Academic journal article Monthly Labor Review

Comparing Employee Benefits in the Public and Private Sectors

Academic journal article Monthly Labor Review

Comparing Employee Benefits in the Public and Private Sectors

Article excerpt

While employee benefits are an important part of the compensation package for all workers, the characteristics of the benefit programs vary considerably between the private and public sectors. Differing employer and employee needs affect the types and characteristics of benefits received.

This article compares the incidence and administration of employee benefits for full-time employees in the private and public sectors, and examines the characteristics of work schedules and paid leave plans. Accompanying articles appearing in this issue of the Review compare other private and public sector benefits-employer-sponsored health and life insurance and disability benefits, and defined benefit pension plans and defined contribution plans (such as savings and thrift, profit-sharing, and stock ownership plans). Taken together, these articles represent a current, comprehensive look at benefits provided to employees in medium and large firms in private industry and in State and local governments.

The data are from the Bureau of Labor Statistics' annual Employee Benefits Survey.' They show that:

* Paid vacations are granted to nearly all full-time employees in medium and large firms in private industry, compared with about three-fourths of those employed by State and local governments, Teachers are the least likely of public employees to receive paid vacations; police and firefighters, the most likely. Private firms generally provide many single-purpose types of leave (such as separate vacation and personal leave plans); State and local govemments are more likely to provide a multiple-purpose annual leave plan.

* Defined benefit pension plans for State and local government workers, which are often jointly financed by employers and employees, provide more generous benefits than do plans in the private sector, which typically are financed by the employer only. However, private sector pensions are almost always accompanied by Social Security benefits. In the public sector, approximately one-fourth of pension plan participants work for jurisdictions not in the Social Security system.

* Participation in health maintenance organizations (HMO'S) is more prevalent among public employees. Concentrations of public sector employers in metropolitan areas, where HMO'S are widely available, may help to explain civil servants' greater participation in these prepaid health plans.

The survey

The Bureau of Labor Statistics' Employee Benefits Survey, begun in 1979, initially looked exclusively at benefits in medium and large firms in private industry. The survey coverage mirrored that of the Bureau's National Survey of Professional, Administrative, Technical, and Clerical Pay (PATC survey), yielding both pay and benefits data. In 1987, for the first time, the Employee Benefits Survey focused on benefits in State and local governments. both the private and public sector surveys, geographic coverage is limited to establishments in the 48 contiguous States.

The Employee Benefits Survey provides information on the incidence and characteristics of paid leave, insurance plans, defined benefit pension plans, defined contribution plans, flexible benefits arrangements, and work schedules. Eligibility (but not details of plan provisions) for several additional benefits, such as severance pay and employersubsidized parking, is also provided. With a few exceptions, the survey is limited to benefits financed at least in part by employers. It is constantly revised in an effort to keep abreast of new developments in employee benefits plans.

Private sector survey. During the 1979-86period, when medium and large firms in the private sector were surveyed, the industrial coverage included manufacturing; mining; construction; transportation, communications, electric, gas, and sanitary services; wholesale trade; retail trade; finance, insurance, and real estate; and selected services. …

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