The Debate on Benefits for Employees in the Workplace

The American economy is often being compared to the European Economy and the differences are many when it comes to unions, employees, employers and labor legislation that affects the economy. The European system emphasizes job security and has led to very few job openings within the last decade. The United States on the other hand, has created many more jobs in large part to the fact that job security is not guaranteed and there is much more flexibility on the part of the employer to create new jobs in the economy.

Four benefits are required by employers to give to their employees and they include: social security, workers compensation, unemployment insurance, and family and medical leave. Health care insurance is also being considered by Congress to be a required benefit but has not passed yet into legislation.

Because of these requirements on the employer to give these benefits, many companies have decreased the monetary wages in order to give the employees these benefits. Thus, the overall compensation which the cost of the benefits plus the monetary wages of the employee is still the same.

The reason why benefits have been mandated by employers is because employers are able to buy premiums in bulk on things like workers compensation or medical insurance for a mass amount of employees. Overall, the cost for an employer providing this benefit is cheaper than if the employee bought it himself at the market value.

The social security Act was passed in 1935 and was the first benefit to be federally required of employers. Medicare was required in 1965 to provide health insurance to workers who are retired over the age of 65. The social security act also provides for unemployment insurance that can be used when a worker does not have a job and has no other means to support himself and his family. The only stipulation that a worker needs to have in order to get workers compensation is to be currently looking for work and to be in need of work to support him or herself.

Workers compensation began to be required from various states. By 1949 48 states had workers compensation legislation passed. Workers compensation requires employers to money and benefits to the worker who has been injured on the job or killed. The employer is required to purchase insurance premiums which help pay for this workers compensation. The goal of this workers compensation is to force employers to improve working conditions for employees or otherwise the employer will have to pay for damages.

In 1993 the Family Medical Leave Act was passed by Congress which was another federal mandate by Congress that stated that a person who has a medical condition or needs to take time off to care for the birth of a child or to care for a family member can be allowed to have 12 weeks of unpaid leave and the person will be allowed to come back to their job at that company or have another position with the same salary or higher.

Paid leave is also another benefit that very few employers are willing to give. Not only is the employee being paid for work that they are not doing, but the employer must also hire a temporary worker to do the work instead. The employers then have to hire workers from a temp organization that specializes in finding work for part time employees. Often employers must pay more in salary than their regular employer because they have to pay a fee to the temp agency to hire the worker. For companies that do give paid leave to their employees, this covers holidays, funeral leave, military leave and jury duty leave.

Severance pay is another benefit that some companies give. Severance pay is given to employees after they are fired or laid off room work. Severance pay depends on the years of service that the employee has worked for the company, the position and standing of the employee in the company, the reason for termination, and the employee's salary at the time that they are fired and the reason why they were fired.

Pensions are another benefit that only some companies give. While almost all of the federal government employees like teachers, police officers etc. get pensions, only some private employers give pensions. Pensions are used to give money to an employee for when they retire.

These benefits greatly help the employee and usually hurt the employer, especially when they are federally mandated because it forces the employer to have less flexibility in their budget. Benefits can also hurt the employee because employers become tentative to hire more employees since they would then have to pay for more benefits. Wages are also frozen for employees instead of being increased because the employer knows that he will have to pay for benefits in the future which will be an added expense on the employer to pay. In other cases of employment, the overall package of pay and benefits might increase for the employee if the employer is willing to pay for the additional costs.