Pay, Benefits Increase 4.1% in Past Year

Pay raises are continuing to grow rather than diminish for the first time this decade, with benefit increases doubling in size overall in the past year and tripling for blue-collar workers, the government said Tuesday.

Wage and benefit increases for the 12 months ending in March averaged 4.1%, compared to 3.4% during the previous 12 months, the Labor Department said.

Over-the-year gains of 3.5% in basic wage rates for non-union workers in private industry exceeded those of union members at 2.6%, continuing a trend that has dominated most of the decade, the department said.

But when benefits are included, that gap narrowed considerably: a 4% total compensation gain for non-union workers versus 3.9% for those who belong to unions.

Teamsters Case Cited

And in the rebounding manufacturing sector, union members with combined wage and benefit gains averaging 5.5% outpaced non-union workers with an average increase of 4.2%, the Bureau of Labor Statistics said.

The government data reflects what analysts and labor negotiators for both businesses and unions have been seeing as a growing demand for more untaxed benefits rather than taxable wage increases 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.

Benefit increases in the past 12 months have averaged 5.8% overall in private industry, double the 2.9% rate during the previous 12 months, the Labor Department’s statisticians said Tuesday.

And among blue-collar workers, benefit cost increases to employers have nearly tripled--from a 2.3% gain a year ago to 6.8% during the past 12 months. In manufacturing, the average benefit increase the past 12 months was 7%, compared to just 1.5% a year earlier.

The government said the bulk of the accelerating benefit increase is represented by escalating health insurance costs, with a smaller portion coming from increased Social Security contributions by employers.

“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, an labor economist for the Conference Board, a business research group.

Crash Plays Role

“For a while, it looked like many employers were containing health care costs but in the last year a lot of the solutions, such as increased outpatient care and requiring second opinions before surgery, have unraveled,” he said. “With mandatory health insurance on the horizon, a lot of companies are going to have to go back to the drawing board.”

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

“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.”

Zalusky agreed that unions are emphasizing non-pay items more at the bargaining table, such as profit sharing, bonus and employee stock ownership plans that don’t show up in the government’s collective bargaining or employment cost figures.

“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.”

20% OK Freezes

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

However, excluding the 20% 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%, 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%, the government said.

That compares favorably to both the 2.4% effective wage increase a year earlier for union members and the 3.5% gain the past 12 months for non-union workers.

Earlier government data showed that union workers last year maintained a roughly 36% wage advantage over non-union workers--$465 a week, compared to $342 in 1987.