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The benefits gap between high and low earners is widening

By The Economist

I see patients every day who are going to have babies because they work at Facebook,” says Peter Klatsky of Spring Fertility clinic in Silicon Valley. Tech giants now include egg-freezing and in vitro fertilisation in their employees’ health coverage. But even as high-earning Americans have the cost of making a baby covered by their companies, many low earners cannot get paid leave to look after theirs.

Since the end of the first world war, American workers have seen a steady rise in benefits. According to the Bureau of Economic Analysis, “supplements” to wages, which include most of today’s benefits but exclude performance bonuses, rose from 1.4% of total compensation in 1917 to 17.5% in 2000. Using a broader measure that includes performance bonuses as well as paid leave, overtime, health insurance and contributions to retirement plans, that share has risen further since: from 27% of compensation in 2000 to 32% now.

When growth in wages slowed after the financial crisis, so did growth in benefits. Another trend also became apparent: a widening gap between rich and poor.

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