Abstract
This article aims to explain why inequality in fringe benefits has grown faster than wage inequality over the past four decades. We depart from previous income inequality research by studying benefits in addition to wages, but also by focusing on workplaces as the main drivers of benefit determination. We advance the argument that benefits determination is more organizationally embedded than wages mainly because workplaces have greater ability and incentive to alter benefits. Consequently, workplace compensation practices, including type of employment relations, are more important for benefits than for wages. Longitudinal linked employer–job administrative data on wages and voluntary benefits costs from the Employer Costs for Employee Compensation (ECEC) allow us to test these arguments, as well as examine why benefit inequality has dramatically increased. Results from variance decomposition reveal that between- and within-establishment inequality is higher in benefits than in wages, indicating that workplaces affect benefits more than wages. Regression results show that, as expected, establishment-level pay-settings affect benefits more than wages, and the decline in labor unions along with the liberalization of employment practices partly account for why benefit inequality increased at more than twice the rate of wage inequality.
| Original language | English |
|---|---|
| Pages (from-to) | 271-297 |
| Number of pages | 27 |
| Journal | American Sociological Review |
| Volume | 85 |
| Issue number | 2 |
| DOIs | |
| State | Published - 1 Apr 2020 |
Bibliographical note
Funding Information:We thank the United States-Israel Binational Science Foundation for support of this project. Tali Kristal also thanks the European Research Council for partial support of this project. This research was conducted with restricted access to BLS data. We gratefully acknowledge the support of the Bureau of Labor Statistics (BLS) and its staff, who facilitated this research with generosity and patience. Earlier versions of this paper were presented at the 2019 ASA annual meeting in NYC and the 2019 RC28 summer meeting at Princeton University. We thank Donald Tomaskovic-Devey, Thomas DiPrete, Adam Reich, and Cordelia Reimers for their helpful comments and suggestions. Views expressed by us in any publication resulting from analysis of these data do not necessarily reflect the views of the BLS. The views expressed herein are those of the authors and do not necessarily reflect the views or policies of the United States Department of Labor or any agency within it.
Funding Information:
We thank the United States-Israel Binational Science Foundation for support of this project. Tali Kristal also thanks the European Research Council for partial support of this project. This research was conducted with restricted access to BLS data. We gratefully acknowledge the support of the Bureau of Labor Statistics (BLS) and its staff, who facilitated this research with generosity and patience. Earlier versions of this paper were presented at the 2019 ASA annual meeting in NYC and the 2019 RC28 summer meeting at Princeton University. We thank Donald Tomaskovic-Devey, Thomas DiPrete, Adam Reich, and Cordelia Reimers for their helpful comments and suggestions. Views expressed by us in any publication resulting from analysis of these data do not necessarily reflect the views of the BLS. The views expressed herein are those of the authors and do not necessarily reflect the views or policies of the United States Department of Labor or any agency within it.
Publisher Copyright:
© American Sociological Association 2020.
Keywords
- compensation inequality
- employment relations
- fringe benefits
- organizations
- unions
ASJC Scopus subject areas
- Sociology and Political Science
