In the first two articles in this series, I presented the case for the importance of employee empowerment and training as central to the ability of our country to continue to lead in the global economy for years to come. But it's equally clear that education and training have a direct bearing on employees' standard of living. Only a minuscule 1.7% of the working-age college-educated population of our country is unemployed. For every extra year of education after high school, one can add between five and 15% in increased income. Compensation can no longer be considered a matter of hourly wages only. Compensation includes wages, salaries, bonuses, benefits, and the employer FICA contribution. Using the total compensation model, it's clear that for millions of America's employees, times are good indeed. Consider a few examples:
- Virtually 100% of the NAM's 14,000 member companies provide health benefits to their employees.
- A Wall Street Journal/NBC News poll conducted in April 1998 indicated that 48% of those surveyed said they owned at least $5,000 in stock, whether through IRAs, 401(K) plans, or direct investment.
- A Peter Hart survey, completed last year for NASDAQ, found that 43% of adult Americans own stock, a number that had doubled since 1990.
- According to the Investment Company Institute, "retirement plans held 35% of all mutual fund assets at year-end 1996." In addition, "total assets of 401(K)s increased from $16 billion in 1990 to an estimated $857 billion in 1996." During that same period, mutual funds grew from about five percent of 401(K) assets to 39%.
- The mean salary for a full-time employee in 1996, including benefits, was $38,000; for workers in manufacturing, the figure was $41,000. Real wages went up 11.6% in constant dollars from 1976 to 1996 and real total compensation rose by 15.2% in the same period.
- According to the National Center for Employee Ownership, there are about 15,000 firms in the United States that "share ownership broadly with employees." Such ownership, together with such benefits as health care, incentive pay, and traditional pension plans, is helping ordinary people accrue significant savings. Some examples: Incentive pay: Safelite Glass Corp. in Columbus is the nation's largest installer of automobile glass. Safelite offers its 1,600 employees cash bonuses based on output and the quality of their installation work. The bonuses are given twice yearly, providing workers with target dates for meeting their goals and tangible rewards for doing so. Similarly, at Nucor Steel in North Carolina, the average worker earns just $9 per hour -- but average pay is $60,000 annually. Every Nucor employee receives an identical bonus based on how much steel is produced. And that bonus can be as high as 150% to 100% of base pay. Stock ownership: At Eastman Chemical Co., the firm's 17,500 employees will own between 10% to 15% of the company by 2010. This is part of the total compensation package Eastman offers its employees. A survey conducted last year by the William M. Mercer consulting firm found that 30% of America's largest companies have stock ownership programs. When employees know they have a material interest in the companies where they work, they have an incentive to work all the harder and be more productive. Stock options: Three-quarters of the companies in America that have $50 million or less in sales offer their workers stock options, the ability to purchase stock at a given rate and then sell it later when the stock appreciates. Intel, the computer-chip giant, offers stock options to virtually all of its 50,000 employees. Along with Intel's retirement and bonus programs, this adds roughly $8,000 to the entry-level worker's salary of $25,000. Incentive pay is part of what makes the new American worker so productive. The new worker has the training needed to excel, the autonomy needed to innovate, and the compensation incentives needed to be consistently more productive. Without each of these elements, America's employees will not compete successfully in the world marketplace. The old worker punched a clock, was closely monitored by management, and received limited financial incentives for excellence. This vision of the American worker is receding as that of the new worker becomes the norm. And given the value of workers to today's economy, that's good news for our future. Jerry J. Jasinowski is president of the National Association of Manufacturers.
