This item is the employer's costs for social security tax, unemployment tax, workmen's compensation insurance, state disability insurance pension plans, stock purchase plans, union-negotiated benefits, life insurance premiums, and insurance premiums on hospital and medical plans for employees.

Fringe benefits include both legally required expenditures and payments for voluntary programs. The legally required portion consists primarily of federal old age and survivors' insurance, unemployment compensation, and workers' compensation. Payments for voluntary programs include all programs not specifically required by legislation, whether they were employer initiated or the result of collective bargaining. They include the employer portion of such plans as insurance premiums, premiums for supplemental accident and sickness insurance, pension plans, supplemental unemployment compensation, welfare plans, stock purchase plans on which the employer payment is not subject to withholding tax, deferred profit-sharing plans, and payments made directly to retired employees or their survivors that do not pass through a fund. They exclude such items as losses on company-operated cafeterias and snack bars, cost of in-plant medical services, cost of free parking lots, discounts on employee purchases, cost of uniforms and other work clothing supplied to employees and similar expenditures, and wages and salaries reported in payroll (holidays, vacations, sick pay, bonuses, jury pay, costs for training, and partially subsidized housing and safety).