Source: D. Bruce Johnsen, American University Business Law Review, Vol. 1 No. 2, 2012
From the abstract:
From 1945 to 2010 the proportion of private-sector workers covered by collective bargaining agreements declined from 36% to a once unthinkable 6.9%. This decline raises the question of how well labor unions serve their rank and file. This study addresses the economics of labor unions in an attempt to determine who captures the rents from unionization. Among other things, it examines the generosity of multiemployer defined benefit pension plans for rank-and-file union members and the officer and staff plans for the union that administers them. For a given wage, it finds that union officers and staff enjoy pensions and related benefits that are lavish by comparison. Although this could be the outcome of efficient implicit contracting, given the high agency costs workers and employers face monitoring union administration, it is impossible to reject the hypothesis that union officers and staff are the primary beneficiaries of unionization in the multiemployer setting. Multiemployer plans now appear obsolete and should be replaced by 401(k) defined contribution plans despite resistance from union officials anxious to preserve their private benefits of control.
Source: Alicia H. Munnell, Jean-Pierre Aubry, Anek Belbase and Josh Hurwitz, Center for Retirement Research at Boston College, State and Local Pension Plans, SLP#30, March 2013
The brief’s key findings are:
– This study examines the long-term effects of pension reforms on employer costs and on state budgets for a sample of 32 plans in 15 states.
– The results show:
* for most plans, the reforms fully offset or more than offset the impact of the financial crisis on the sponsors’ costs.
* for the sample as a whole, pension costs as a share of state-local budgets are projected to eventually fall below pre-crisis levels.
– A few caveats: the projections assume that the reforms stick, that plan sponsors consistently make their required payments, and that they earn expected returns.
– Detailed results for each plan are available in a companion series of fact sheets.
Source: Gautam Gowrisankaran, Karen Norberg, Steven Kymes, Michael E. Chernew, Dustin Stwalley, Leah Kemper and William Peck, Health Affairs, Vol. 32 no. 3, March 2013
From the abstract:
Many policy makers believe that health status would be improved and health care spending reduced if people managed their health better. This study examined the effectiveness of a program put in place by BJC HealthCare, a hospital system based in St. Louis, Missouri, that tied employees’ eligibility to participate in the system’s most generous health plan with participation in a wellness program. The intervention, which began in 2005, was associated with a 41 percent decrease, relative to a comparison group, in hospitalizations for conditions targeted by the wellness program but with no significant decrease in other hospitalizations. We found reductions in inpatient costs but similar increases in non-inpatient costs. Therefore, we conclude that although the program did cut some hospitalizations, it did not save money for the employer in the short term. This finding underscores that wellness program incentives under the Affordable Care Act are unlikely to greatly reduce health care spending over the short run.
Source: Jill R. Horwitz, Brenna D. Kelly and John E. DiNardo, Health Affairs, Vol. 32 no. 3, March 2013
From the abstract:
The Affordable Care Act encourages workplace wellness programs, chiefly by promoting programs that reward employees for changing health-related behavior or improving measurable health outcomes. Recognizing the risk that unhealthy employees might be punished rather than helped by such programs, the act also forbids health-based discrimination. We reviewed results of randomized controlled trials and identified challenges for workplace wellness programs to function as the act intends. For example, research results raise doubts that employees with health risk factors, such as obesity and tobacco use, spend more on medical care than others. Such groups may not be especially promising targets for financial incentives meant to save costs through health improvement. Although there may be other valid reasons, beyond lowering costs, to institute workplace wellness programs, we found little evidence that such programs can easily save costs through health improvement without being discriminatory. Our evidence suggests that savings to employers may come from cost shifting, with the most vulnerable employees—those from lower socioeconomic strata with the most health risks—probably bearing greater costs that in effect subsidize their healthier colleagues.
Source: Center for Economic and Policy Research (CEPR), February 28, 2013
The federal Family and Medical Leave Act (FMLA) celebrated its 20th anniversary this month. It was a huge step forward for the U.S., which lags behind nearly all other high-income countries in enabling people to take the time they need, without worrying that they may be fired from their jobs, to care for themselves and their families when faced with serious illness or welcoming a new child…. Department of Labor surveys of experiences with the FMLA, released earlier this month, find ways to improve the effectiveness and increase the coverage of family and medical leave for American families. CEPR senior economist Eileen Appelbaum recently wrote a series of blog posts to review these findings of the FMLA surveys and draw lessons about what to do next.
