Health and retirement benefits: Data from two BLS surveys

Monthly Labor Review

Volumn 123, Issue 3, 2000, Pages 3-20

  Herz, Diane E ^a   Meisenheimer II, Joseph R ^a   Weinstein, Harriet G ^a  

^a NONE

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EID: 0039850978     PISSN: 00981818     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (40)

1. For a more complete discussion of the elements of job quality, including employee benefits, see Joseph R. Meisenheimer II, "The services industry in the 'good' versus 'bad' jobs debate," Monthly Labor Review, February 1998, pp. 22-47.
2. Employer Costs for Employee Compensation - March 1999, USDL 99-173 (U.S. Department of Labor, June 24, 1999).
3. See, for example, Sylvester Schieber and John Shoven, eds. Public Policy Toward Pensions (Cambridge, MA, MIT Press, 1997).
4. The importance of having accurate information to develop public policy on health care is discussed by Linda T. Bilheimer and Robert D. Reischauer in "Confessions of the estimators: Numbers and health reform, " Health Affairs, Spring 1995, pp. 37-55.
5. For more information on the National Compensation Survey, see Harriet G. Weinstein, "Overview of the NCS: Summer 1998," Compensation and Working Conditions, Summer 1998, pp. 41-44.
6. All of these supplements included questions on employer-provided health and retirement benefits. The May 1988 and April 1993 supplements also included questions on short- and long-term disability benefits, which are not analyzed in this article.
7. The March supplement to the CPS has included questions on health insurance coverage since 1980. These questions focus on coverage from all sources and have provided less reliable information than the supplements on employer-provided health insurance benefits. See Mark C. Berger, Dan A. Black, and Frank A. Scott, "How Well Do We Measure Employer-Provided Health Insurance Coverage?" Contemporary Economic Policy, July 1998, pp. 356-67.
8. Information on educational levels also appears to be more easily obtained from household surveys than from establishment sources. Information on educational attainment is available each month from the CPS, and estimates are published in the monthly news release. The Employment Situation, and in the BLS publication. Employment and Earnings. BLS recently asked employers in four metropolitan areas to provide information on educational attainment in test studies of the National Compensation Survey. These tests showed that employers were unable to provide information on educational attainment for 7 in 10 workers. Although it may surprise some readers that employers so often were unable to provide information about the educational attainment of their workers, it is important to remember that employers may not always find such information relevant. For example, many service and laborer occupations do not require academic credentials to perform the job adequately. Even in specialized trades like plumbing and carpentry, work experience in the occupation is far more relevant to employers than is educational attainment. See John E. Buckley, "Collecting Data on Human Capital Variables," Compensation and Working Conditions, Fall 1998, pp. 29-31.
9. In addition to the employment estimates from the CPS, employment estimates also are available from the BLS Current Employment Statistics (CES) program, a monthly survey of nonfarm establishments that obtains information on employment, hours, and earnings by industry. To illustrate the differences that can occur between CPS and CES employment estimates for detailed industries, consider the personnel supply services industry, which consists largely of firms that provide temporary employees to establishments in other industries. The 1998 annual average employment level estimated from the CPS for this industry was about 1 million. The employment estimate from the CES program was 3.2 million. In part, this large discrepancy stems from the different treatment of multiple jobholders in each survey. Persons who are paid by more than one "temporary-help" or "staffing" firm during a survey reference period are counted only once in the CPS; in the CES program, these individuals are counted in the employment records of each staffing firm for which they worked. A larger part of the discrepancy probably results from the different way in which the industry is reported in the two surveys. Many CPS respondents may report the industry of the client to which a temporary worker was assigned, rather than that of the staffing firm which provided the worker to the client. By comparison, respondents to the CES program report the industry of the establishment that pays the worker - that is, the staffing firm. Thus, if one wants to know how many people are employed in the personnel supply services industry, establishment data are a more reliable source of information than the CPS.
