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Your employee benefits were 400 years in the making

The simple pension plan that started in 1636 took centuries to evolve into free snacks and ping-pong tables.

Your employee benefits were 400 years in the making
[Photo: Ilya Pavlov/Unsplash; Internet Archive Book Images]

The promise of opportunities to bring your dog to work or to take a break between meetings by playing ping-pong or hopping aboard a Peloton treadmill has become somewhat common in workplaces across the country. Even coworking spaces like Luminary which are filled with freelancers and startup founders, offer perks like free wine.

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With unemployment hovering at historic lows, employers are beefing up their benefits and perks to attract candidates who aren’t necessarily actively looking for work but could be persuaded to make the leap for the right package. A survey from the Society for Human Resource Management (SHRM) revealed that the vast majority (92%) of employees said benefits are important to their overall job satisfaction. Nearly a third (29%) of employees reported that their overall benefits package was a top reason to look for a position outside of their current organization and 32% of employees who said they wouldn’t look cited their overall benefits package as a top reason as well.

From the standard benefits like health insurance and 401K to premium perks like student loan repayment and maternity concierge services, employees have come to expect benefits as part of their overall compensation from their employers. But it wasn’t always this way.

1636: The first pension plan

The very first benefit recorded for workers happened during colonial times. In 1636, Plymouth (now part of Massachusetts) began paying a pension to colonists who were disabled during the fight for independence. The nascent government in 1789 passed a federal pension plan that would pay benefits to veterans of the Revolutionary War. The first private pension plan wouldn’t appear until 1875 when American Express offered employees who retired from the company 50% of the salary they earned in their final decade with them (but not to exceed $500).

1797: The birth of profit sharing

As the country grew, so did the need for skilled workers in manufacturing, which meant that individual employers needed a way to attract talent and keep them loyal. So in 1797, Albert Gallatin, the Secretary of the Treasury under Presidents Jefferson and Madison, who also happened to be a glassworks mogul, crafted the nation’s first profit-sharing plan for his employees.

The profit-sharing plans we know today continued to evolve in the 1800s, when the likes of General Foods and Pillsbury gave part of their profits to employees as a bonus. Companies used profit sharing during World War II to give their workers additional compensation without having to raise their wages.

1877: The first employee health plan

Healthcare as a benefit didn’t appear until 1877 when the Granite Cutters Union started the first plan for workers who got sick or injured on the job. However, retailer Montgomery Ward was the first to adopt a group accident and sickness policy for its employees, around 1910.

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1940s: Paid vacation, and employee assistance

Flash-forwarding to the mid-1940s, Kodak and Dupont established alcohol recovery programs, which were the precursors to the modern Employee Assistance Program. And by 1940, vacation coverage for hourly employees had grown to 50%. A 1943 report submitted to then Secretary of Labor Frances Perkins revealed that nearly 8 million workers, or 60% of those under union agreements, were entitled to paid vacation, up from just 2 million in 1940.

1980s, ’90s, and beyond: paid parental leave, stock options, and more

IBM started the first elder-care program in 1987 and in 1991 Starbucks became the first private employer to offer stock options to eligible full- and part-time employees.

From here benefits and perks expand to include many of the ones we are familiar with now. And the menu just keeps growing. In 1996, the SHRM tracked 60 perks and benefits. In 2018 that number had swelled to over 300.

Among them, paid parental leave has been both a hot-button issue for equity between men and women in the workplace as well as a tool employers have used to lure talent–particularly in tech jobs. And paid leave for caregivers is becoming a more urgent need as gen Xers who are mostly in middle management and executive positions toggle between caring for children and elder and sick family members.

Employers looking to build loyal teams have taken a less practical approach to benefits in recent years. Instead, they’ve built company cultures around group wellness, unlimited vacation policies, and even more esoteric perks such as pet cloning.

The bottom line is that benefits and perks affect the bottom line. The most recent Bureau of Labor Statistics data shows that in 2015, employers factored in 31.3% of their payroll for benefits as compared to 20 years prior, when 71.4% was earmarked for salaries, and only 28.6% went to benefits.

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A 2017 SHRM survey found that organizations leveraging benefits to recruit and retain employees are nearly twice as likely to have more satisfied employees and to report better business performance. As a previous Fast Company report revealed, companies that invested in benefits beyond healthcare and vacation saw a boost in retention rates–and an increase in diversity. As Patricia Clarke, chief talent officer at Havas, told us, “It’s an investment in these people to continue to grow and be amazing contributors.”

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About the author

Lydia Dishman is a reporter writing about the intersection of tech, leadership, and innovation. She is a regular contributor to Fast Company and has written for CBS Moneywatch, Fortune, The Guardian, Popular Science, and the New York Times, among others.

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