Employer costs for employee compensation averaged $27.82 per hour worked in March 2007, the U.S. Department of Labor’s Bureau of Labor Statistics reported. Wages and salaries, which averaged $19.47, accounted for 70.0 percent of these costs, while benefits, which averaged $8.35, accounted for the remaining 30.0 percent. Employer Costs for Employee Compensation, a product of 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 $2.21 per hour (7.9 percent of total compensation). Employer costs for life, health, and disability insurance benefits averaged $2.33 (8.4 percent); paid leave benefits (vacations, holidays, sick leave, and other leave) averaged $1.96 (7.0 percent); and retirement and savings benefits averaged $1.16 (4.2 percent) per hour worked.

Private industry

In March 2007, private industry employer compensation costs averaged $25.91 per hour worked. Wages and salaries averaged $18.34 per hour (70.8 percent), while benefits averaged $7.58 (29.2 percent). Employer costs for paid leave averaged $1.78 per hour worked (6.9 percent), supplemental pay averaged 76 cents (3.0 percent), insurance benefits averaged $1.97 (7.6 percent), retirement and savings averaged 87 cents (3.3 percent), and legally required benefits $2.20 (8.5 percent) per hour worked.

Employer costs for health benefits varied by industry, occupation, bargaining status, region and establishment size. These differences reflect in part, varying incidence of benefit coverage among these groups. The National Compensation Survey also produces comprehensive data on the percentage of workers with access to and
participation in various employer provided benefit plans.

Health benefit costs in private industry

The average cost for health benefits was $1.83 per hour worked in private industry (7.1 percent of total compensation) in March 2007. As a percent of total compensation, health benefit costs have been steadily increasing since March 1998 when a cost of 1.00 per hour worked was 5.4 percent of total compensation.

Among occupational groups, employer costs for health benefits ranged from 86 cents per hour and 6.7 percent of total compensation for service workers to $2.66 and 5.8 percent of total compensation for management, professional, and related occupations. Among other occupational categories, employer costs for health benefits averaged
$1.59 (7.8 percent) for sales and office occupations, $2.20 (7.6 percent) for natural resources, construction, and maintenance occupations, and $2.07 (9.3 percent) for production, transportation, and material moving occupations.

Employer costs for health benefits were significantly higher for union workers, averaging $3.81 per hour (10.8 percent), than for nonunion workers, averaging $1.60 (6.4 percent).

In goods-producing industries, health benefit costs were higher, $2.53 per hour (8.4 percent of total compensation), than in service-providing industries, $1.65 per hour (6.7 percent of total compensation).

Within goods-producing industries, health insurance costs were $2.76 per hour (9.1 percent of total compensation) for manufacturing workers, greater than the cost for construction workers ($1.97 and 6.9 percent of compensation.) Service-providing industries varied greatly in costs, ranging from 58 cents in leisure and hospitality (5.1 percent), to $2.50 in the financial activities industry (7.2 percent) and $2.86 in
the information industry (7.4 percent).

Among the four regions, costs for health benefits ranged from $1.59 per hour in the South to $2.04 in the Northeast. Health care costs were $1.96 in the Midwest and $1.87 in the West. The proportion of total compensation represented by health benefits was 6.7 percent in the West, 6.9 percent in the South and Northeast, and 7.8 percent in the Midwest. Within census divisions, hourly health benefit costs ranged from $1.51 in the West South Central division, to $2.08 in the Middle Atlantic and East North Central divisions.

Health benefit costs increased, both in average hourly dollar amount and as a proportion of total compensation, with establishment size. Establishments with fewer than 50 workers averaged $1.20 (5.7 percent), those with 50-99 workers averaged $1.56 (6.9 percent), those with 100-499 employees averaged $2.02 (7.7 percent), and
those with 500 or more employees averaged $2.88 (7.9 percent).