March 30, 2001 (The Editor’s Desk is updated each business day.)

Prevalence of bonus plans in service sector

Among private service-producing industries, referral, hiring, and retention bonus plans were most prevalent last year in transportation, communications, and public utilities and in finance, insurance, and real estate.

[Chart data—TXT]

With regard to referral bonuses, 14 percent of employees in finance, insurance, and real estate and 11 percent of those in transportation, communications, and public utilities had access to such bonus plans in March 2000. This compares to 8 percent of those in wholesale trade and in "other services" and 7 percent in retail trade.

Hiring bonus plans were offered to 8 percent of employees in transportation, communications, and public utilities and 7 percent in finance, insurance, and real estate. Next were other services, wholesale trade, and retail trade at 4 percent, 3 percent, and 2 percent, respectively.

Employees in transportation, communications, and public utilities had the highest incidence of retention bonus plans at 7 percent. Finance, insurance, and real estate and wholesale trade were both at 3 percent, while the two remaining industries were at 2 percent.

These data are a product of the Employment Cost Trends program. Referral bonuses are made by the employer to an employee for recommending an applicant who is hired by the establishment. Hiring bonuses are payments made by the employer to induce an individual to accept employment. Retention bonuses are payments to an incumbent employee to retain that individual within the establishment. Learn more about bonuses in "The cost and incidence of referral, hiring, and retention bonuses" (PDF 66K), by Thomas G. Moehrle, in Compensation and Working Conditions, Winter 2000 edition.