Bottomless Pit of Benefits?

How much do fringe benefits cost U.S. industry? No one knows exactly. This is the conclusion of Management Consultant Austin Fisher and John F. Chapman, associate editor of the Harvard Business Review, after a survey of 400 "handpicked" companies.

In the current issue of the Harvard Business Review, they say that "the average executive has scant knowledge . . . of true present costs . . . rate of growth and . . . trends [of fringe benefits]. Cost-accounting practices, created originally to serve a primarily mercantile business community, simply have not kept pace with the intelligence requirements of today's industrial management."

To businessmen, the very word "fringe", coined during the easy-money, cost-plus days of World War II, is a "semantic blur." To clear up the blur, Fisher and Chapman list 28 fringe payments, which they define as money costs and employment benefits outside direct wage payments for regular hours. These, ranging from such familiar items as pensions to "pamper extras" such as swimming pools (TIME, Sept. 13), now cost' American business 43-c- to 44-c- extra per productive hour. This adds up to a national total exceeding $25 billion.

Fisher and Chapman think that another 40-c- an hour will be added to the average wage bill in the next decade--above and beyond any general wage increases--if the fringe benefits (already up 60% since 1948) keep rising at the present rate.

The authors predict that if unions win more fringes and management continues to bestow extras on its own (as it often has), fringes may replace wage boosts: "Both labor and management need to reconsider . .. The American appetite for more security against the risks of life, coupled with the desire for more time off with pay, is virtually a bottomless pit into which the whole economy could fall--at the expense of the wage structure which in the last analysis constitutes the real base of our national standard of living."

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