Employer costs for employee compensation averaged $27.31 per hour worked in September 2006, according to data released December 13 by the U.S. Department of Labor’s Bureau of Labor Statistics. Wages and salaries, which averaged $19.12, accounted for 70 percent of these costs, while benefits, which averaged $8.18, accounted for the remaining 30 percent.
Employer costs for employee compensation, a product of the National Compensation Survey, measures employer costs for wages, salaries and employee benefits for non-farm private, and state and local government workers.
Employer costs for insurance benefits – life, health and disability – averaged $2.22 per hour (8.1 percent of total compensation). Legally required benefits, including
Social Security, Medicare, unemployment insurance and workers’ compensation, averaged $2.19 per hour (8.0 percent of total compensation); paid leave benefits (vacations, holidays, sick leave and other leave) averaged $1.91 (7.0 percent); and retirement and savings benefits averaged $1.18 (4.3 percent) per hour worked.
Private industry
In September 2006, private industry employer compensation costs averaged $25.52 per hour worked. Wages and salaries averaged $18.04 per hour (70.7 percent), while benefits averaged $7.48 (29.3 percent). Employer costs for legally required benefits averaged $2.18 (8.6 percent) per hour worked, insurance benefits averaged $1.89 (7.4 percent), paid leave averaged $1.73 (6.8 percent), retirement and savings averaged 93 cents (3.6 percent), and supplemental pay averaged 75 cents (2.9 percent).
Compensation costs in state and local governments
In September 2006, employer costs in state and local governments averaged $37.91 per hour worked. Wages and salaries, which accounted for 67.3 percent of the total, averaged $25.53, while benefits, which accounted for the remaining 32.7 percent, averaged $12.38. Benefit costs increased from 31.4 percent of total compensation and $10.89 per hour for state and local government workers in September 2004.
Among state and local government employees, average hourly compensation costs were higher for management, professional, and related occupations ($46.66) than for service occupations ($28.72) and sales and office occupations ($25.85). Wages and salaries averaged $32.96 per hour worked for management, professional and related occupations; $17.48 for service occupations; and $16.03 for sales and office occupations. Wages and salaries accounted for about the same proportion of total compensation for service employees (60.9 percent) and sales and office employees (62.0 percent); for management, professional and related employees, wages and salaries represented a significantly higher proportion of total compensation (70.6 percent).
For state and local government employees, employer costs for insurance benefits ranged from $3.45 per hour, or 12.0 percent of total compensation for service occupations, to $4.57 per hour worked, or 9.8 percent of total compensation for management, professional, and related occupations. For sales and office occupations, employer insurance costs averaged $3.96, or 15.3 percent of compensation. The largest component of insurance costs was health insurance, which averaged $4.05, or 10.7 percent of total compensation for state and local government employees. Health insurance costs in September 2004 were $3.49 and 10.0 percent of total compensation.
In September 2006, the average cost for retirement and savings benefits was $2.68 per hour worked in state and local governments (7.1 percent of total compensation). Included in this amount were employer costs for defined benefit plans, which averaged $2.39 per hour (6.3 percent), and defined contribution plans, which averaged 29 cents (0.8 percent). Defined benefit costs were $1.97 per hour and 5.7 percent of total compensation in September 2004. Defined benefit plans specify a formula for determining future benefits, while defined contribution plans specify employer contributions but do not guarantee future benefits.
A major component of benefit costs is paid leave, including vacations, holidays, sick leave and other leave such as personal leave, military leave and funeral leave.
The average cost for paid leave was $2.98 per hour worked for state and local government employees. Among occupational groups, the average cost for management, professional and related workers was $3.29, significantly higher than the costs for sales and office workers, which averaged $2.47, and for service workers, which averaged $2.63.
Costs for legally required benefits, including Social Security, Medicare, unemployment insurance (both state and federal), and workers’ compensation, averaged $2.22 per hour worked for state and local government employees. The average cost for management, professional and related workers was $2.58 per hour worked (5.5 percent of total compensation); greater than the costs for sales and office workers which averaged $1.61 (6.2 percent), and service workers which averaged $1.79 (6.2 percent).
