Benefits

Another major component of an employee's compensation package is benefits – compensation other than salaries, hourly wages, or financial incentives. Types of benefits include the following:

  • Legally required benefits (Social Security and Medicare, unemployment insurance, workers' compensation)
  • Paid time off (vacations, holidays, sick leave)
  • Insurance (health benefits, life insurance, disability insurance)
  • Retirement benefits
Unfortunately, the cost of providing benefits is staggering. According to the Employee Benefit Research Institute, it costs an employer 30 percent of a worker's salary to provide the same worker with benefits. If you include pay for time not worked (while on vacation or sick and so on), the percentage increases to 41 percent. So if you're a manager making $100,000 a year, your employer is also paying out another $41,000 for your benefits. The most money goes for health care (8 percent of salary costs), paid time off (11 percent), and retirement benefits (5 percent)".

Some workers receive only benefits required by law, including Social Security, unemployment, and workers' compensation. Low-wage workers generally get only limited benefits and part-timers often nothing at all. Again, Starbucks is generous in offering benefits. The company provides benefits even to the part-timers who make up two-thirds of the company's workforce; anyone working at least twenty hours a week gets medical coverage.