BLS: Health Care Cost Hikes Clip Compensation

June 25, 2004 ( - Employers are increasingly using funds they might have dedicated to payroll to cover their soaring health-care benefits costs.

The Bureau of Labor Statistics (BLS) of the U.S. Department of Labor reported that private-sector benefits spending rose 24% from March 2000 to March 2004, primarily because of escalating health care premiums. BLS said that came at the expense of wages, which increased 15% over the same period, but represented a declining share of the total compensation employers pay to workers.

But benefits now take up more of employers’ total spending on compensation to workers. Benefits now represent 29% of total compensation, up from 27% in 2000. Wages dropped to 71% of total compensation, from 73%, over the same four years, the BLS said.

Wages still outpaced inflation over the past four years. The average wage of US workers in the private sector rose 17.3%, to $23.29 per hour in March 2004 from $19.85 per hour in March 2000. Inflation rose 9.5% during that period.

Employers have used the weak job market to hold down wages and shift health costs to employees, economists said. Most workers are unwilling or unable to leave a job when hiring opportunities elsewhere are scarce.

Economywide in March, the BLS said employers spent an average $24.95 per hour worked for employee compensation, including $17.71 or 71% on wages and salaries and $7.23 or 29% on benefits. In the private sector, employee compensation costs in March were $23.29 per hour including $16.64 (71.5%) for wages and salaries and $6.65 or 28.5% on benefits.

A summary of the government data is at .