Family and Medical Leave in 2012
Source: U.S. Department of Labor, Office of the Assistant Secretary for Policy, Chief Evaluation Office, February 2013
The Family and Medical Leave Act at 20, Part 1, Part 2, Part 3, Part 4
Source: Eileen Appelbaum, Center for Economic and Policy Research (CEPR), February 2013
Source: Diane Oakley, Kelly Kenneally, National Institute on Retirement Security, February 2013
From the press release:
New public opinion research finds that Americans remain highly anxious about their retirement prospects (85 percent) and would participate in a new pension system to help rebuild the road to retirement (81 percent)…. The polling also conducted a deeper examination of measures Congress could introduce to make pensions more broadly available to Americans. The poll described a possible new type of privately run pension plan that would be available to all Americans; portable from job to job; allow for a regular check that lasts through retirement; and easy for employers to administer while offering professional money management. These characteristics are similar to a possible proposal by the U.S. Senate called Universal, Secure, and Adaptable (“USA”) Retirement Funds.
Three quarters of Americans agree that such a new pension system is a good idea, with Millennials highly supportive at 84 percent. Some 81 percent of Americans indicate they would participate in a plan with the described features if it were available, with Millennials supporting such a measure at 88 percent. The report key findings are as follows:…
Source: Don R. Heilman, HR News, Vol. 79 no. 2, February 2013
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The last 10 years have created a unique challenge among public sector employers in establishing, and delivering on, an organizational total compensation strategy. A number of factors have contributed to, or exacerbated, this challenge:
■ Initial Shift in Total Compensation
■ Economic Downturn
■ Lagging Recovery
■ Higher Benefits Costs
■ Retiree Health
… The net effect of these impacts is that the public sector’s costs for benefits have increased at a greater rate than for the private sector, and now represent an even greater proportion of total compensation than in prior years. This creates a real dilemma, in both finding the revenues and in convincing elected officials and policy makers to increase salaries to attract and retain talented employees without some tradeoffs in the level of benefits…
Source: National Association of State Retirement Administrators, NASRA Issue Brief, Updated January 2013
As of the third quarter of 2012, state and local government retirement systems held assets of approximately $3 trillion. These assets are invested to defray the cost of benefits within an acceptable level of risk. The investment return on these assets matters because over time, investment earnings account for a majority of public pension fund revenues. A shortfall in expected investment earnings must be made up by higher contributions or reduced benefits.
Funding a pension benefit requires the use of projections, known as actuarial assumptions, about future events. Actuarial assumptions fall into one of two broad categories: demographic and economic. Demographic assumptions are those pertaining to a pension plan’s membership, such as changes in the number of working and retired plan participants; when participants will retire, and how long they’ll live after they retire. Economic assumptions pertain to such factors as the rate of wage growth and the investment return on the fund’s assets.
As with other actuarial assumptions, projecting public pension fund investment returns requires a focus on the long-term. This brief discusses how investment return assumptions are established and evaluated and compares these assumptions with public funds’ actual investment experience.
Source: Government Finance Officers Association (GFOA), 2013
Background. Governments that offer defined benefit pensions to their employees should fund the cost of those benefits in an equitable and sustainable manner. An actuarial valuation provides an employer with crucial information on the amount that needs to be contributed each period to fund the long-term cost of benefits promised to plan participants. Generally accepted accounting principles (GAAP) have required that this actuarially determined amount, known as the actuarially required contribution (ARC), be calculated within standardized parameters and disclosed as part of an employer’s annual financial report.
Recently, the Governmental Accounting Standards Board (GASB) changed its approach with regard to pension reporting and moved from one that served both the purposes of accounting/financial reporting and funding to one related solely to accounting/financial reporting. As a result, GAAP will no longer require that employers calculate and disclose an ARC in their financial reports starting with fiscal years ending on or after June 30, 2014….
Source: WorkSource Oregon, February 2013
The 2012 Oregon Benefits Survey asked private employers from all industries, class sizes, and regions of the state about the benefits offered to their management employees, and full-time and part-time non-management employees, in June 2012. Employers’ responses provided several key findings about overall offerings:
• Three-quarters (75%) of employers offered one or more health, retirement, leave, pay, fringe, or other insurance benefit to employees.
• More than one-half (57%) of Oregon employers offered health benefits.
• Slightly less than one-half (43%) of firms offered retirement benefits to employees.
• Almost three-quarters (74%) of eligible employees enrolled for health care benefits, while 61 percent of eligible employees enrolled for retirement benefits…
…The Oregon Employment Department surveyed nearly 12,000 private employers in all industries, class sizes, and regions of the state between June and August 2012. Almost 4,300 employers responded to the survey. They provided detailed information about the health, retirement, insurance, pay, leave, and fringe benefits offered to part-time, full-time, and management employees in June 2012 (see Appendix 2 for full-time employment definition).
The findings from the 2012 Oregon Benefits Survey provide an extensive picture of many benefits offered by employers, along with the extent and impacts of changing benefit costs on businesses. This report also serves as an update to the Employment Department’s 2005 Oregon Benefits Survey, and fills an unmet need for data. Other publicly published benefit and employer cost statistics are available for the U.S., but not for each individual state….