BENEFITS GROWING FASTER THAN WAGES

BENEFITS GROWING FASTER THAN WAGES

Worker benefits are growing at a higher rate than wages, with escalating health insurance costs accounting for most of the increase, the government says.

Basic wage rates over the past 12 months have risen 2.6 percent for union workers and 3.5 percent for non-union employees, the Bureau of Labor Statistics said recently.But when benefits are included, the overall hourly cost of labor in private industry increases at 3.9 percent for union members and 4 percent for non-union members.

Some of these benefits have turned into entitlements, and just like the government, a lot of businesses have lost control of them, said Richard Belous, a labor economist for The Conference Board, a business research house.

Benefit increases in the 12 months ending April 1 have averaged 5.8 percent overall in private industry, double the 2.9 percent increase of the previous 12 months, said the Labor Department statisticians.

And among blue-collar workers, benefit cost increases have nearly tripled - from a 2.3 percent gain a year ago to 6.8 percent the past 12 months. In manufacturing, non-cash worker benefits rose 7 percent in the past year, compared with just 1.5 percent a year earlier.

The U.S. Chamber of Commerce estimates that employee fringe benefits such as pension and health and dental insurance plans now comprise an average 40 percent of a company's labor costs.

The government said that the bulk of the increase in those costs in the past year was escalating health insurance premiums, with a smaller portion coming from increased Social Security contributions by employers.

For a while, it looked like many employers were containing health-care costs, said Mr. Belous. But in the last year a lot of the solutions have

unraveled. With mandatory health insurance on the horizon, a lot of companies are going to have to go back to the drawing board.

John Zalusky, an economist for the AFL-CIO, said the stock market crash last October explains much of the difference in the size of benefit increases between union and non-union workers.

Union employers tend to have defined benefit pension plans, which means that when the market crashed, they had to put more money into the kitty, he said. Non-union employers have switched more to defined contribution plans in which the beneficiaries absorbed the brunt of the crash.

However, Mr. Zalusky acknowledged that unions also are being sent signals

from their members to get more benefits and job security rather than cash at the bargaining table despite nominally lower tax rates.

Just last month, officials of the Teamsters union were told by 180,000 members to take back a contract just negotiated with the trucking industry and swap some of the pay increase for bigger employer contributions to health and pension plans.

Many of those benefits, such as training programs and profit sharing, bonus and employee stock ownership plans don't show up fully in the government's collective bargaining and employment cost figures, Mr. Zalusky said.

The worker retraining programs negotiated with Ford, General Motors and AT&T now constitute the largest privately endowed education program in the country, he said, And they are nowhere reflected in the data.

In a separate report, the Labor Department said first-year pay increases in major union contracts negotiated in the first three months of 1988 averaged only 2.1 percent, excluding cost-of-living adjustments and lump-sum bonuses.

However, excluding the 20 percent who agreed to wage freezes - often in exchange for profit-sharing, stock ownership or bonus arrangements - the

average increase under the new contracts was 2.7 percent, the department said.

Including the COLA payments and lump-sum or profit-sharing bonuses from other, older contracts, the average effective wage increase over the past 12 months under collective bargaining agreements has been 3.8 percent, the government said.