Health Insurance Premiums: the modern day wage freeze
In 1942 Executive Order 9250 established wage freezes. Today the source can be found in most employee benefits guides.
FDR's Executive Order 9250 established the Office of Economic Stabilization and brought with it wage and price controls during WWII.
The labor supply was low and employers could no longer raise wages as a method for attracting and retaining workers. [1]
The executive order made an exception for insurance and pension benefits, so employers pivoted and started offering health insurance benefits to workers as an alternative way to increase compensation. [2]
In 1943 the IRS ruled that employer sponsored health insurance coverage was not taxable. This made employer provided coverage even more attractive to the 40 million US workers filing taxable returns and was one of the cheapest ways to obtain health insurance coverage.
"Average Americans were suddenly in need of tax shelters and the exclusion for health insurance was very popular, leading to an expansion of health insurance coverage. By 1945, 32 million people had such benefits." [3]
However, is employer sponsored health insurance coverage and the tax advantages still benefiting workers today?
Due to the rising cost of medical services and health insurance premiums there is a strong argument most employer sponsored health insurance plans are not.
Over past decade, the average health insurance premiums for families have outpaced both wages and inflation.
The majority of employer sponsored health insurance plans have essentially acted as a wage freeze. The very problem they were used to combat in 1942.
[1] https://archive.ph/a4TW#selection-3849.6-3849.77
[2] https://archive.ph/LCOGK
[3] https://economix.blogs.nytimes.com/2013/07/30/the-question-of-taxing-employer-provided-health-insurance/?_php=true&_type=blogs&_r=0