The University of Michigan
555 South Forest Street
Third Floor
Ann Arbor, MI 48104-2531

T 734-936-9842
F 734-998-6341

Workers in entry-level jobs that require simple English or computer skills are more likely to have health insurance than workers in entry-level jobs with lower skill requirements. A study by Nan L. Maxwell and Lynn Paringer, funded by the Economic Research Initiative on the Uninsured (ERIU), examines the relationship between particular skills and health benefits for entry level workers (no more than a high school education; no more than one year prior work experience) in the San Francisco bay area, on both the worker and employer sides.

A large share of entry-level jobs provide benefits, but most often with some conditions.

  • 79.8% of employers offered health insurance, the most common benefit, followed by 79.0% offering paid vacation. 13.8% offered none of the 24 benefits asked about in the survey.
  • Over 95% of employers restricted eligibility for health related benefits based on workers' hours, tenure, or both.
    • 36.8% required workers to be full time (35+ hours) to be eligible for benefits.
    • Approximately 80% of firms that offer health related benefits imposed a waiting period for eligibility. About 7.5% of waiting periods were one year or more.

Employers adjusted over the business cycle by varying eligibility requirements rather than dropping health benefits.

  • None of the employers surveyed that continued in operation or continued the position stopped offering any of seven benefits termed "health benefits" (e.g., health insurance, paid sick leave) between the first and second interview, a time when labor market conditions in California were deteriorating.
  • Workers in weaker labor markets were less likely to have no restrictions places on their eligibility. The prevalence of jobs without eligibility restrictions fell by 30% when the labor market conditions deteriorated.

English language skills and computer skills were associated with jobs that came with the potential for obtaining health benefits.

  • Across multivariate models with varying measures of health benefits offered by employers as a dependent variable, the skill of simple English ability was consistently associated with jobs that offered health benefits, including health insurance.
  • The other skill associated with an increased availability of health benefits, including health insurance, was skill with productivity enhancing software such as word processing and spreadsheet programs.
  • Other skills, such as applied math, algebra, and more complex ability to use English, showed no statistically significant association with health benefits for entry-level jobs.

The relationship between employer characteristics and benefits offered generally followed patterns found elsewhere.
Small firms (fewer than 50 employees) were associated with fewer health benefits and a lower probability of offering health insurance. Unionized entry level jobs and jobs with higher wages were more likely to come with health benefits.

The propensity of employers to offer health related benefits is related to the skill sets of the workers they seek to attract. This raises the possibility that training in particular skills English language ability among those for whom English is a second language and the ability to use the computer software used most widely may have a positive effect on the chances of workers getting a job with health benefits including health insurance, at least in the San Francisco bay area.

The study does not demonstrate causality between skills and health benefits. The skill sets measured may proxy for other employee traits.

The data is from workers in California and employers in the San Francisco bay area, and may not be representative of the United States as whole. In particular, other local labor markets may use health insurance to reward workers with skills needed in their area, which may differ from English and computer skills rewarded in the Bay Area labor market.

In the firm survey, there was a 21.4 percent response rate for the first survey and 92.4 positive disposition for the follow up (meaning the firm completed the survey or was no longer in business.) Employers that responded may not be representative.

The relationship between the employers surveyed and aggregate employer demand for entry level workers cannot be expressed because the survey sampling frame was a sample of employers, not jobs.

The survey asked employers about 24 benefits. A factor analysis identified seven benefits that constituted a "health" factor (with a criterion of .5 as a significant loading): health insurance, paid vacation, paid sick leave, retirement, medical, dental, vision, and life insurance. The factor analysis produced a health factor value used as a dependent variable in the multivariate models. The count of how many of the seven health factor benefits was also used as a dependent variable.

The survey asked employers about 53 particular skills identified in pre-survey focus groups with employers. A factor analysis on each skill lead to identification of 15 skill sets by identifying the most highly correlated skills on each factor loading. For example, skills loading high on "simple English" were reading written instructions, labels, schedules, journals, general memos, letters, form, writing simple sentences and paragraphs, and completing forms, logs, charges, or labels.

Bay Area Longitudinal Surveys (BALS) and California Work and Health Surveys of 2000 (CWHS). BALS has three components. The first is a survey of 405 firms hiring low-skill entry-level workers in San Francisco, Alameda and San Joaquin counties in California. Low skilled was defined as a position for which employers did not require more than a high school education and no more than one year of work experience. Face-to-face interviews took place from June 1998 to October 2002. The second is a longitudinal component, reinterviewing firms by phone between October 2002 and October 2003, on average 23 months after the first interview. The third is a household survey, with interviews largely one year after the first firm survey, asking workers about their skills. CWHS is a telephone-based longitudinal survey, although the paper uses a cross-section. The sample is stratified, with an over-sampling of African Americans, Asian/Pacific Islanders and Latinos. The survey had 2,168 adult respondents.

Employer-Based Health Insurance and Worker Skills
Nan Maxwell and Lynn Paringer, California State University

Conference paper presented at ERIU Research Conference, July 2004

ERIU Working Paper #34 (Adobe PDF)

Back to top

Funded by The Robert Wood Johnson Foundation, ERIU is a five-year program shedding new light on the causes and consequences of lack of coverage, and the crucial role that health insurance plays in shaping the U.S. labor market. The Foundation does not endorse the findings of this or other independent research projects.