A Brief History of Fringe Benefits

Marc Plooster is an Accountant for the County of Ottawa, MI. Prior to joining Ottawa County, he worked for the City of Grand Rapids, MI in multiple roles including as a John H. Logie Fellow.

Let’s talk about fringe benefits. For two years, I worked as a temporary employee for a municipality. While I would not be in my current position without those two years, working for a temporary agency does not come with may nonfinancial benefits. I had offered to me the most basic health insurance plan possible to satisfy the requirements of the Affordable Care Act. No retirement savings programs were available, and I had no paid vacation, no paid holidays, and no paid sick time.

For a month and a half, I have been a full-time employee at a different municipality. Knowing what I do now, I would not trade my time as a temporary employee. In addition to gaining invaluable experience employers are looking for in every candidate, I increasingly appreciate the fringe benefits offered to me. I have health insurance that is primarily paid by the county and is no longer 40% of my net monthly earnings. Both a required matching funds defined contribution pension and an optional matching funds deferred compensation plan are open to county employees. When the county is closed for holidays, when I use floating holiday hours, when I used sick time, or when I use vacation time, I get paid.

Private and public organizations with a history of strong union membership correlate with private and public organization with the most generous fringe benefits. In countries with strong unions with strong political influence such as those in Western Europe and Scandinavian, common practice and statutory requirements include secure employee benefits. In countries with strong businesses with strong political influence such as the United States, entrepreneurship and tax laws afford wealth distribution through equity. In sectors, industries, and countries where it is less common encourage employee loyalty using equity based compensation, fringe benefits attract and keep employees. Equity based options match compensation to performance but can focus too heavily on short-term results. Fringe benefits have long-term impact for employees but may not offer immediate employee reward.

I find value in serving the public when others may not want to take a lower wage and the sigma that come with being a government employee.

MARC PLOOSTER

The most expensive fringe benefit still offered to employees – health insurance – remains an important tool to attract and maintain talent. The most important term to equity based compensation – productivity – is managed by the employees and directly impacts performance. Just as fringe benefits arose during the industrialization and organization of labor and the professionalization of public administration, equity based compensation arose during exponential productivity growth during the early information revolution. As employees are compensated for their ideas of implementing technology, the attraction to a job is no longer the security it affords but the amount of wealth the employee will earn for their ideas. The Lost Generation, the Greatest Generation, the Silent Generation, and the baby boomers moved from the farm to the industrial city, organized labor, lived through the great depression, fought four wars and ultimately sought wealth security not knowing what was next. Generation X, Millennials, and Generation Z develop and implement technology, express individuality and personality freely, and see risk and failure not as dangers but as necessary to wealth.

While an overly simplified exploration of fringe benefits as deriving from labor unions, and equity based compensation derived from the information revolution is not fair, it does raise questions about how and why we chose our careers. As someone was raised fiscally conservative and see sees risk not as opportunity but danger, I gravitated toward a career with stable work and defined benefits. Fringe benefits attracted me and will keep me in my current job because of the security they provide. Someone else may be more willing to take a risk, paying for failure, and benefiting from success. I find value in serving the public when others may not want to take a lower wage and the sigma that come with being a government employee. Others value manufacturing and selling products they believe in because of the engineering involved, quality of craftsmanship, and/or environmental considerations taken. Whether you are a mid-career manager considering a career change or a young professional looking for the next career move, take a moment to consider why you chose to be in the position you are and what a different choice would have meant.

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