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Why Are They Called Fringe Benefits?

Benefits became popular during WW II because U.S. wages were frozen by the War Board, unions were prohibited from striking for higher pay (it would have been unpatriotic), and employers were making a lot of money. Companies sought other forms of helping employees, and decided that benefits were the answer. The word “fringe” means an edge or a narrow space that marks the outermost bound of something. Benefits were a very small part of overall compensation sixty years ago, but have slowly grown to become a significant factor in employment and “quality of work-life” today.

These “extras” now cost the average employer in America about 36% above the actual wages and salaries paid. Fringe benefits usually fall into one of four categories: 1) insurance offerings --- such as medical, dental, vision, life, disability, cancer, and legal; 2) security --- including retirement, savings plans, Social Security, separation pay, Workers’ Compensation insurance, and shift differentials, and unemployment compensation; 3) time off --- such as holidays, vacation, sick leave, jury duty, funeral leave, birthdays, and breaks; and 4) services --- for uniforms, daycare, tuition assistance, credit unions, cafeterias, workout facilities, travel services, and bank cards.

Employers will be under continuing pressure to increase benefits and services because of outside competition, as well as the ever-increasing expectations of employees for protection against losses and improvements in their standard-of-living.