The New Maine Workforce: Employment Costs in Waterville and Presque Isle-Caribou

In the last issue of Maine Business Indicators, we presented some of the first results from a three-year project designed to assess Maine’s workforce at a greater level of detail than ever before. This project, which involves conducting surveys of both employees and employers using phone and mail surveys respectively, will be conducted across 17 regions of Maine. Beginning in early 1999 with a pilot study of the Waterville and Presque-Isle Caribou regions, the project will continue over the next two years until the entire state is completed. Funding for the pilot study came from the Mid-State Economic Development Corporation and the Northern Maine Development Commission. For studies of the balance of the state, funding is provided by the Maine Department of Economic and Community Development.

Previously, we examined some of the trends in hiring and recruiting workers that businesses in these two regions are encountering. In this issue of MBI, we focus upon the issues of employment cost and compensation arising in the Waterville and Presque Isle areas. Two principal elements of compensation and costs are studied: wages and salaries on the one hand, and benefits on the other.

For white-collar jobs, a somewhat similar pattern is found. At the lowest-paid levels the two regions show scant difference. At levels between $7.00 and $11.00 an hour, however, Presque Isle respondents are more likely to receive wages at each level, while Waterville residents are more likely to receive wages above $11.00 an hour. As with blue-collar jobs, the two regions deviate most substantially at the higher wage levels.

Figure 3 shows the distribution of salaries across the two regions and by broad type of job. As might be expected, the number of blue-collar-type jobs that are paid by salary rather than wages is relatively small. Only 9% of respondents in both areas with blue-collar-type jobs indicated that they are paid by salary. For this reason, blue-collar salary jobs are omitted from this graph.

The data does indicate that the most common salaries in both regions for all types of jobs lie between $30,000 and $40,000 per year. Figure 3 also shows that the gap between the two regions for salaries is less than that for wages. The differences between the two are relatively small for all salary levels except those earning over $75,000 per year and those earning less than $20,000, at both of which levels Waterville clearly leads. At each intermediate salary level, however, Presque Isle respondents represented a somewhat higher proportion than did Waterville respondents.

The other major component of compensation is benefits. These are a major concern for businesses and for public policy, because employment is associated with providing key services such as health care. Table 2 shows the percentage of companies indicating in the employer mail survey that they offered each benefit type to full- and part-time employees. Three observations may be made from this table. First, the distribution of benefits among firms in the two regions is relatively comparable. Waterville firms are more likely to offer most types of benefits to full-time employees than Presque Isle-Caribou firms, but Presque Isle firms are slightly more likely to offer disability insurance, life insurance, pensions, and sick days.

Second, full-time employees are far more likely to receive benefits than are part-time employees. In the Waterville area, none of the benefits listed are offered to even a quarter of part-time employees, and only sick days are offered to more than 20% of part-time employees. In the Presque Isle area, no benefit is offered to as much as a fifth of part-time employees.

Third, health insurance is the most commonly offered benefit, with more than two-thirds of firms in both areas offering health insurance to full-time employees. More than half of the firms also offer sick days. It is interesting to note, however, that more firms indicate that they offer health insurance than sick days. The benefit offered least often is day care.

The proportion of firms offering benefits does not necessarily indicate the proportion of the population receiving them. This can be assessed from the household survey. This confirms that part-time employees in both areas are very unlikely to receive benefits, although the survey indicates that the dividing point between likely- and unlikely-to-receive benefits is about 20 hours per week.

Figure 4 shows the responses from the household surveys to questions about the distribution of benefits. These numbers suggest conclusions somewhat different from the employer data. The proportion of employees indicating that they have some form of health insurance was over 90%, and the proportions indicating they receive other types of benefits were also higher than implied in the employer survey. Several reasons may be attributed to this discrepancy. First, the household survey was made with a randomly drawn sample and thus provides somewhat more reliable measures, while the respondents to the employer survey do not necessarily constitute a reliable sample. Second, the employers who did respond to the mail survey may not have covered as large a proportion of total employment as could be drawn from a sample of employees.

Overall, the distribution of benefits in the employee survey is similar to the employer survey. Health insurance, life insurance, and pension are the most commonly available, with dental insurance less common and child care the least common. (Because of time limitations in a telephone survey format, the household survey of employees asked about fewer types of benefits than did the employer survey.) Slightly more Presque Isle residents mentioned having health and life insurance and pension benefits than did Waterville residents, but many more Waterville residents said that they had dental insurance and child care.

The employer survey also asked whether firms increased or decreased benefits over the past 12 months. (Increase or decrease in this case means offered to more employees, or offered expanded levels of coverage.) In Waterville, 106 responses pointed to increased benefits, while 21 responses indicated reduced benefits. In Presque Isle, 86 responses indicated increased benefits, while 16 stated reduced benefits. A single employer could have given more than one response to an increased or decreased benefit, so these figures do not necessarily reflect actual changes by firm. But the trend towards increased benefits is clear. This undoubtedly reflects the tightening labor markets in both regions. Employers report that the most common benefits to be increased were, consistent with the pattern of existing benefits, health insurance, life insurance, and pensions. Health insurance was by far the most commonly cited benefit to be both increased and to be decreased, but the number of firms reporting an increase in health insurance was about four times the number reporting a decrease in both regions.

A frequent concern about benefits, particularly health insurance, is that small companies do not offer it. However, over half the firms with less than ten employees in both areas said that they currently offered health insurance (although primarily for full-time employees). Moreover, more than half of the firms who stated that they have increased health insurance coverage over the past 12 months have been firms with fewer than 20 employees. Similar responses were indicated to a question about plans to increase benefits in the next 12 months.

Benefits remain unevenly distributed among employers and employees, but the evidence from Presque Isle and Waterville is that they are becoming an increasingly important component of the compensation costs for businesses. The surveys suggest that businesses are using benefits as major attraction and retention tools in the increasingly tight labor market, although the structure of the surveys did not allow a more direct test of this hypothesis. The next version of the survey has been modified to more directly analyze the relative roles of benefits and other compensation strategies.

In the next issue of Maine Business Indicators, we will complete our discussion of the Presque Isle and Waterville surveys by looking at education and training issues. Future issues of MBI will also provide updates on information from the Workforce Assessment Project as data is collected from more areas of the state.