Employer costs for employee compensation averaged $25.57 per hour worked in December 2004, the U.S. Department of Labor's Bureau of Labor Statistics reported today. Wages and salaries, which averaged $18.07, accounted for 70.7 percent of these costs, while benefits, which averaged $7.50, accounted for the remaining 29.3 percent. Employer Costs for Employee Compensation, based on the National Compensation Survey, measures employer costs for wages, salaries, and employee benefits for nonfarm private and State and local government workers.
Costs for legally required benefits, including Social Security, Medicare, unemployment insurance, and workers' compensation, averaged $2.07 per hour (8.1 percent of total compensation). Employer costs for life, health, and disability insurance benefits averaged $1.99 (7.8 percent) ; paid leave benefits (vacations, holidays, sick leave, and other leave) averaged $1.70 (6.6 percent) ; and retirement and savings benefits averaged $1.08 (4.2 percent) per hour worked.
Private industry
In December 2004, private industry employer compensation costs averaged $23.90 per hour worked. Wages and salaries averaged $17.02 per hour (71.2 percent), while benefits averaged $6.88 (28.8 percent). Employer costs for paid leave averaged $1.53 per hour worked (6.4 percent), supplemental pay averaged 66 cents (2.7 percent), insurance benefits averaged $1.70 (7.1 percent), retirement and savings averaged 88 cents (3.7 percent), and legally required benefits $2.08 (8.7 percent) per hour worked.
Legally required benefit costs in private industry
The average cost for legally required benefits was $2.08 per hour worked in private industry (8.7 percent of total compensation) in December 2004. Included in this amount were employer costs for Social Security and Medicare, Federal and State unemployment insurance, and workers' compensation.Employer costs for legally required benefits varied by occupation, industry, bargaining status, region, and establishment size. The average cost per hour worked for legally required benefits ranged from $1.29 per hour worked for service occupations, to $2.97 per hour for management, professional and related occupations and natural resources, construction, and maintenance occupations. Sales and office occupations averaged $1.57 and production, transportation, and material moving occupations, $2.11 per hour. The proportion of total compensation represented by legally required benefits ranged from 7.1 percent for management, professional, and related workers to 11.0 percent for natural resources, construction, and maintenance workers.
Employer costs for legally required benefits were higher for union workers, $2.89 per hour, than for nonunion workers, $1.98 per hour. As a proportion of total compensation, legally required benefits accounted for 8.8 percent of total compensation for union workers and 8.7 percent for nonunion workers.
Costs for legally required benefits were higher in goods-producing industries ($2.71 per hour or 9.6 percent of total compensation) than in service-providing industries ($1.92 per hour or 8.4 percent of total compensation). Within goods-producing industries, construction averaged $3.26 per hour worked (11.8 percent) and manufacturing $2.43 per hour (8.6 percent). Service-providing industries ranged from $1.20 per hour for the leisure and hospitality industry (11.4 percent) to $2.46 for the information industry (7.2 percent).
Among the four regions, employer costs for legally required benefits ranged from $1.81 in the South to $2.42 in the West. Legally required benefit costs were $2.01 in the Midwest and $2.26 in the Northeast. Within the nine census divisions, costs for legally required benefits ranged from $1.76 in the East South Central and $1.77 in the West South Central divisions, respectively, to $2.62 in the Pacific division.
Legally required benefit costs increased in average dollar amount per hour with establishment size: $1.90 in establishments with fewer than 100 employees; and $2.29 in establishments with 100 employees or more. Conversely, legally required costs decreased as a proportion of total compensation with establishment size. Legally required costs in establishments with fewer than 50 employees averaged 9.6 percent; and in establishments with 500 workers or more, 7.4 percent of total compensation.
