COMMERCE 2BC3 Chapter Notes - Chapter 10: Socalled, Co-Insurance, Externality
4 Mar 2014
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Employee benefits part of an organization"s total compensation package and include both mandatory government-sponsored benefits and voluntary benefits such as life and disability insurance, extended health coverage, additional vacation pay and a range of other options. Benefits adds an average 44% to every dollar of payroll. Controlling labor costs is not possible without controlling benefits costs. Some benefits, like cpp and ei are mandated by law. After the wwii, wage and price controls were put in place, so employers used benefits to attract and retain employees. Marginal tax rate the percentage of an additional dollar of earnings that goes to taxes. Employers also have to pay on salaries, but generally not benefits. Deferring compensation until retirement allows the employee to receive cash, but at a time (retirement) when the employee"s tax rate is sometimes lower because of a lower income level. Another factor is the cost advantage that groups typically realize over individuals, for insurance.
