Benefits Make Up A Larger Portion Of Employee Compensation Costs

Benefits, as a percentage of total compensation, rose from 27.4% in March 2001 to 29% in March 2004, the U.S. Department of Labor's Bureau of Labor Statistics reported in a study of employer costs for employee compensation.

Employer costs for employee compensation averaged $24.95 per hour worked in March 2004, according to the report. Of that amount, wages and salaries, which averaged $17.71, accounted for 71% of these costs, while benefits, which averaged $7.23, accounted for the remaining 29%.

Among private industry employers, benefits as a percentage of total compensation were slightly lower at 28.5%, but have risen from 27% in March 1999. Average private industry employer compensation costs were $23.29 per hour worked in March 2004, with benefits accounting for $6.65 of this figure.

Among state and local government employees, benefits as a percentage of total compensation were 30.8% in March 2004. Total compensation costs for these employees amounted to $34.21 per hour worked, of which benefits accounted for $10.52.

Broken down by type of benefit, paid leave averaged 6.7% of compensation per hour worked for all workers, supplemental pay averaged 2.4%, insurance benefits averaged 7.7%, retirement and savings averaged 4.0%, and legally required benefits (i.e. Social Security, Medicare, unemployment insurance and workers' compensation) averaged 8.1%.

Health care coverage made up the bulk of insurance benefits costs, accounting for an average of 7.2% of total compensation for all workers. For state and local employees, retirement and savings benefits made up an average of 6.1% of compensation, compared with only 3.4% for employees in private industry.

Broken down by private industry occupational group, benefits costs as a percentage of total compensation were highest among management and professional employees (27.9%), and lowest among service sector workers (24.2%).