August 6, 2004
Knight Ridder News
In the first quarter of this year, medical benefits accounted for 23 percent of compensation outside of wages compared with 22.6 percent for paid leaves, including vacations and sick time, according to a study from the Employment Policy Foundation, an economic-research foundation that focuses on workplace issues.
It's the first time in the past 10 years that health-care costs exceeded the paid leave category, foundation president Ed Potter said.
Employer spending on health benefits jumped 12.4 percent from 2002 to 2003, more than five times the inflation rate, he said, noting that small employers face cost increases that are far higher.
``The private sector, as far as I can see, has essentially maxed out on what it's able to do,'' Potter said. ``When you have large companies who historically have been able to pay who no longer are able to be competitive by paying the bill, you come to appreciate there's a problem here.''
The EPF, which receives about half of its funding from businesses, examined government data from about 8,200 private employers.
It found that employers spent nearly $331 billion last year for employee health insurance, a 51 percent jump since 1998, when they spent $219 billion.
U.S. companies paid $3.80 per hour, on average, for each worker who participated in their health plans in 2003.
The ballooning tab for medical benefits bodes poorly for workers' raises, Potter said.
``It's such an increasing part of the overall compensation for employees that there is the inevitable consequence that wage increases are going to be affected by this,'' Potter said.
``Gradually, this benefit cost alone is eating away at the overall compensation pie."