The Employer Costs for Employee Compensation program is a product of the National Compensation Survey, which measures employer costs for wages, salaries, and employee benefits for nonfarm private and state and local government workers.
State and local government employers spent an average of $13.41 for benefits for every hour worked in September 2008, which accounted for 34.2 percent of total compensation. Private industry employers averaged $7.93 for benefits or 29.3 percent of total compensation. State and local government employer costs for health benefits were higher ($4.21) than private industry ($1.93). Retirement and savings costs, which includes both defined benefit and defined contribution plans, were also higher for state and local government employers ($3.09) than private employers ($0.97).
Private industry
In September 2008, private industry employer compensation costs averaged $27.07 per hour worked. Private industry employer wages and salaries averaged $19.14 per hour (70.7 percent), while benefits averaged $7.93 (29.3 percent). Private industry employer costs for paid leave averaged $1.81 per hour worked (6.7 percent), supplemental pay averaged 82 cents (3.0 percent), insurance benefits averaged $2.07 (7.7 percent), retirement and savings averaged 97 cents (3.6 percent), and legally required benefits averaged $2.26 (8.3 percent) per hour worked.
Compensation costs in state and local governments
In September 2008, employer costs in state and local governments averaged $39.18 per hour worked. State and local governments wages and salaries, averaged $25.77 per hour (65.8 percent), while benefits, averaged $13.41 (34.2 percent). Among state and local government employees, average hourly compensation costs were higher for management, professional, and related occupations ($48.21) than for service occupations ($28.56) and sales and office occupations($26.69). Wages and salaries averaged $32.80 per hour worked for management, professional, and related occupations; $17.30 for service occupations; and $16.49 for sales and office occupations. Wages and salaries accounted for 60.6 percent of total compensation for service employees and 61.8 percent for sales and office employees; for management, professional, and related employees, wages and salaries represented a significantly higher proportion of total compensation (68.0 percent).
For state and local government employees, employer costs for insurance benefits ranged from $3.55 per hour, or 12.4 percent of total compensation for service occupations, to $4.89 per hour worked, or 10.1 percent of total compensation for management, professional, and related occupations. For sales and office occupations, employer insurance costs averaged $3.97 or 14.9 percent of compensation. The largest component of insurance costs was health insurance, which averaged $4.21, or 10.8 percent of total compensation for state and local government employees.
In September 2008, the average cost for retirement and savings benefits was $3.09 per hour worked in state and local governments (7.9 percent of total compensation). Included in this amount were employer costs for defined benefit plans, which averaged $2.75 per hour (7.0 percent), and defined contribution plans, which averaged 34 cents (0.9 percent). Defined benefit plans specify a formula for determining future benefits, while defined contribution plans specify employer contributions but do not guarantee the amount of future benefits.
A major component of benefit costs is paid leave, including vacations, holidays, sick leave, and personal leave. The average cost for paid leave was $3.25 per hour worked for state and local government employees. Among occupational groups, the average cost for paid leave for management, professional, and related workers was $3.85, significantly higher than the costs for sales and office workers, which averaged $2.42, and for service workers, which averaged $2.56.
Costs for legally required benefits, including Social Security, Medicare, unemployment insurance (both state and federal), and workers’ compensation, averaged $2.33 per hour worked for state and local government employees. The average cost for management, professional, and related workers was $2.71 per hour worked (5.6 percent of total compensation); greater than the costs for sales and office workers which averaged $1.68 (6.3 percent), and service workers which averaged $1.87 (6.6 percent).
