Benefit Participation Rates Plummet

June 3, 2004 ( - Over the past 14 years, the number of employees participating in employer-sponsored benefits plans has seen a noticeable decline.

Looking at two sample sizes, all full-time workers and private-sector employees only, the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) saw declines in nearly every benefit category, from insurance to retirement plans. A decline in participation rates among employer-provider benefit plans is cause for concern given that these benefits constitute nearly 30% of employer compensation costs, the BLS said.

Across all retirement plans, the number of full-time employees participating in an employer-sponsored retirement plan fell only slightly, to 58% in 2003 from 62% in 1990-91. Significantly though, the employees participating in defined benefit plans has decreased from 24% in 2003 to 42% in 1990, while the number of workers chipping into a defined contribution plan was up to 48% from 40% in 1990.

Even working in state and local government employees into the mix did not significantly improve employee participation rates in retirement plans. From 1989-90 to 1999, the number of full-time workers participating in an employer sponsored retirement plan fell to 62% from 68% when the governmental employees are folded into the sample. Also mirroring the private-sector only employee sample was a decline in defined benefit plan participants, from 50% in 1989 to 35% in 1999, and an increase in defined contribution participants, from 34% in 1989 to 38% in 1999.

Driving the participation rates among private sector employees in various retirement plans in 2003 were differences in worker and establishment characteristics. While 83% of union workers were participating in their employer’s retirement plan, only 45% of non-union workers were. Particularly high was the concentration of union worker participation in a defined benefit plan (72%) compared to their non-union counterparts (15%), while more even was union defined contribution participation (39%) compared to nonunion participation (40%).

Additional differences were noted by the BLS in the defined contribution participation rates amongst white-collar workers (51%) compared to their blue-collar counterparts (38%) and in the participation rates for workers in companies with more than 100 employees (57%) compared to workers in companies with less than 100 employees (29%).

The trends in retirement plan participation were indicative of other employee-benefit participation rates. Amongst the greater sample size of full-time workers, the number of employees participating in their employer’s medical care program fell to 68% in 1999 from 83% in 1989, while life insurance participation rates saw a dip to 71% in 1999 from 81% in 1989. When governmental employee data is backed out of the sample size the declines become even more pronounced. Participation rates in medical care amongst full-time private sector employees were down to 56% in 2003 from 80% in 1989-90, and employer-sponsored life insurance participation rates fell to 59% from 79%.

A copy of the full BLS report can be found at