Progressive Employers Expand Employee Benefits Packages to Include Commuter-Costs

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Economic pressures during the last two years have forced employers to freeze or reduce employee benefits. According to a recent Society of Human Resource Management (SHRM) survey, employee benefits have decreased at 60 percent of the companies participating in the survey. Some forward-thinking employees, however, have decided to pay employees’ commuter costs as a proactive benefits strategy. There is evidence that doing so can improve a company’s financial picture, help balance employees family budgets and contribute to a greener world.

Many of those progressive employers base their decision on the conclusions of a recent white paper. It was prepared by a Web-based business that advises employers how to cut their taxes when they include employees’ commuter costs in their benefits packages. The white paper results include interesting data and recommendations that will help employers understand and justify this additional benefit.

  • An Employee Omnibus Survey by SHRM (January 2009) shows that 39% of employees are concerned about the rising cost of commuting and would like benefits to cover or subsidize those expenses.
  • Where commuter benefits have been added, the average commuter saved almost 40% of the cost of a transit ticket. In Detroit, that  equates to a commuter cost of $12 per week for a two-way bus ticket.
  • Employees who don’t use mass transit for various reasons can benefit instead from commute-related parking expenses, vanpools and bicycle allowances.
  • For employees who can only commute by car, pre-tax benefits can be used for commute-related parking, and are available as parking vouchers, debit cards or direct payments to vendors.
  • Employers can save 10% or more on payroll taxes since the employee commuting costs they pay are deducted from employer and employees’ taxable incomes.
  • The green benefit can be expressed quantitatively, as one person switching to public transit can reduce daily carbon emissions by 20 pounds, or more than 4,800 pounds, annually.

Employers may find this special employee benefit a competitive advantage because it can improve employee retention. It’s also an important signal to employees that the company is doing its best to expand benefits, even if, in reality, it has had to reduce or freeze traditional benefits.

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