Simple arithmetic is forcing HR Managers to adjust existing plans and look for creative ways to make benefits packages more attractive.
A recent survey by the Society for Human Resource Management (SHRM) indicates that in the face of economic pressure, many organizations have plans to reduce or eliminate financial and compensation benefits within the next 12 months1. Sixty percent of surveyed companies said that they have already cut back on benefits2.
Commuter benefits fill multiple needs
For many companies, the answer is commuter benefits -- an innovative, federally-backed program that allows employees to pay for their commutes in pre-tax dollars* – and allows employers to kick in at whatever level they choose as a subsidy in addition to payroll. Any way you look at it, it’s a big win for the community.
“There are a number of obvious benefits to transit ridership,” says Congressman Jim McGovern (D-MA), who has worked to promote such benefits for years, “including a reduction in energy consumption, improved air quality, and reduced congestion. But the one issue that I think is most important to employees and employers is the fact that both employers and employees can save hundreds of dollars a year by simply doing the right thing. It’s a no brainer.”
Saving money for employees and employers
Employees clearly want help with their commutes. An Employee Omnibus Survey by SHRM (January, 2009) indicates that 39% of employees are concerned about the rising cost of commuting, and they’d like to see benefits that help them manage those expenses3.
Commuter benefits save the average commuter up to 40% off the cost of the transit ticket (employers save up to 10%). For those not able or willing to take mass transit, pre-tax benefits also include commute-related parking expenses, vanpools and bicycle allowances.
For example, a commuter in Poughkeepsie making $40,000 and commuting into New York City might pay as much as $4,848 in annual transit fees. Enrolling in commuter benefits would save this employee $1,697 annually – more than 1/3 of the cost of the commute.
Some employees may live in an area not served by mass transit. To help them defray the burgeoning costs of commuter parking, the same pre-tax benefits apply. They can only be used for commute-related parking, and are made available in parking vouchers, debit cards or direct payments to parking vendors.
Employers can save 10% or more on payroll taxes since any dollars going to commuting costs under the program are deducted from taxable income for both employee and employer. Obviously, the more employees who enroll, the greater the tax savings for employers.
The irony is that so few people know that these ‘no-brainer’ benefits exist. One Atlanta study, corroborated elsewhere, suggested a poor understanding among most employees of the availability of commuter benefits4.
Stress-free commuting means a more productive workforce
Economics is not the only motivation that keeps commuters off the crowded highways. “I’ve always felt that once people get into the habit of using alternative commuting, other reasons take over to make them stay,” says Dave Beadle, an HR Manager at Qualcomm who was instrumental in bringing commuter benefits to Qualcomm.
“For me, it was the lack of stress -- not having to deal with that daily commute and wonder if the guy in that SUV was going to smash into me. It’s being able to sit back and read a book or catch up on some work that I didn’t quite get done at the office, or being able to leave a late meeting to catch your train. So other things take over to keep people using mass transit but the financial incentive inherent in commuter benefit programs definitely encourage people to take that first look.”
Consumers reward a commitment to the greater good
Public awareness of sustainability issues has brought sharper scrutiny to corporate social responsibility than ever before. A BBMG survey5 shows that three-quarters of U.S. consumers reward and punish brands based on corporate behavior. .
The willingness to take on bigger problems outside the traditional corporate purview – like clean air, climate change, and crowded highways – is an important brand statement. There’s no doubt that changing commuter behavior can have a major impact; one person switching to public transit can reduce daily carbon emissions by 20 pounds, or more than 4,800 pounds in a year.
Commuter benefits reduce stress and traffic congestion, reduce air pollution and save tax dollars for employees and employers. No wonder they’re called the “no brainer benefit.”
Download a free white paper on Commuter Benefits
1. 2009 Employee Benefits: A Survey Report by the Society for Human Resource Management” (SHRM), page 19
2. 2009 Employee Benefits: A Survey Report by the Society for Human Resource Management” (SHRM), page 2
3. SHRM Employee Omnibus Survey, January 2009, pg 19
4. Center for Transportation and the Environment and Center for Urban Transportation Research. “Evaluation of the Effectiveness of Programs Contained in the “Framework For Cooperation To Reduce Traffic Congestion and Improve Air Quality,” Phase Three: Employee Travel Model.” Prepared for Georgia Department of Transportation, May 13, 2003
5. 2009 BBMG Conscious Consumer Report: Redefining Value in a New Economy
* -- up to
$230/month for transit and $230/month for parking