Manufacturers Losing Pay Benefits
LANSING — Two recent surveys show a slowdown in manufacturing wage increases and scaling back of employee benefits.
The 2002 Michigan Manufacturers Association (MMA) Cash Compensation Survey found that wage increases in the manufacturing industry averaged 2.5 percent in 2002, compared to an increase of more than 4 percent from 2000 to 2001.
The market rates for production-related jobs actually statistically decreased over the last year, with only clerical and administrative positions showing significant increases at the middle of the market.
“Michigan manufacturers continued to provide competitive increases longer than any of the other major sectors of the economy,” said Edmond Ura, president of Management Resource Center (MRC), which conducted the surveys.
“The 2001 edition of the Cash Compensation Survey showed that manufacturers had continued to increase their employees’ pay at higher levels through 2001, even as other industries showed their lowest rates in years.”
In 2002, however, manufacturers took a step back and paid their employees much less than planned, the report indicated. In 2001, Michigan manufacturers were planning on wage increases of 3.5 percent to 4 percent; actual increases reported this year were 2.6 percent to 2.8 percent.
“Rates of pay increases in 2003 look to be similar to 2002, reflecting the expectation that financial resources from 2002 company performance will be limited,” said Ura.
The survey also found that more employees than ever are participating in bonus or incentive plans. For 2002, more than 60 percent of surveyed businesses’ employees were considered “bonus eligible” — a 20 percent increase from 2001.
More than three-quarters of managers participate in incentive programs. Despite higher levels of participation, actual award payouts for 2001 performance were down sharply, reflecting lower than expected company financial results.
The 2002 MMA Employee Benefits Survey revealed more change in benefit plans over the past two years than in any other two-year period since the early 1990s. More than two-thirds of survey participants changed their benefits programs in response to rising health care costs. More than half increased health insurance co-pays and deductibles.
“Coupled with a dramatic change in the ‘mix’ of program types, it’s clear that the typical employer is paying more for a program that costs their employees more and provides a lower level of benefits,” said Ura.
“Continued pressure from health care has driven up employers’ benefits costs sharply and while the reduction in benefits has offset some of the increases, Michigan manufacturers are still paying a third more for employee health insurance than they did in 2000.”
The percentage of employers requiring employees to contribute to the cost of health maintenance organization coverage increased from 58 percent to 61 percent.
Employees are also paying more for their preferred provider organization coverage. More than two-thirds of companies require employees to pay part of their PPO premium — up from just over half of employers in 2000.