Other Labor Income
Other labor income consists of the employer contributions to privately administered pension and welfare funds, employer contributions to government employee retirement plans, and a miscellaneous category.(1)
Other labor income accounted for over 6 percent of personal income at the national level in 2001 (table C).
Employer contributions to private pension and welfare funds
Contributions by employers to privately administered benefit funds, which consist of their payments to pension and profit–sharing plans, premiums for private group health and life insurance plans, payments to supplemental unemployment benefit plans, and payments to privately administered workers' compensation plans, accounted for about 81 percent of other labor income in 2001 (table C). For private pension plans, other components of personal income include their investment income, except capital gains (net of losses). However, benefits paid by these plans are not counted as part of personal income.
Private pension and profit–sharing plans, group health and life insurance, and supplemental unemployment insurance.–The national estimates of the employer payments to private pension and profit–sharing plans are based mainly on data tabulated from Internal Revenue Service form 5500 (Annual Return/Report of Pension Plans) and are prepared by Standard Industrial Classification (SIC) two–digit industry.(2)
The national all–industry estimates of the payments for group health insurance for years after 1996 are based mainly on data collected by the Medical Expenditure Panel Survey.(3) The estimates for 1996 are based mainly on extrapolations of the 1991 estimates by the relative change in data on employers' health insurance costs from the Employer Costs of Employee Compensation (ECEC) report of the Bureau of Labor Statistics (BLS); the estimates are disaggregated to the SIC two–digit level based on data from the ECEC and on the distribution of wage and salary accruals. The estimates prior to 1992 are based mainly on the total private expenditures on health insurance (including the cost of self–administered plans) from the 1993 National Health Account of the Centers for Medicare and Medicaid Services(CMS), formerly the Health Care Financing Administration. Premiums paid by employees are subtracted using consumer expenditures for health insurance (excluding medicare premiums) from the BLS Consumer Expenditure Survey.
The national estimates of premiums paid by employers for group life insurance are based mainly on data provided by the American Council on Life Insurance (ACLI), and the national estimates of payments for supplemental unemployment benefits are based mainly on data from labor union and industry sources and from BLS. The estimates by SIC Division are also based on the ACLI, BLS, and union and industry sources. These estimates are allocated to the SIC two–digit industries based on the distribution of wage and salary accruals.
The state estimates of the payments to these private benefit plans are prepared for each private industry. Because state data are not available from the sources used to prepare the national estimates, the payments amount for each industry is allocated to the states in proportion to the state estimates of wages and salary disbursements for the industry.(4) However, for the large payments made by two motor vehicle manufacturing firms to previously underfunded pension funds in 1993–95, the contribution made by each firm was allocated to states in proportion to the firm's employment in motor vehicle manufacturing plants.
The state government contributions to private pension plans consist only of contributions to annuity plans made on behalf of selected groups of employees–primarily teachers. The state estimates are based on data from the Teachers Insurance and Annuity Association/College Retirement Equities Fund.
The national estimates of Federal, state, and local government payments to employee group health and life insurance plans are allocated to states in proportion to ES–202 employment data for each level of government.
Workers' compensation plans.–The contributions by employers to privately administered workers' compensation plans consist of net premiums paid by employers to private insurance companies for workers' compensation insurance, benefit payments by self–insured employers, and court–awarded payments by the railroad industry and the water transportation industry for work–related injuries.(5)
The national estimate for the employers' premium payments to private insurance companies is based on data compiled annually by A.M. Best Company, Inc., supplemented by data from the National Council on Compensation Insurance (NCCI), the National Association of Insurance Commissioners (NAIC), and the American Association of State Compensation Insurance Funds (AASCIF).(6) The estimate of employers' costs for self–insurance is based on state–level data compiled by the Social Security Administration (SSA) and by the National Academy of Social Insurance (NASI).(7) The allocation of the national estimates to the SIC two–digit industries is based on BEA estimates of employment by industry and on BLS data on occupational injury incidence rates.
The national estimates of the payments made under court awards are based on data provided by the Federal Railroad Administration and the Maritime Administration of the Department of Transportation.
The state estimates are prepared in three parts: For railroad transportation, for water transportation, and for all other industries.
State data for the court–awarded payments by the railroad and water transportation industries are unavailable. For the railroad industry, the national estimate of these payments is allocated to states in proportion to the number of workers killed or injured in railroad accidents, as reported in the Annual Accident/Incident Bulletin by the Federal Railroad Administration. For the water transportation industry, the national estimate of the court–awarded payments is allocated to states in proportion to the estimates of wages and salaries for this industry.
The state estimates of the premiums and benefits paid by employers in the other industries are prepared with a dual allocation.(8) In this four–step procedure, first, the national estimate for all industries combined is allocated to states in proportion to the sum of two data series: (1) Earned premium data collected from the NAIC, supplemented with data from the NCCI and the AASCIF, and (2) data on benefits paid by self–insured employers from the SSA and the NASI. Second, the national estimate for each industry is allocated to states in proportion to the estimates of wages and salaries for the industry. Third, the state estimates from the first step are allocated to the industries in proportion to the output of the second step.(9) Finally, the national estimate for each industry is allocated to states in proportion to the output of the third step.