10. This does not, of course, imply that proxy responses are always unreliable. In fact, for many important items in the CPS, such as a person's employment or unemployment status, proxy responses may be as reliable as self-responses, at least when an adult respondent answers questions about the labor force activity of another adult in the household. Assessing the accuracy of a response is more ambiguous when the response is from an adult who is answering questions about the labor force activity of youths in the household. For a more detailed discussion of proxy responses in the CPS, see Brian A. Kojetin and Judith M. Tanur, "Proxies for Youths and Adults: Communication and Reports of Job Search," 1996 Proceedings of the Section on Survey Research Methods, vol. 1 (Alexandria, VA, American Statistical Association, 1997), pp. 254-59. See also Norman Bowers, "Youth labor force activity: alternative surveys compared," Monthly Labor Review, March 1981, pp. 3-17. Without proxy responses, the CPS would cost far more to administer because CPS interviewers typically would have to contact sampled households several times to obtain information from each resident of the household. The only alternative to using proxy responses or incurring higher costs would be to obtain no information at all for some household residents.
11. This does not, of course, imply that proxy responses are always unreliable. In fact, for many important items in the CPS, such as a person's employment or unemployment status, proxy responses may be as reliable as self-responses, at least when an adult respondent answers questions about the labor force activity of another adult in the household. Assessing the accuracy of a response is more ambiguous when the response is from an adult who is answering questions about the labor force activity of youths in the household. For a more detailed discussion of proxy responses in the CPS, see Brian A. Kojetin and Judith M. Tanur, "Proxies for Youths and Adults: Communication and Reports of Job Search," 1996 Proceedings of the Section on Survey Research Methods, vol. 1 (Alexandria, VA, American Statistical Association, 1997), pp. 254-59. See also Norman Bowers, "Youth labor force activity: alternative surveys compared," Monthly Labor Review, March 1981, pp. 3-17. Without proxy responses, the CPS would cost far more to administer because CPS interviewers typically would have to contact sampled households several times to obtain information from each resident of the household. The only alternative to using proxy responses or incurring higher costs would be to obtain no information at all for some household residents.
12. In addition to health insurance and retirement plan provisions, the EBS compiles data on employee work schedules, paid leave, disability benefits, life insurance, flexible benefits plans, and reimbursement accounts, as well as a variety of emerging benefits.
13. The April 1972 CPS supplement was a mail survey that examined the benefits coverage of full-time workers. Data on retirement benefits were examined in Walter W. Kolodrubetz and Donald M. Landay, "Coverage and Vesting of Full-Time Employees Under Private Retirement Plans," Social Security Bulletin, November 1973. Health benefits data from the April 1972 CPS supplement were not analyzed in that article.
14. Retirement plan coverage rates from 1972 to 1993 were published in Pension and Health Benefits of American Workers: New Findings from the April 1993 Current Population Survey (U.S. Department of Labor, Social Security Administration, Small Business Administration, and Pension Benefit Guaranty Corporation, 1994).
15. The EBS measures, among other things, employee benefit programs sponsored by employers who pay some share of the costs.
16. The high nonresponse rate on this question partly reflects some proxy respondents' lack of knowledge about health plan options of other household members.
17. Databook on Employee Benefits, 4th ed. (Washington, DC, Employee Benefit Research Institute, 1997), p. 301.
18. The EBS and the CPS define union membership differently. In the EBS, the establishment identifies the number of workers in union occupations. Those occupations fulfill the following requirements: a labor organization must be recognized as the bargaining agent for all workers in the occupation; wage and salary rates are determined through collective bargaining and negotiations; and settlement terms, which must include earnings provisions and may include benefit provisions, are embodied in a signed, mutually binding collective bargaining agreement. In the CPS, union members are respondents who replied affirmatively to the question, "On this job, (is/are) (name/you) a member of a labor union or of an employee association similar to a union?"
19. The CPS sample currently includes 50,000 households each month. The 1995 Employee Benefits Survey of Medium and Large Private Establishments sampled 3,462 nonagricultural establishments with 100 or more workers. The 1994 Employee Benefits Survey of Small Private Establishments sampled 2,135 nonagricultural establishments with fewer than 100 employees. The 1994 Employee Benefits Survey of State and Local Governments sampled 860 government establishments.
