In the News

Benefits Make up 30 Percent of Average Hourly Compensation Cost

Story by The Kansas City Star

The average employer cost for employee compensation was $28.46 per hour worked at the close of the first quarter this year, the U.S. Department of Labor reported Wednesday.

The figures, based on a sample employer survey, indicated that wages and salaries accounted for an hourly average of $19.83, or 69.7 percent of total compensation costs.

The cost of employee benefits averaged $8.63 per hour worked, or 30.3 percent of the total costs, according to the data, current as of March 2008.

The survey provided a breakdown of how those benefit dollars were allocated. One category encompassed legally required benefits such as Social Security, Medicare, unemployment insurance and workers' compensation. Those costs averaged $2.24 per hour worked, or 7.9 percent of total compensation costs.

The other category was discretionary benefits. Included in that section are employer costs for life, health and disability insurance benefits, which averaged $2.40 an hour, or 8.4 percent of total compensation costs.

Also in the discretionary benefits category were paid-leave benefits (vacation, holidays, sick leave and other), averaging $2 an hour, or 7 percent of total costs, and retirement and savings benefits, averaging $1.26 per hour, or 4.4 percent of the total costs.

The National Compensation Survey measures how much employers spend on wages, salaries and employee benefits in nonfarm private establishments and state and local government offices.

In March, the average employer cost for employee health benefits was $1.92 per hour in private industry, up from $1.41 per hour in March 2003.

The survey found a large range in employer costs for employee health benefits -- from 90 cents per hour for service workers that received health benefits through their jobs, up to an average of $3.95 per hour for union workers.

The survey also noted that average employer compensation costs in private industry were significantly lower than compensation costs for government workers. For example, the private sector average compensation cost per employee hour was $26.76 compared with $37.84 in state and local government.

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