CalChamber Releases Employer Benefits Survey
Past decade shows a marked increase in the number and types of benefits
offered to employees

Tuesday, December 18, 2007

SACRAMENTO —The California Chamber of Commerce today released the results of a recent survey evaluating how California companies have changed their employee benefits packages over the last decade.

To help California employers evaluate their benefits programs compared to other organizations for their size, in their industries and in the state, the CalChamber invited California employers to participate in a survey of employee benefits. Since the first employer survey in 1997, the past decade shows that there has been a marked increase in the number and types of benefits offered to employees, with a corresponding rise in employee cost sharing for health care.

More than 1,000 CalChamber member companies large and small throughout the state participated — providing information on health care benefits and retirement packages, along with information on part-time employees, holidays, paid time off, wellness and elder care benefits.

This is the third Employer Benefits Survey published by CalChamber. The first survey was published in 1997, the second in 2006 and the current study in 2007. All comparisons to 1997 California employer activities are in reference to the 1997 CalChamber Employer Benefits Study as is generally cited in the report. All other references provide the source for the data against which these study findings are compared.

Expanded Benefits and Employee-Focused Programs

Throughout the state, employers expanded benefits and employee-focused programs as a recognition of the importance of contributing to the well being of employees throughout their tenure with the organization. With the goal of creating an appealing, flexible work environment to help employees manage the demands of balancing work and family, a number of employer practices have become more prevalent. Specifically, since 1997, more California employers are:

Providing employee handbooks (up twelve percentage points to 92 percent in 2007);
Conducting employee orientations (up fifteen percentage points to 86 percent in 2007);
Conducting performance appraisals (up eight percentage points to 89 percent in 2007);
Offering child care assistance (up twenty-five percentage points to 53 percent in 2007);
Offering elder care assistance (35 percent in 2007 - not measured in 1997);
Offering employee assistance (EAP) (up seven percentage points to 41 percent in 2007);
Allowing telecommuting (up fourteen percentage points to 29 percent in 2007);
Offering alternative work schedules (up twenty-eight percentage points to 41 percent in 2007);
Offering an expanded list of holiday and floating holidays (for example, Martin Luther King Day up ten percentage points to 29 percent in 2007); and
Offering more team building activities and casual work environments (for example, employer-sponsored parties, outings, casual dress any time, and job-related tuition reimbursement).

Employer support of certain types of health care coverage and wellness programs has also expanded. Since 1997, more employers are:

Paying at least some portion of employee dental coverage (up eleven percentage points to 81 percent in 2007);
Paying at least some portion of employees vision coverage (up twenty-four percentage points to 54 percent in 2007);
Offering employee wellness programs (29 percent in 2007 - not measured in 1997); and
Increasing contributions toward dependents’ coverage for dental (up eight percentage points to 53 percent in 2007) and vision insurance (up seventeen percentage points to 39 percent in 2007).
The proportion of employers paying at least some portion of employees’ or dependents’ medical and life insurance has not changed, however, and are 97 percent and 69 percent, respectively for employees in 2007, and 60 percent and 12 percent, respectively for dependents in 2007.

Rising Health Care Costs and Cost Management Activities

California employers reported an increase in the per-employee cost of health care compared to 2006. They further report a variety of changes or intended changes in their health care programs in an effort to manage escalating costs. The following is included in this year’s survey:

The percentage of employers paying more than $5,000 per employee has risen from 27 percent in 2006 to 38 percent in 2007, a 40 percent increase. In 2007, 21 percent of employers pay more than $7,000 per employee.
Twenty-three percent of employers are considering raising their employees’ portion of the premium payment. Thirty-seven percent of large (100+ employees) are considering such an increase.
Twenty-six percent and 22 percent of employers offer Health Savings Accounts (HSA) or High Deductible Health Benefits (HDHB).
Seventy-eight percent of employers offer a 401(k) plan, up from 56 percent in 1997. Today, only 5 percent of California employers offer a pension program, many fewer than in 1997 (23 percent).
Overall, only 5 percent of employers offer retiree health care benefits. Seven percent of employers with 100 or more employees offer retiree health care benefits and among employers with 250 or more employees, 10 percent do. This is considerably lower than nationally reported penetration levels among employers with two-hundred or more employees (33 percent).
Size of the Organization

The survey found that the number of employees working in an organization influences the number and types of employee benefits and management activities undertaken by the employer. Smaller, and especially micro organizations (1-10 employees), perform fewer employee support activities such as employee handbooks, orientations, and harassment training, for example, than larger employers. The very small, micro employers are also less likely to pay any portion of health care coverage for their employees or to offer any type of retirement program. Employers with 11-49 employees in some cases operate similarly to micro organizations and in other cases appear to be more similar to larger employers. More than larger organizations, smaller employers offer a more flexible and casual environment as evidenced by the more frequent allowance of alternative work schedules and casual dress.

Once an organization reaches fifty employees, many of the activities related to managing employees (e.g., hiring, training, appraisals, etc.) are in place and relatively few differences emerge as the employer adds employees. Yet, as the size of an organization increases, the time and resources required to manage employee benefits and activities grows exponentially due to both the greater number of employees and the increased number of activities and programs performed, according to the survey.

Industry

While few differences emerge between employers from different industries in terms of health insurance coverage for employees, dependents, or part-time employees, some differences do emerge in terms of health care costs and planned changes.

Manufacturing and scientific/technical employers report some of the highest levels of per-employee costs for health care while retail/wholesale trade and agriculture/resources tend to have slightly lower costs.
Employers in the retail/wholesale sector report a greater intent than most other employers to raise their employees’ premium portion. Employers in scientific/technical are least likely to be considering this change.

Some other types of benefits vary by the industry in which the employer competes. For example, there is a tendency for more employers in finance/insurance/information services to offer child care and employee assistance programs than many other industry employers. And they, along with scientific/technical, are more likely to offer both alternative work schedules and telecommuting.

A copy of the executive summary can be found at www.CalBizCentral.com/benefitssurvey. CalBizCentral, the source for California business and human resource compliance products, presented by the CalChamber.

The California Chamber of Commerce (CalChamber) is the largest broad-based business advocate to government in California. Membership represents one-quarter of the private sector jobs in California and includes firms of all sizes and companies from every industry within the state. Leveraging our front-line knowledge of laws and regulations, we provide products and services to help businesses comply with both federal and state law. CalChamber, a not-for-profit organization with roots dating to 1890, promotes international trade and investment in order to stimulate California's economy and create jobs. Please visit our website at www.calchamber.com.