Employer Costs for Employees Lowest in South, Highest in Northeast

September 28, 2012

Total employer costs for employees in private industry ranges from $26.14 per hour in the South to $32.98 in the Northeast.

According to U.S. Bureau of Labor Statistics, the same costs are $28.06 in the Midwest and $30.01 in the West.

Overall, compensation costs among private industry employers in the United States averaged $28.80 per hour worked in June 2012. Wages and salaries, at $20.27 per hour, accounted for 70.4 percent of these costs, while benefits, at $8.52, made up the remaining 29.6 percent.

The costs ranged within each region, with total compensation costs of $24.44 in the East South Central division to $33.47 in New England.

BLS used compensation data from June 2012. The agency measures the average cost to employers for wages, salaries and benefits per employee hour worked. Benefits include health, life and disability insurance; workers’ compensation, unemployment insurance, Social Security and Medicare; and paid leave including vacation, holiday and sick days.

The data cover private industry only and exclude self-employed and farm and private household workers. The costs were collected from a sample of 47,400 occupations from about 9,500 establishments in private industry.

Regional Costs


Northeast: In the Northeast, hourly total compensation costs were comprised of the following: wages and salaries (at $22.80) made up 69.1 percent, while total benefits (at $10.18), accounted for the remaining 30.9 percent. Insurance costs, which include life, health, and short- and long-term disability, averaged $2.79 per hour worked and 8.5 percent of all compensation costs. Legally required benefits, which include Social Security and Medicare, workers’ compensation, and unemployment insurance, averaged $2.71 per hour worked and represented 8.2 percent of total compensation costs. Paid leave benefits, of which vacation, holiday, sick, and personal leave is included, was $2.46 per hour worked and accounted for 7.5 percent of total compensation costs.

West: Hourly wages and salaries averaged $21.28 in the West and accounted for 70.9 percent of all compensation costs. Total benefits averaged $8.73, or 29.1 percent of total compensation costs. Legally required benefits averaged $2.58 per hour worked and accounted for 8.6 percent of total compensation costs in the West. Insurance benefits averaged $2.31 per hour worked and represented 7.7 percent of all employer costs, while paid leave was $2.03 per hour, or 6.8 percent of total compensation costs.

Midwest: The Midwest Region witnessed hourly wage and salary averages of $19.50 in June 2012, and that represented 69.5 percent of all compensation costs. Total benefits averaged $8.56, and accounted for the remaining 30.5 percent of all compensation costs. The three highest employee-cost areas for employers included: insurance benefits ($2.55 per hour worked), legally required benefits ($2.29 per hour), and paid leave ($1.86 per hour). These cost areas represented 9.1 percent, 8.2 percent, and 6.6 percent, respectively, of total employer compensation costs in the Midwest.

South: In the South, wages and salaries averaged $18.71 per hour and comprised 71.6 percent of total employer compensation, while total benefits, at $7.42 per hour, accounted for the remaining 28.4 percent. Legally required benefits represented the largest benefit category, averaging $2.09 per hour worked, or 8.0 percent of total compensation costs. Insurance benefits, at $1.96 per hour, or 7.5 percent of total compensation costs, represented the second largest benefit category in the South. Paid leave, the third largest benefit category, averaged $1.73 per hour and represented 6.6 percent of all costs.

Source: Bureau of Labor Statistics

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