Question

A. Optimum Fringe Benefits 1. Briefly explain how offering fringe benefits for employees can generate profits for firms. Why do some firms not offer fringe benefits? 2. Use the concept of “optimum fringe benefits” to assess the wisdom of Congress mandating that employers offer some specific fringe benefit (day care for children of employees, say) free of charge.

Answer 1

1...) Briefly explain how offering fringe benefits for employees can generate profits for firms. Why do some firms not offer fringe benefits?

·         Fringe benefits are extra benefits other than salary. Car, health care facilities etc. are examples of fringe benefits.

·         Fringe benefits incentivize workers to enhance productivity and contribute positively towards the growth of organization.

·         Fringe benefits reduce the attrition rate in an organization.

·         Some organizations do not offer fringe benefits; this may be due to unavailability of sufficient fund or labors are hired temporarily.

2. Use the concept of “optimum fringe benefits” to assess the wisdom of Congress mandating that employers offer some specific fringe benefit (day care for children of employees, say) free of charge.

• First, these benefits enhance higher participation rates.
• Fringe benefits increase women participation rate in labor force.
• Fringe benefits increase living standards of people.