Running a company is a game of balancing selling a product or service, customer needs, employee happiness, and the needs of a functioning business. It is difficult to manage the finances which is why so many businesses go out within the first years of opening. One unexpected cost that most people do not think about is employee benefits; the only time people really pay attention to it is when they are negotiating their contract. Today’s business world is a very different picture than it was ten years ago, and employee benefits have changed from the basic weeks of vacation and paid sick days. Companies now are offering fitness centers, catered food services, secondary insurance policies, longer maternity and paternity leave, and other wonderful employee benefits, but what does the cost of that look like?
When trying to break down the average cost of employee benefits, we are only going to look at the basic type of package which includes, “paid vacation or sick days, health insurance, life insurance and pension plan contribution”. There are varying statistics based on the business being in the public or private sector, but in general, for 2019, the average employer cost for employee compensation averaged $36.61 per hour worked, per the Employer Costs for Employee Compensation new release text by the Bureau of Labor Statistics. If we want to break this down even further, we can see that wages and salaries averaged at $25.12 per hour worked while benefit costs averaged at $11.48 per hour worked; percentage-wise, wages and salaries accounted for 68.6% of the average compensation while benefits were 31.4%.
We can also compare the average cost of employee benefits across civilian, private industry, and state and local government workers. The total benefit cost is much higher for state and local government workers who make an average of $19.20 per hour worked. Private industry workers make about $10.30 per hour and we know from above that civilian workers make $11.48 per hour on average.
These numbers can be broken down further, but we get a pretty good picture of the average amount of money being spent by companies in the United States on employee benefits. The next steps to take would be to look at a comparison of the amount spent over the past few years to see what kind of trends the companies are making in spending on benefits and how we are seeing that manifest.