20. An establishment is an economic unit - such as a factory, a mine, a store, or an office-that produces goods or provides services, typically in a single physical location. An establishment is distinct from a firm, which may be in a single physical location or may include multiple establishments at differen locations. The EBS samples are drawn from a list of establishments, not firms, and readers should be aware that some participants in the survey of small establishments may in fact be a part of large firms.
21. See, for example. Employee Benefits in Medium and Large Private Establishments, 1995, Bulletin 2496 (Bureau of Labor Statistics, April 1998); Employee Benefits in Small Private Establishments, 1994, Bulletin 2475 (Bureau of Labor Statistics, April 1996); and Employee Benefits in State and Local Governments, 1994, Bulletin 2477 (Bureau of Labor Statistics, May 1996).
22. See, for example. Employee Benefits in Medium and Large Private Establishments, 1995, Bulletin 2496 (Bureau of Labor Statistics, April 1998); Employee Benefits in Small Private Establishments, 1994, Bulletin 2475 (Bureau of Labor Statistics, April 1996); and Employee Benefits in State and Local Governments, 1994, Bulletin 2477 (Bureau of Labor Statistics, May 1996).
23. See, for example. Employee Benefits in Medium and Large Private Establishments, 1995, Bulletin 2496 (Bureau of Labor Statistics, April 1998); Employee Benefits in Small Private Establishments, 1994, Bulletin 2475 (Bureau of Labor Statistics, April 1996); and Employee Benefits in State and Local Governments, 1994, Bulletin 2477 (Bureau of Labor Statistics, May 1996).
24. The Employer Costs for Employee Compensation series provides estimates by industry and major occupational group, as well as by bargaining status, region, and establishment size. Not surprisingly, the groups with the highest employer costs for health insurance mirror those categories with the higher participation rates. The data on incidence of participation that will be produced annually from the National Compensation Survey will be based on a sample that is about double the current EBS sample. This should enable the Bureau to publish additional geographic, industrial, occupational, and other detailed information and allow for an analysis of the link between plan participation and cost. (See Employer Costs for Employee Compensation - March 1999, cited in note 2.)
25. Section 401(k) of the Internal Revenue Code authorizes private-sector, profitmaking firms (and some nonprofit organizations) to offer taxdeferred retirement plans for their workers. Section 403(b) authorizes such retirement plans for nonprofit organizations, and Section 457 authorizes plans for employees of State and local governments. Some tax-deferred retirement plans are funded solely by employee contributions, and that might explain why some respondents answered "no" to either of the first two questions about participation in retirement plans and subsequently answered "yes" to the question on participation in a tax-deferred retirement plan. When answering the first two questions, some respondents may not have considered tax-deferred plans that were sponsored, but not funded, by their employers. When, later in the supplement, these respondents were asked whether they had the option to contribute money to a plan on a tax-deferred basis, they correctly answered affirmatively. Even if a tax-deferred retirement plan does not receive employer funding, it still benefits employees because the employer provides a convenient vehicle through which employees can invest for retirement. More importantly, if the employer had not established the plan and employees instead invested their money in an after-tax mutual fund or savings account, their contributions would be subject to taxation at the time they were made, and their investment earnings would be subject to taxation at the time they were earned. Under an employer-provided plan, employees could defer paying taxes on their contributions and earnings until retirement. Even for employees who are eligible to invest in pretax individual retirement accounts at banks or other financial institutions, the limit on how much they can invest each year is much lower than under an employer-provided plan.
26. Administrative figures from the Office of Personnel Management indicate that about 96 percent of Federal employees participated in either the Civil Service Retirement System or the Federal Employees Retirement System in 1997. The considerably lower CPS estimate of 88-percent participation among Federal employees may result from a variety of possible response errors in that survey. For example, some CPS respondents may not be aware of a household member's participation in a Federal employee retirement plan. Another possibility is that some noncovered workers employed by a private-sector contractor to the Federal Government may be classified incorrectly as Federal employees.
