer of protection against economic hardship.¹ Employers may also offer protection that they feel employees are unable to provide for themselves. According to this theory, employers assume that employees will tend to favor current consumption over prudent savings, and will therefore be unprepared for emergencies.² Finally, employers may offer benefit plans to meet union demands in collective bargaining, to attract and keep good employees, or to remain competitive with other employers in the labor market.³

This excerpt is from an article published in the March 1990 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.

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Footnotes
¹ Jerry S. Rosenbloom and G. Victor Hallman, Employee Benefit Planning (Englewood Cliffs, NJ, Prentice-Hall, 1981, p. 14.

² Everett T. Allen, Jr., "Designing Employment Benefits Plans," in Jerry S. Rosenbloom, ed., The Handbook of Employee Benefits: Design, Funding, and Administration (Homewood, IL, Dow Jones-Irwin, 1984), pp. 5-20.

³ Rosenbloom and Hallman, Employee Benefit Planning, p. 16.

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