Employee Benefits and Social Welfare: Complement and Conflict

Abstract

Employee benefits constitute a major vehicle for the provision of income security for Americans. Since the 1940s, wage supplements, particularly in the form of pensions and health insurance, have expanded to provide protections that are the province of public programs in most other Western countries. Building upon the precedents of the welfare capitalism of the early 1900s, the growth of employee benefits has been actively stimulated by federal tax and regulatory policies. The emergence of employee benefits as a major source of income security and health insurance has reduced the aggregate need for public programs, but it has left those in lower-paying, less stable jobs—disproportionately women and minorities—both unprotected and with fewer political allies to press for improved protections. The implementation of the employee benefit programs has also created financial interests in the existing structure that would resist changes that would diminish their role.