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South Dakota e-Labor Bulletin
Employee Benefits Offered by South Dakota Employers
An important aspect of an individual’s employment and career decisions, employee benefits are additional ways, beyond wages, employers can compensate their workers. Some employee benefits are required by law, such as unemployment insurance, job-protected leave covered under the Family and Medical Leave Act (FMLA) and special tax programs covered under the Social Security, Medicare and Federal Insurance Contributions Act (FICA).
Other employee benefits like medical insurance, retirement plans and paid leave are not required to be offered by employers. However, employers often choose to offer these types of benefits. This leads to non-wage compensation which can vary company to company.
In today’s competitive job market, an impressive benefits package may be the deciding factor in an employer being able to hire and retain the best employees.
Two of the most commonly offered benefits are medical insurance and retirement plans. With the growing expense of medical insurance, individuals tend to look for employers who help cover the cost of being insured. Employees concerned with future financial well-being may decide to start or end their career with a company having a sound retirement plan.
There are many other benefits employees hold valuable. Insurance benefits such as life, dental, vision and short-term/long-term disability may be an especially important perk for some individuals. For example, an employee who enjoys traveling may be more attracted to an employer offering extensive types of paid leave. Recent graduates or even someone currently in college may look to work for a company offering tuition or educational assistance.
We recently completed a study of employee benefits in South Dakota. We sent 1,924 surveys to private-sector South Dakota employers to gain insight into what benefits are being offered in our state. Below are statewide highlights of the survey.
- Half of all the employers in South Dakota offer single medical insurance.
- Slightly under half of employers offer family medical insurance.
- After medical insurance, the most frequently offered insurances are life, dental, vision, short-term disability and long-term disability, in that order.
- Almost half of all employers in South Dakota offer a retirement plan.
- Of those employers offering a retirement plan,
- 91 percent offer a defined contribution plan (plan which determines payments based on the amount of money contributed and the rate of return on the money invested).
- 16 percent offer a defined benefit plan (plan which determines payments according to a fixed formula based on salary, years of service, or age).
- Only 15 percent of employers in South Dakota offering a retirement plan offer both a defined contribution plan and defined benefit plan.
Paid Leave Highlights
- The most commonly offered types of paid leave are vacation and holiday leave, with six in 10 employers offering these types of leave.
- On average, 12 days of paid vacation leave and 8 days of paid holiday leave per year are offered to employees.
- Three out of 10 employers offer paid sick leave.
- Two out of 10 employers offered consolidated leave, which is leave combining all types of paid leave over time into one lump sum.
- Larger employers are more likely to offer insurance, retirement and leave benefits.
- Benefit offerings vary greatly by industry.
- Full-time employees are much more likely to be offered benefits than part-time employees.
In this study, we also gained a sense of the costs employers face when offering certain benefits. Much like the decision of how much an employer is willing to pay an employee, the employer must face the decision of how much they are willing to “pay” their employees in benefits.
The costs of providing employee benefits is a big factor when companies design their benefits package. In some instances, employers choose to split the cost by paying some or most of the premium for insurances. In other instances, they do not contribute to an employee’s premium.
To gain a better understanding of these costs, the survey asked questions about monthly costs of providing single and family medical insurance as well as what the annual cost of a total insurance benefits package is. So responses regarding costs would be comparable and relevant, we posed the questions in terms of average costs per employee.