Employee Benefits Increasingly, employees are being allowed to choose benefit packages from a menu of items. For instance, workers may be given a package of benefits that includes basic and optional items. Basics might include modest medical coverage, life insurance equal to a year’s salary, vacation time based on length of service, and some retirement pay.

But then employees can use credits to choose among such additional benefits as full medical coverage, dental and eye care, more vacation time, additional disability income, and higher company payments to the retirement fund. Using the theory of consumer behavior, how do you think flexible benefit packages would affect an employee’s preference between higher wages and more benefits? Respond to at least two of your fellow students’ postings.

Flexible benefit packages affect an employee’s preference between higher wages and more benefits, because flexible benefit yields more satisfaction than higher wage. Consumers prefer to have more of a good rather than less, and the benefits package offers more utility than just higher pay. For example, a package of benefits that an employee would choose depends on his/ her personal situation. A single, young, healthy person with no dependents would be satisfied with a higher salary and a basic benefit package.

But, an employee with a family and a medical history, would choose more benefits than a higher salary, so that his family will be taken care of, and ensure that should he suffer injury while at work, his disability income would cover the costs incurred while being unemployed and more vacation time would mean spending time with family. For an employee who plans to retire soon a flexible benefit package which include higher company payments to the retirement fund(more benefits), would be preferable than having to seek higher wages- to cover retirement costs.