If you don't think controlling the cost of employee benefits is important, look at what's happening in Los Angeles County. The cost of the benefits package for the county's firefighters has climbed to an astounding 59 percent of their base salary.

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That means it is no longer fiscally prudent to hire new firefighters because it costs more to pay benefits to new workers than it does to pay time-and-a-half overtime to existing firefighters.

Something is wrong here.

Michael Fox, the Southern California managing principal of Towers Perrin human resources consulting firm, says that while this may be an extreme example of runaway benefit costs, it does highlight the concern over the ever-growing expense.

"Lately, this has been a very big issue on both the benefits side and the cost side," he says.

Most companies find themselves spending the equivalent of about 35 percent of an employee's salary on benefits.

In recent years, however, health care costs have been rising 12 percent to 15 percent a year, workers' compensation rate hikes have been staggering and the investment returns on pension funds have been down because of low interest rates.

All of that has stressed a benefits system that needs no more pressure.

"When one benefit increases, you either have to spend more on benefits or find a way to cut back on others," Fox says.

Increasing employee contributions for health insurance, increasing medical deductibles or office co-payments or encouraging workers to set aside more for their pensions are all common ways of accommodating escalating benefit costs without reducing benefits.

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Source: San Diego Union Tribune