Benefit Gains Exceed Wage Growth, New Labor Data Show

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U.S. employers are boosting benefits—including bonuses and vacation time—at a faster pace than salaries, a move that gives them more flexibility to dial back that compensation if the economy turns sour.
The

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The cost of benefits for private-sector employers rose 3% in June from a year earlier, while the cost of wages and salaries advanced 2.7%, the Labor Department said Tuesday

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The benefit gain was driven by a nearly 12% increase in bonuses and other forms of supplemental pay. Paid leave, including vacation time, rose 4% in June from a year earlier.

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The increase in bonus compensation in part reflects lump-sum payments that many large companies, including AT&TInc. and Comcast Corp. , gave employeesafter Congress approved a package of tax cuts late last year. After the tax cut, many employers, such as Southwest AirlinesCo. and American Airlines Group Inc.,offered bonuses but not wage increases. Southwest said modifying wages would have required negotiating with its union. American didn’t respond to a request for comment on its decision.

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For instance, 90% of employers offered sign-on bonuses for some physician assistants and nurse practitioners last year, up from 34% five years prior, 

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The shift toward one-time bonuses from sustained wage increases is less favorable for workers, said Fatih Guvenen, economics professor at the University of Minnesota

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All this has happened as workers’ earnings have trended sharply downward. In 1968, for example, the average 25-year-old male employee was making $35,000 a year, adjusted for inflation to 2013 dollars, Mr. Guvenen’s research found. By contrast in 2011, that figure for 25-year-old male employees was closer to $25,000 in 2013 dollars. “This has occurred even as the economy has been growing,” he said

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“Bonuses and paid leave are the ones growing fastest lately,” Kevin Hassett, chairman of the advisers council, said this month. “Employees appreciate such benefits just as much as cash, and that’s why we look at the sum, rather than one in isolation.”
Some workers would rather see a lasting bump in pay. Brian Foor, a 34-year-old single father working for Lowe’s Co s. in Lumberton, N.C., said he got a one-time bonus of about $225 after the tax cut. Mr. Foor, who has worked at the store for four years and makes about $12 an hour, said he appreciated the lift, but said that his pay hadn’t noticeably changed.
“I thought it would’ve helped a little bit more,” he said. “I’m getting by paycheck to paycheck.”

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