27. The February 1995 and 1997 supplements did not include questions on plan characteristics.
28. For detailed descriptions of the various types of plans and the calculation of benefits, see Ann C. Foster, "Factors Affecting Employer-provided Retirement Benefits," Compensation and Working Conditions, Winter 1998, pp. 10-17. See also William J. Wiatrowski, "Factors affecting retirement income," Monthly Labor Review, March 1993, pp. 25-35.
29. For detailed descriptions of the various types of plans and the calculation of benefits, see Ann C. Foster, "Factors Affecting Employer-provided Retirement Benefits," Compensation and Working Conditions, Winter 1998, pp. 10-17. See also William J. Wiatrowski, "Factors affecting retirement income," Monthly Labor Review, March 1993, pp. 25-35.
30. See note 20 for references.
31. A comparison of EBS data with data from the Employer Costs for Employee Compensation series indicates that employer expenditures for retirement plans are higher in groups for which coverage is more common. In the private sector, employer expenditures were higher for union workers, full-time workers in goods-producing industries, and workers in larger establishments (500 or more employees). Expenditures for union workers' defined-benefit plans were greater than those for their defined-contribution plans. Similarly, employer costs in larger establishments were higher for defined-benefit plans than for defined-contribution plans. Ultimately, the redesigned National Compensation Survey will provide data that will enable researchers to analyze more rigorously the relationship between employer costs and employee participation for a variety of employee benefits. See Harriet G. Weinstein, "Linking Retirement Plan Measures," Compensation and Working Conditions, Spring 1998, pp. 52-55.
32. For a discussion of how the EBS estimates a worker's eligibility for, and participation in, a retirement plan, see William J. Wiatrowski, "Counting the Incidence of Employee Benefits," Compensation and Working Conditions, June 1996, pp. 10-18.
33. For additional information on the conference and on the major issues regarding linked data, see the series of reports in the July 1998 Monthly Labor Review, pp. 48-60.
34. Harley Frazis, Maury Gittleman, Michael Horrigan, and Mary Joyce, "Results from the 1995 Survey of Employer-Provided Training," Monthly Labor Review, June 1998, pp. 3-13.
35. Mark C. Berger, Dan A. Black, and Frank A. Scott, "How Well Do We Measure Employer-Provided Health Insurance Coverage?" Contemporary Economic Policy, July 1998, pp. 356-67.
36. Alan L. Gustman and Thomas L. Steinmeier, Employer Provided Pension Data in the NLS Mature Women's Survey and in the Health and Retirement Study, NBER Working Paper no. 7174, (Cambridge, MA, National Bureau of Economic Research, Inc.), June 1999.
37. Wesley Mellow and Hal Sider, "Accuracy of Response in Labor Market Surveys: Evidence and Implications," Journal of Labor Economics, October 1983, pp. 331-44. One data set used in the study included information from the January 1977 CPS, linked with information collected from the employers of CPS participants. The other data set matched information collected from workers and employers interviewed in the Employment Opportunity Pilot Project Survey.
38. See, for example, Ioannis Theodossiou, "Promotions, Job Seniority, and Product Demand Effects on Earnings," Oxford Economic Papers, July 1996, pp. 456-72. See also Robert F. Elliot and Robert Sandy, "Adam Smith may have been right after all: A new approach to the analysis of compensating differentials," Economics Letters, Apr. 9, 1998, pp. 127-31.
39. See, for example, Ioannis Theodossiou, "Promotions, Job Seniority, and Product Demand Effects on Earnings," Oxford Economic Papers, July 1996, pp. 456-72. See also Robert F. Elliot and Robert Sandy, "Adam Smith may have been right after all: A new approach to the analysis of compensating differentials," Economics Letters, Apr. 9, 1998, pp. 127-31.
40. Low response rates occurred in the 1995 BLS Survey of Employer-Provided Training and in the 1993 survey sponsored by the W. E. Upjohn Institute for Employment Research. (See the articles cited earlier in notes 30 and 31, respectively.)