Benefits December 1, 2003

Benefit Costs Outpace Wages in Q3

December 1, 2003 (PLANSPONSOR.com) - Benefit costs continue to rise, but they are a smaller proportion of the total package now than a decade ago, according to new government data.
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In the third quarter of 2003, benefit costs accounted for 27.9% of the total pay package for private sector employees, according to the Labor Department’s Bureau of Labor Statistics. In 1994 benefits costs comprised 28.9% of the total, according to the BLS.

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Total compensation costs paid by private sector employers averaged $22.84/hour in the most recent quarter, a full 1% higher than a quarter ago, and 3.8% higher than a year earlier. Wages and salaries averaged $16.46 an hour, while benefit costs averaged $6.38 an hour, according to the report.

Still, wage and salary costs paid by private employers rose 0.9% during the quarter, while benefit costs rose 1.3% during the same period. Within the benefits category, BLS data reveals that health insurance costs paid by private employers rose by 4.8% during the quarter, while costs for retirement and savings were up 1.5% in the most recent quarter – and nearly 8% higher than a year ago.

Costs for retirement and savings averaged 68 cents an hour for private industry employees in the third quarter, about 3% of total compensation. Other employer costs included:

  • legally required benefits (Social Security, Medicare, unemployment insurance, and workers’ compensation)- $1.95/hour (8.5% of the total)
  • insurance benefits – $1.59/hour worked (7.0% of the total)
  • paid leave – $1.48/hour worked (6.5% of the total)
  • supplemental pay – 65 cents/hour worked (2.8%)

Total employers’ costs for civilian employees, which includes state and local government as well as private industry, averaged $24.48/hour in the most recent quarter. That was 1.2% higher than a quarter ago, and 4.4% higher than a year earlier.

Average employer costs for state and local governments during the quarter were $33.62/hour, with wages and salaries responsible for 69.7% of the total. In the public sector, not only were employer costs higher, but benefits were an even larger proportion – 30.3% of the total in the third quarter – $10.20 an hour.

Wages and salaries averaged $26.80 per hour worked for white-collar occupations, compared with $16.83 for blue-collar occupations, and $15.89 for service occupations. Wages and salaries accounted for about the same proportion of total compensation for blue-collar employees (64.3%), and service employees (63.5%), but it represented a significantly higher proportion of total compensation for white-collar workers (71.5%).

The third quarter report on employer costs for employee compensation is available at http://www.bls.gov/news.release/pdf/ecec.pdf .

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