Benefit Costs Rise in 2014, Outpacing Wages, BLS Says

By Ben Penn

The cost of employer-provided benefits for full-time private sector workers increased by 9.4 percent in December 2014, compared with December 2013, a Bloomberg BNA analysis of data released March 11 by the Labor Department's Bureau of Labor Statistics showed.

The increase was nearly double the 5.1 percent growth rate for wages and salaries during that period, the analysis showed.

Employers' average hourly benefit costs increased by $1.01, to 11.80 from $10.79 in the final three months of 2014, compared with the same period the previous year. Average hourly pay increased by $1.20 over the 12 months, to $24.91 from $23.71.

Benefits represented 32.1 percent of full-time compensation, the greatest share on record dating back to 2004, according to the bureau's data. The percentage of total compensation devoted to benefits has slowly risen from 29.7 percent in the first quarter of 2004.

Meanwhile, wages and salaries have gradually moved in the opposite direction, accounting for 67.9 percent of compensation in the October-to-December period, compared with 68.7 percent a year earlier and 70.3 percent at the start of 2004, the analysis of employer costs for employee compensation report revealed.

Overall compensation costs for the typical full-time private sector worker increased 6.4 percent to $36.70 per hour over 2014.

Union Compensation Growth

Among all private-sector employees, including part-time workers, the growth rate of total compensation costs for union-represented workers, 11.9 percent, outpaced the level for nonunion employees, 4.7 percent, over the year ended in the fourth quarter, the Bloomberg BNA analysis showed.

Benefit costs for union-represented workers grew 12.1 percent to $18.74 an hour, while those for nonunion employees rose 7.3 percent to $8.70 an hour.

Part of the difference in costs reflects the nonunion workforce's higher proportion of part-time workers, who are less likely than full-time employees to have access to benefits.

Union-represented workers also experienced a greater gain in wages and salaries than their nonunion counterparts, by 11.8 percent compared with 3.7 percent, and had higher hourly wages, $27.76 compared with $21.13.

For more information, see Compensation and Benefits Library's “Compensation Policies: Philosophies and Objectives” chapter.