Insurance Costs Keep Benefit Costs in Check: BLS

August 28, 2001( - Over the past 14 years benefit costs per hour worked have risen more than 56%, but were largely unchanged as a percentage of total compensation, according to a new report.

This year benefits comprised just 27.1% of total hourly compensation in 2001, compared with 26.8% in March 1987 according to a new report from the US Bureau of Labor Statistics (BLS).

Ups And Downs

However, that measure has fluctuated over time, rising as high as 28.9% of total compensation costs in 1994, before slipping back.   According to the report a major cause of the decline was insurance costs, which ranged from 72 cents/hour worked in 1987 to $1.23 in 1994, before falling back to a low of $1.09 per hour worked in 1997.   Since then those costs have been on the rise, totaling $1.28 per hour worked in March 2001.

Since March 1987, total compensation costs have increased at an average rate of 3.2% per annum, according to data released by the US Bureau of Labor Statistics (BLS).   Total average private-sector compensation costs were $20.81 per hour worked in March this year compared to $13.42 in March of 1987, according to the new data release.

Cost Cuts

The chief driver of this decline was a drop in insurance costs. During the first half of the 14-year period, they increased steadily from $0.72 per hour worked in 1987 to $1.23 in 1994, but then declined to a low of   $1.09 in 1997.

These costs have since risen, the largest increase occurring between over the last year, with costs increasing from $1.19 to $1.28.

Legal Requirements

Legally required benefits such as Social Security, federal and state unemployment insurance, and workers’ compensation accounted for 8.4% of total hourly compensation costs in 1987, increasing to 9.4% by 1994, and falling again to 8.3% in 2001.

Social Security and Medicare costs to private-sector employers amounted to 4.8% and 1.2% respectively of total compensation in 1996, the first year that the BLS provided statistics on these costs.

In comparison, this year while the Medicare share of total compensation costs remained constant, the Social Security share of compensation cost increased by 0.1%.

Total compensation costs were higher in: 

  • companies with fewer than 100 employees ,
  • goods-producing industries,
  • in white-collar occupations ,
  • firms that employed union workers, and
  • companies employing full-time workers

The data release can be viewed at the Bureau of Labor Statistics Web site at