This started out as a blog about wages and benefits in New York City. But then I shared it with some colleagues, who thought it was too Gotham-centric. My real purpose is to highlight the data on employer costs for wages and benefits in several large metropolitan areas, including New York.
But maybe I should back up a little. Since 1986, BLS has published information on what it costs employers to employ their workforce. Employer Costs for Employee Compensation look at what employers spend on wages and benefits. Over the years, we have expanded the data to provide more industry and occupational detail and other job characteristics, such as union versus nonunion status and full-time versus part-time work. For the past decade, information has been available for private industry workers in 15 metropolitan areas, including New York. More on that in a moment.
Across the United States, private employers spent an average of $34.17 per hour worked on wages and benefits in March 2018. Of this amount, 69.5 percent ($23.76) went for wages. The rest (30.5 percent or $10.41) was for a wide range of benefits, including paid time off, insurances, retirement and savings plans, and legally required benefits (for example, the employer’s share of Social Security taxes).
There is a lot of variation around that average. For example, private employers in the financial activities industry spent an average of $49.46 per hour worked on wages and benefits, while employers in the leisure and hospitality industry spent less than one-third of that amount — $14.94. And the share of compensation dollars going toward benefits also varies — 40.4 percent for union workers, compared with 29.1 percent for nonunion workers.
Editor’s note: Data for this chart are available in the table below.
So how can you use this information? If you run a business, you might compare your compensation costs to the average for your industry. And you might see how your split between wage and benefit costs stacks up. As an employee, you might also check how you fare against the average.
Private employers in the New York metropolitan area (you knew I would get there eventually) spent $45.61 per hour worked to compensate their workers — fully a third more than the national average. New York was one of three metropolitan areas to have costs in the mid-$40 range, along with Boston and Seattle. All were eclipsed by the San Jose-San Francisco-Oakland area, with average compensation costs of $56.92 per hour worked. In contrast, employers in Miami averaged $31.32.
Editor’s note: Data for this chart are available in the article “Compensation costs in San Jose-San Francisco-Oakland averaged $56.92 per hour in March 2018.”
How these costs are split between wages and benefits can vary for many reasons. These include the industry and occupation mix in an area, the extent of collective bargaining, local benefit practices (and legal requirements), and the generosity of benefit plans. Many benefits, such as paid leave and employer matching contributions to 401(k) plans, are tied partly to wages. The higher the wages, the higher the cost of benefits.
With this in mind, the data tell a couple of different stories. On the one hand, the share of compensation costs going toward benefits hovers around the national average (30.5 percent) in all areas, ranging from 27.7 percent in Dallas to 33.6 percent in Detroit. But the actual dollar amounts vary. Employers spend an average of $8.92 per hour worked on benefits in Miami and nearly twice that much ($17.12) in the San Francisco Bay Area. As noted, many of these costs are tied to wages.
Again, this information might be helpful to compare your compensation costs to the average in your area. Businesses might use the data when making relocation or expansion decisions. Or you might just call your friends in New York and show off how much you know about the Big Apple.
We update the national information quarterly, 3 months following the reference date. Data for the 15 metropolitan areas is available once a year — in the June release providing information for March. To keep the data consistent, I’ve used March 2018 data in this blog. The next release, with December 2018 data, is scheduled for March 19. Watch for these data coming your way soon. We also have more charts on employer costs for employee compensation.
|500 workers or more||32.00||17.16|
|Leisure and hospitality||11.73||3.21|