Employee Benefits Made Up 30.3% of Total Compensation in December 2010

That’s just over 43% of pay!

According to the Bureau of Labor and Statistics, employer-paid benefits make up a big chunk of change – 30.3% of total compensation for employees across all industries and sectors.

total compensation percentage

The BLS study shows that private industry employer costs for paid leave benefits averaged $1.89 per hour worked, while legally required benefits was $2.28 per hour worked. Take a look at the study to compare the compensation costs for state and local government workers, private industry workers, and civilian workers.

COMPackage believes that the proportion of employer-paid benefits is actually higher than 30.3% for many industries, because the BLS study is not taking into account all possible benefits, such as travel expenses, training, company outings, free suburban parking, cell phone expenses, etc. COMPackage has always believed that employer-paid benefits as a percentage of base pay is 43%, which is what the BLS percentage of Total Compensation number equates to. But we also believe that when you add these above benefits that the BLS wouldn’t typically include, then average definable benefits are actually even more, especially for companies employing higher salaried workers!

Included in the amount accounted for by the BLS were employer costs for vacations, holidays, sick leave, and personal leave. Other costs included legally required benefits, including workers’ compensation, (1.5% of total compensation); state unemployment insurance, (0.7%); and federal unemployment insurance, (0.1%).

This study is important for a couple of reasons:

a)It shows whether there is a rise or fall in how much employers are paying for total benefits of employees. (There was an increase of nearly 3% over the last three years.)
b)It points out that employer-paid benefits make up a tremendous portion of employees’ total compensation, a point that is often not communicated to employees, even though it is a very substantial amount of their pay.

When the total costs of employee benefits, like insurance, health care, and paid-time off, go unreported, how can employees possibly decipher their true compensation? If employees can only attach a number to their salary, and do not understand their total worth to the company, both parties suffer unrealistic expectations. Employers feel like they’re paying employees too much, while employees feel like they’re being paid too little. Neither party is wrong, but without knowing and reporting on how much the actual costs are, neither party has a leg to stand on, whether negotiating salaries or finding ways to retain employees.

When was the last time you took a hard look at the numbers you’re spending on your employees? And if you are already using total compensation reporting methods, what types of benefits are you including in your total compensation reports?

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