Answer to Question 1
Answer: Most discretionary benefits originated in the 1940s and 1950s. During both World War II and the Korean War, the federal government mandated that companies not increase employees' wages or salaries, but it did not place restrictions on companies' employee benefits expenditures. Companies invested in expanding their offerings of discretionary benefits as an alternate to pay hikes as a motivational tool to enhance worker productivity. Separate from the benevolence of employers, employee unions directly contributed to the increase in employee welfare practices through the National Labor Relations Act (NLRA) of 1935, which legitimized bargaining for employee benefits. Union workers tend to participate more in benefits plans than do nonunion employees (92 percent versus 72 percent). Unions also indirectly contributed to the rise in benefits offerings because nonunion companies often fashion their employment practices after union companies as an approach to minimize the chance that their employees will seek union representation and may offer their employees benefits that are comparable to the benefits received by employees in union settings.
Answer to Question 2
C
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