Employer contributions to government employee retirement plans
Government employee retirement plans are treated similarly to private pension plans in the national income and product accounts.(10) For the measurement of personal income, employer contributions to the plans are counted as part of other labor income, and the investment income (excluding capital gains) received by the plans is counted as part of personal dividend income or personal interest income. The employer contributions to these plans accounted for about 21 percent of other labor income in 2001. The employee contributions to the plans and the payment of benefits to retired persons and survivors are not reflected in personal income.
Contributions for Federal civilian employees.–The government employee retirement plans for Federal civilian employees consist of the Civil Service Retirement System (CSRS), which covers only employees hired before 1984; the Basic Benefit Plan of the Federal Employees Retirement System (FERS), which covers mainly employees hired after 1983; the Thrift Savings Plan (TSP); and several plans that cover specified groups of employees, such as the plan for the Foreign Service. Employees covered by FERS are also covered–but those covered by CSRS are not covered–by Old–age, Survivors, and Disability Insurance (social security). Employees covered by both CSRS and FERS are eligible to participate in the TSP, but employer contributions to the TSP are made only on behalf of employees covered by FERS. Employee contributions are required to both the CSRS and the Basic Benefit Plan of FERS; employee contributions to the TSP are optional.
The national estimate of the employer contributions to all of the retirement plans for Federal civilian employees–which is based mainly on data from the Monthly Treasury Statement–is allocated to states in proportion to Federal civilian wages and salaries.
Contributions for military personnel–Military personnel are covered both by social security and by the military retirement system. Retirement benefits under the latter require a minimum of 20 years of service, but the benefits begin immediately upon retirement, regardless of age. No employee contribution is required.
The national estimate of the employer contributions for military retirement–which is based mainly on data from the Monthly Treasury Statement–is allocated to states in proportion to military wages and salaries.
Contributions for state and local government employees–The government employee retirement plans for state and local Government employees consist of those plans operated by state and local governments. The pension plans for some state and local government employees are operated by private carriers; the employer contributions to these plans are classified as employer contributions to private pension plans. Some local government employees are covered by plans operated by state governments. Employee contributions to the state and local government plans may or may not be required.
Both the national and the state–level estimates are based on data from the Census Bureau's annual Finances of Employee–Retirement Systems of State and Local Governments. The state estimates of the contributions for state government employees are based on the total contributions received by the state–operated plans less the contributions made for local government employees to those plans. The state estimates of the contributions for local government employees are based on the total contributions received by the plans operated by local governments plus the contributions made for local government employees to the state–operated plans.
Other
This category consists of fees paid to jurors and witnesses, compensation of prisoners, and marriage fees paid to justices of the peace. The national estimates of the judicial fees are based on data from the Budget of the United States Government and from the Census Bureau's annual State Government Finances, and the national estimates of the compensation of prisoners is based on data provided by the Department of Justice. In the absence of source data, the marriage fees are arbitrarily assumed to be $10 million. The national estimate of each of these subcomponents is allocated to states in proportion to the civilian population.
Footnotes
1. Other labor income excludes employer contributions paid to social insurance funds, such as those for the Old–age, Survivors, and Disability Insurance (social security) program. Generally, government–administered funds that provide benefits to individuals are classified as social insurance; however, government employee retirement plans are treated similarly to private pension plans. The benefits paid from social insurance funds are counted as part of the transfer payments component of personal income.
For the difference in the treatment of government employee retirement plans and social security, see footnote 10 in Brent R. Moulton, Robert P. Parker, and Eugene P. Seskin, "A Preview of the 1999 Comprehensive Revision of the National Income and Product Accounts," Survey of Current Business 79 (August 1999): 11.
2. See the section "Changes in Methodology" in " Improved Estimates of the National Income and Product Accounts for 1959–95: Results of the Comprehensive Revision," Survey 75 (January/February 1996): 22–27.
3. See the section "Changes in Methodology" in " Annual Revision of the National Income and Product Accounts: Annual Estimates, 1997–99, and Quarterly Estimates, 1997:I–2000:I," Survey 80 (August 2000): 27–29.
4. Because wage and salary disbursements by industry are used to allocate the national estimates to states, the state estimates reflect the various mixes of industries among the states and the wide variation in contribution rates relative to wages among industries, but not the variation in contribution rates among states for a given industry.
5. Programs for workers' compensation insurance are authorized by law in all states, and laws in the District of Columbia and in all but five states authorize programs for private workers' compensation insurance. Federal laws authorize the court–awarded payments by the railroad industry and the water transportation industry. Laws in many states authorize self–insurance. Workers' compensation insurance provided by government–operated funds is classified as social insurance, and the premiums paid to these funds are classified as employers' contributions for social insurance, which is not a component of personal income. The benefits paid by these funds are classified as transfer payments to persons, and are therefore part of personal income.
6. Some state–chartered workers' compensation insurance funds have mixed public and private characteristics and are included neither in the A.M. Best data for private insurance carriers nor in the Census Bureau data for social insurance funds. BEA treats these funds as private and obtains data for them from the other sources.
7. The SSA series of employer costs for self–insurance was discontinued after 1995 and succeeded by the NASI series.
8. See "Dual allocation" in the technical notes.
9. For West Virginia, the state estimate is allocated to industries in proportion to data from the Annual Report of the West Virginia Workers' Compensation Fund.
10. In addition to or instead of coverage under government employee retirement plans, many government employees are covered by the Old–age, Survivors, and Disability Insurance Program (social security); see footnote 1.
