Benefits cost employers a bundle!

July 21, 2014

The national average paid out by employers for employee benefits is 39 percent of total payroll costs. This figure comes from the U.S. Chamber of Commerce, based on a survey of nearly 400 U.S. companies of various sizes, industries and geographic locations.

Here are some of the specific figures from the survey:

One in 10 employers put more than 48 percent of their payroll dollars into benefits.
One in 10 employers put less than 23 percent of their payroll dollars into benefits.
Larger employers paid more per employee for benefits. For example, employers with 99 or fewer employees provided an average of 32.6 percent of payroll — or $13,064 per employee — in benefits. But employers with 1,000 to 2,499 employees put 39.6 percent of payroll — or $18,910 per employee — into benefits.
The average payroll dollar is broken down like this: 61-cents in wages, 11-cents in medical benefits, 10.9-cents for holidays and vacation, 8.2-cents for legally required payments such as payroll taxes and Workers’ Comp, 8-cents in retirement and savings contributions, and 1-cent for other costs.

Here’s what the benefit dollars go for:

Nearly 100 percent of surveyed companies provided paid holidays, health insurance, and paid vacation benefits to full-time employees.
Retirement programs were offered by 95 percent of surveyed firms.
Life insurance was provided by 91 percent of businesses.
Sick leave was paid for by 77 percent of firms.
Long-term disability coverage was provided by 69 percent of companies, while 59 percent offered short-term disability to full-time employees.
Paid holidays were given to part-time employees by 44 percent of businesses.
Only 24 percent of firms provided health benefits to part-time employees.

However, “average” percentages can be misleading. Comparing your own company’s benefits costs to a national average is not very helpful.

Smart strategy: Do a breakdown of your payroll costs. Calculate how much each item in the employee’s payroll costs. Then share this information with your employees once a year in a report. The more employees know exactly what they receive — and what it costs — the more likely they’ll appreciate the full value of their job.