Employer costs for employee compensation averaged $26.86 per hour worked in June 2006, the U.S. Department of Labor's Bureau of Labor Statistics reported. Wages and salaries, which averaged $18.80, accounted for 70 percent of these costs, while benefits, which averaged $8.06, accounted for the remaining 30 percent. Employer Costs for Employee Compensation, a product of the National Compensation Survey, measures employer costs for wages, salaries, and employee benefits for nonfarm private and state and local government workers.

Costs for legally required benefits, including Social Security, Medicare, unemployment insurance, and workers‚ compensation, averaged $2.17 per hour (8.1 percent of total compensation). Employer costs for life, health, and disability insurance benefits averaged $2.19 (8.1 percent); paid leave benefits (vacations, holidays, sick leave, and other leave) averaged $1.88 (7.0 percent); and retirement and savings benefits averaged $1.15 (4.3 percent) per hour worked.

Private industry

In June 2006, private industry employer compensation costs averaged $25.16 per hour worked. Wages and salaries averaged $17.77 per hour (70.6 percent), while benefits averaged $7.39 (29.4 percent). Employer costs for legally required benefits averaged $2.16 (8.6 percent) per hour worked, insurance benefits averaged $1.87 (7.4 percent), paid leave averaged $1.70 (6.8 percent), retirement and savings averaged 91 cents (3.6 percent), and supplemental pay averaged 73 cents (2.9 percent).

NOTE: Collection of severance pay and supplemental unemployment plans, which comprised "other benefits" and was published in all tables, was discontinued beginning with the March 2006 estimates to reduce the burden on survey respondents. This change had minimal impact on most series because the cost of these benefits averaged only 4 cents per hour worked for civilian workers in 2005.

Retirement and savings benefit costs in private industry

In June 2006, average costs in private industry for retirement and savings benefits were 91 cents per hour worked, or 3.6 percent of total compensation. The average cost per hour worked for defined benefit plans, retirement plans that typically specify a benefit based on age, years of service, and earnings, was 45 cents (1.8 percent of total compensation). The average cost for defined contribution plans, retirement plans usually based on employer contributions to individual employee accounts, was 46 cents (1.8 percent of total compensation).

Among occupational groups, retirement and savings costs ranged from 18 cents per hour worked for service occupations to $1.82 for management, professional, and related occupations. Sales and office occupations averaged 57 cents; production, transportation, and material moving occupations, 82 cents; and natural resources, construction, and maintenance occupations, $1.48 per hour. The proportion of total compensation represented by retirement and savings ranged from 1.4 percent for service workers to 5.2 percent for natural resources, construction, and maintenance workers.

Retirement and savings costs were higher, both in amount and as a proportion of total compensation for union workers ($2.42 and 7.0 percent of total compensation) than for nonunion workers (73 cents and 3.1 percent of total compensation). Defined benefit plan costs were significantly higher for union workers ($1.84 and 5.3 percent of compensation) than for nonunion workers (29 cents and 1.2 percent of compensation).

Retirement and savings costs were higher per hour worked in goods-producing industries ($1.51 and 5.1 percent of total compensation) than in service-providing industries (76 cents and 3.2 percent of total compensation). There was little variation in costs within goods-producing industries; construction averaged $1.47 per hour and manufacturing averaged $1.46. Costs in service-providing industries varied widely, ranging from 10 cents in leisure and hospitality to $1.57 in financial activities and $1.47 in the information industry.

Among the four census regions, retirement and savings costs ranged from 73 cents per hour in the South to $1.07 in the Northeast. Retirement and savings costs were $1.03 in the Midwest and 91 cents in the West. Within the nine census divisions, retirement and savings costs ranged from 56 cents in the East South Central division to $1.13 in the East North Central and $1.11 in the Middle Atlantic divisions.

Retirement and savings costs were greater, both in cost per hour worked and proportion of total compensation, with establishment size. Establishments with fewer than 50 workers averaged 44 cents (2.2 percent), significantly less than establishments with 500 workers or more, $1.91 (5.3 percent).