Benefit Costs in the Private Sector

"Employee benefits make up nearly 30% of compensation packages in the private sector, with insurance benefits comprising 8% of that total, according to 2010 research by the U.S. Bureau of Labor Statistics.

Overall, employers in the private sector allocated, on average, $19.68 per hour on wages and salaries, totaling 70.6% of compensation. BLS analysts found that legally required and insurance benefits constituted the largest benefits categories.

For example, private-sector employers spent $2.31 per hour worked on legally mandated benefits, which includes Social Security, Medicare, unemployment insurance and workers’ compensation. This category represented 8.3% of total compensation.

The majority of insurance costs ($2.24) stemmed from health insurance, which costs $2.10 per hour worked. The remaining balance was tagged for life, short-term disability and long-term disability. On the retirement side, defined benefit and defined contribution plans cost private-sector employers 99 cents, totaling 3.6% of total compensation.

Meanwhile, paid-leave benefits, such as vacations, holidays, sick leave and personal leave, averaged $1.88 per hour, which composed of 6.7% of total compensation. Supplemental compensation categorized as overtime and premium pay, shift differentials and non-production bonuses averaged 78 cents, totaling 2.8% of total compensation.

The research on benefits costs is outlined in the memo report Employer Costs for Employee Compensation for September 2010."

EBN

So mandated benefits (i.e. taxes) cost more than health insurance benefits (8.3% vs. 8%).