Findings From the Contingent Work Supplement to the
February, 1999 Current Population Survey
INTRODUCTION
Data from Employee Benefits Supplements to the Current
Population Survey (CPS), conducted at approximately 5-year intervals from
1972 to 1993, found that the pension coverage rate of private wage and
salary workers remained relatively stable over this period at about 50%
for full-time workers. More recent data from the Contingent Work
Supplements (CWS) to the CPS, conducted in 1995, 1997, and 1999 indicate
that pension coverage may now be increasing.
Pension coverage is not the primary focus of the CWS
but it does ask a limited set of questions of all workers about coverage
under a "pension or retirement plan." The brief description of a
pension plan given in the survey leads to somewhat of an undercount when
compared to the more broadly worded questions in the Employee Benefits
Supplements.(1) Nevertheless, the pension data collected by the CWS are
useful in examining variables associated with pension coverage and in
tracking coverage trends over the 1995-1999 period.
The attached tables present findings on employer
sponsorship and coverage among wage and salary workers (excluding
incorporated self-employed workers) under pension plans based on responses
to the 1999 CWS. Most tables are limited to private sector workers but a
few tables compare sponsorship and coverage rates between private and
public sector workers. Tables are also included showing trends over the
1995-1999 period. The major findings are summarized below:
SUMMARY OF FINDINGS FOR PRIVATE WAGE AND SALARY WORKERS
Employer Sponsorship of Pension Plans
In 1999, 58% of all private wage and salary workers
were employed by firms sponsoring pension plans. The rate of employment in
firms with plans was 64% for full-time workers and 37% for part-time
workers.
Twenty-six percent of women workers are employed on a
part-time basis compared to only 12% of male workers. The relatively low
rate of employment by part-time workers in firms with pension plans
brought the overall percentage of women working for firms with plans (57%)
below that of men (60%), even though both full-time and part-time women
employees were more likely to work for a firm with a plan than their male
counterparts.
Younger workers were less likely to be employed by
firms providing plans. Only 40% of workers under age 25 and 57% of workers
25-29 said that they were employed by a firm with a pension plan. Among
workers ages 35 and older, almost two-thirds worked for a firm with a
plan.
Employment in a firm providing a plan was highly
correlated with education level. The sponsorship rate was 33% for workers
without a high school degree compared to 56% for high school graduates,
61% for workers with some college education, and 74% for college
graduates.
Workers in high pay and unionized industries and
occupations were most likely to be employed by firms sponsoring plans. The
sponsorship rate was greater than 70% for workers employed in mining,
manufacturing, communications and utilities, and finance, insurance, and
real estate industries.
The plan sponsorship rate was less than 50% in
agriculture, construction, and retail trade. Service industry workers, who
now make up almost one-third of the private sector wage and salary labor
force, had a 56% rate of employment in firms sponsoring a pension plan.
This rate, which was only slightly below the overall 58% rate for all
private sector workers, reflects a mixture of high pay and low pay firms
in the service sector.
Among different occupational groups, employment by a
firm with a plan was above 70% for executive and managerial, professional
specialty, and technical and related support occupations. The sponsorship
rate was 50% or less for farming, service, and labor occupations.
Pension Participation Rates
The overall pension coverage rate in 1999 was 44%,
including 47% for men and 40% for women.
While the same demographic and economic variables
associated with employment in a firm sponsoring a pension plan were also
associated with plan participation, the disparities in coverage patterns
were often even more pronounced. Eligibility requirements and the
increasing use of 401(k) plans requiring voluntary employee contributions
as a condition of participation often result in low coverage rates for
part-time, temporary, and low-wage employees even in firms sponsoring
plans.
The pension coverage rate was 51% for full-time
employees and 14% for part-time employees. The higher percentage of women
workers employed on a part-time basis was a major factor in the lower
overall coverage rate of women when compared to men.
The coverage rate varied by race and ethnicity. The
pension plan participation rate was 47% for whites, 41% for blacks, 38%
for Asian and Pacific Islanders, and 27% for Hispanics.
Pension coverage increased sharply with earnings
levels. Only 6% of workers earning less than $200 per week participated in
a plan compared to 54% of workers earning $500-$599 per week and 76% of
workers earning $1,000 or more per week.
Among unionized workers, 70% participated in a pension
plan compared to 41% of non-unionized workers.
Participation Rates in Firms With Plans
Among workers whose employers sponsored pension plans,
three-fourths participated in the plans.
The frequent use of minimum annual hour, length of
service, and employee contribution requirements by pension plans are
especially strong barriers to participation among younger workers. Only
36% of workers under age 25 employed by firms with plans participated in
the plans compared to 68% of workers ages 25-29 and 88% of workers ages
50-54.
Only 19% of workers earning less than $200 per week
were enrolled in their employers' plans compared to 79% or more of workers
earning $400 or more per week. More than half of non-participants in the
low wage group indicated that they did not work enough hours to be
eligible to participate.
Among workers not enrolled in their companies' plans,
the most common reason cited for non-participation was that they did not
yet meet the service or age requirements of the plan. This reason was
given by 39% of men and 34% of women.
The second most common reason given for
non-participation, cited by 27% of non-participants, was a voluntary
decision not to participate. Presumably, workers giving this reason
declined coverage in a 401(k) plan.
The third most common reason for non-participation was
the part-time status of workers. Pension plans are permitted to exclude
workers who work less than 1,000 hours per year. Overall, 19% of all
non-participants did not participate for this reason, including 22% of
women and 15% of men.
Trends in Pension Coverage of Private Wage and Salary
Workers
The three CWSs conducted at two-year intervals
beginning in 1995 showed that among private wage and salary workers, the
coverage rate increased from 41% in 1995 to 42% in 1997 and 44% in 1999.
Among full-time workers pension coverage increased from 48% to 51% over
the 1995-1999 period, while among part-time workers coverage increased
from 12% to 14%.
Data from the CWS surveys also showed an increase in
the rate of employment in firms sponsoring pension plans, from 54% in 1995
to 58% in 1999. Among workers in firms with plans, the percentage who
participated in the plan was stable from 1995 to 1999 at 75%.
Data on reasons for non-participation from the CWS
indicated that the percentage of non-participants who chose not to
participate increased from 24% to 1995 to 27% in 1999. The overall rate of
non-participation remained at 25% because of offsetting decreases in other
reasons for non-participation, such as the percentage of workers in job
categories not eligible for participation, which declined from 8% in 1995
to 6% in 1999.
References
1. The initial question in the 1993 Employee Benefits
Supplement defined retirement plans as including regular pensions and also
including "other plans where money is accumulated in an individual
account for retirement - like thrift, savings, profit sharing or stock
plans." The survey also asked a follow-up question specifically about
coverage under a 401(k) plan. It appears that the narrowly worded pension
question in the CWS leads to an undercount of about 2 to 3 percentage
points in the pension coverage rate when compared to the comprehensive set
of questions in the Employee Benefit Supplement. Back to text
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